UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-K/A


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 31, 1998
                                      OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _________ to _________

                        Commission file number 1-2301
                            BOSTON EDISON COMPANY
            (Exact name of registrant as specified in its charter)

              Massachusetts                          04-1278810
------------------------------------------       -------------------
     (State or other jurisdiction of              (I.R.S. Employer
      incorporation or organization)             Identification No.)

800 Boylston Street, Boston, Massachusetts              02199
------------------------------------------       --------------------
 (Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code:  617-424-2000
                                                     ------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  YES  X   NO
                                                    ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 26, 1999:  None

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

                 Class                      Outstanding at March 26, 1999
       --------------------------           -----------------------------
       Common Stock, $1 par value                    100 shares

<PAGE> 1
Boston Edison Company
------------------------------------------------------------------------------


Form 10-K/A Annual Report
------------------------------------------------------------------------------


December 31, 1998
------------------------------------------------------------------------------


<TABLE>
<CAPTION>
Part I                                                                Page
------------------------------------------------------------------------------
<S>                                                                    <C>
Item  1.  Business                                                      2

Item  2.  Properties and Power Supply                                   6

Item  3.  Legal Proceedings                                             8

Item  4.  Submission of Matters to a Vote of Security Holders           9


Part II
------------------------------------------------------------------------------

Item  5.  Market for the Registrant's Common Stock and Related
          Stockholder Matters                                          12

Item  6.  Selected Financial Data                                      12

Item  7.  Management's Discussion and Analysis                         13

Item  8.  Financial Statements and Supplementary Financial
          Information                                                  28

Item  9.  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                          53


Part III
------------------------------------------------------------------------------

Item 10.  Directors and Executive Officers of the Registrant           54

Item 11.  Executive Compensation                                       57

Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                   65

Item 13.  Certain Relationships and Related Transactions               65


Part IV
------------------------------------------------------------------------------

Item 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K                                                     66
</TABLE>

<PAGE> 2
                                    Part I
                                    ------

Item 1.  Business
-----------------

(a) General Development of Business
-----------------------------------

Boston Edison Company (Boston Edison), an investor-owned regulated public
utility incorporated in 1886 under Massachusetts law, received final approval
of its reorganization plan to form a holding company structure from the
Securities and Exchange Commission (SEC) in May 1998.  Effective May 20, 1998
the holding company, BEC Energy (BEC), was formed with Boston Edison as a
wholly owned subsidiary of BEC.  Effective June 25, 1998, Boston Energy
Technology Group (BETG) ceased being a subsidiary of Boston Edison and became
a wholly owned subsidiary of BEC.

Within its newly restructured industry, BEC has announced its intention to
focus its utility operations on the transmission and distribution of energy.
The sale of Boston Edison's fossil generating assets to Sithe Energies, Inc.
(Sithe) was completed in May 1998.  In November 1998, Boston Edison signed an
agreement with Entergy Nuclear Generating Company (Entergy) to sell its wholly
owned nuclear generating unit, Pilgrim Nuclear Power Station (Pilgrim).  BEC
signed a merger agreement with Commonwealth Energy System (CES) in December
1998 that will create an energy delivery company serving approximately 1.3
million customers located entirely within Massachusetts, including more than
one million electric customers in 81 communities and 240,000 gas customers in
51 communities.

(b) Financial Information about Industry Segments
-------------------------------------------------

Boston Edison operates as a regulated electric public utility, therefore
industry segment information is not applicable.

(c) Narrative Description of Business
-------------------------------------

Principal Products and Services

Boston Edison currently supplies electricity at retail to an area of 590
square miles, including the city of Boston and 39 surrounding cities and
towns.  The population of the area served with electricity at retail is
approximately 1.5 million.  In 1998 Boston Edison served an average of
approximately 660,000 customers.  It also supplies electricity at wholesale
for resale to other utilities and municipalities.  Electric operating revenues
by class for the last three years consisted of the following:

<TABLE>
<CAPTION>
                                                 1998       1997       1996
---------------------------------------------------------------------------
<S>                                               <C>        <C>        <C>
Retail electric revenues:
  Commercial                                      51%        51%        50%
  Residential                                     27%        27%        27%
  Industrial                                       9%         9%         9%
  Other                                            1%         1%         2%
Wholesale and contract revenues                   12%        12%        12%
===========================================================================
</TABLE>

<PAGE> 3
Sources and Availability of Fuel

On May 15, 1998, Boston Edison completed the sale of its non-nuclear
generating assets to Sithe Energies.  In April 1998, Boston Edison began
soliciting expressions of interest for the sale of its nuclear generating
unit, Pilgrim as part of the previously announced strategy to exit the
generation business.  On November 19, 1998, Boston Edison announced that
Entergy, a subsidiary of New Orleans-based Entergy Corporation, had been
selected as the winning bidder for Pilgrim.  A purchase and sale agreement has
been signed and all required approvals are anticipated in the second quarter
of 1999.  Company generation by type of fuel for each of the last five years
were as follows:

<TABLE>
<CAPTION>
             Percentage of Company
             Generation by Source (%)
         --------------------------------
         1998   1997   1996   1995   1994
-----------------------------------------
<S>      <C>    <C>    <C>    <C>    <C>
Oil       8.1   32.0   16.1   17.5   27.8
Gas      20.8   31.1   33.3   39.9   31.6
Nuclear  71.1   36.9   50.6   42.6   40.6
=========================================
</TABLE>

The decrease in company oil and gas generation resulting from the fossil
divestiture was partially offset by higher purchased power in 1998 that
included a six-month transitional power purchase contract with Sithe that
began in May.

In order to obtain fuel for use at Pilgrim Station, Boston Edison must obtain
supplies of uranium concentrates and secure contracts for these concentrates
to go through the processes of conversion, enrichment and fabrication of
nuclear fuel assemblies.  Boston Edison currently has contracts for supplies
of uranium concentrates and the processes of conversion, enrichment and
fabrication through 2002, 2000, 2004 and 2012, respectively.  Following the
planned sale of Pilgrim, it is expected that each of these contracts for
future commitments will either be terminated or permitted to expire in
accordance with their terms.  Boston Edison may be subject to a penalty of
approximately $10 million to terminate one of these contracts.  Management
anticipates any payment will be collected from customers under the terms of
the Boston Edison settlement agreement.  None of these supply contracts have
been assigned to Entergy.

Franchises

Through its charter, which is unlimited in time, Boston Edison has the right
to engage in the business of producing and selling electricity, steam and
other forms of energy, has powers incidental thereto and is entitled to all
the rights and privileges of and subject to the duties imposed upon electric
companies under Massachusetts laws.  The locations in public ways for electric
transmission and distribution lines are obtained from municipal and other
state authorities which, in granting these locations, act as agents for the
state.  In some cases the action of these authorities is subject to appeal to
the Massachusetts Department of Telecommunications and Energy (DTE).  The
rights to these locations are not limited in time, but are not vested and are
subject to the action of these authorities and the legislature.  Pursuant to
the Massachusetts electric utility industry restructuring legislation enacted
in November 1997, the DTE has defined the service territory of Boston Edison
based on the territory actually served on July 1, 1997, and following, to the
extent possible, municipal boundaries.  The legislation further provided that,
until terminated by effect of law or otherwise, Boston Edison shall have the
exclusive obligation to provide distribution service to all retail customers

<PAGE> 4
within such service territory.  No other entity shall provide distribution
service within this territory without the written consent of Boston Edison
which consent must be filed with the DTE and the municipality so affected.

Seasonal Nature of Business

Kilowatt-hour (kWh) sales and revenues are typically higher in the winter and
summer than in the spring and fall as sales tend to vary with weather
conditions.  Refer to the Selected Consolidated Quarterly Financial Data
(Unaudited) in Item 8 for specific financial information by quarter for 1998
and 1997.

Competitive Conditions

The utility industry has continued to change in response to the marketplace
demands for improved customer service and lower prices for energy.  These
pressures have resulted in an increasing trend in the industry to seek
competitive advantages and other benefits through business combinations.  On
December 5, 1998, BEC and CES, headquartered in Cambridge, Massachusetts,
entered into an Agreement and Plan of Merger (the Merger Agreement).
Management's Discussion and Analysis ("Merger with COM/Energy") in Item 7
provides further details regarding the Merger Agreement.

Boston Edison has been anticipating and responding to changes in the electric
energy business as a result of industry restructuring proceedings at both the
federal and state levels.  Management's Discussion and Analysis ("Retail
Access") in Item 7 provides further details regarding Boston Edison's response
to the industry climate, including details of its industry restructuring
settlement agreement.

Environmental Matters

Boston Edison is subject to numerous federal, state and local standards with
respect to the management of wastes, air and water quality and other
environmental considerations.  These standards could require modification of
existing facilities or curtailment or termination of operations at these
facilities.  They could also potentially delay or discontinue construction of
new facilities and increase capital and operating costs by substantial
amounts.  Noncompliance with certain standards can, in some cases, also result
in the imposition of monetary civil penalties.

Environmental-related capital expenditures for the years 1998 and 1997 were
$0.6 million and $1.4 million, respectively.  Management believes that its
remaining operating facilities are in substantial compliance with currently
applicable statutory and regulatory environmental requirements.  Additional
expenditures could be required as changes in environmental requirements occur.

Number of Employees

As of March 26, 1999, Boston Edison had 2,893 full-time and 48 part-time
employees including 1,966 represented by two locals of the Utility Workers
Union of America, AFL-CIO.  The locals' labor contracts are effective through
May of the year 2000.  Management believes it has satisfactory employee
relations.

Approximately 600 employees are expected to terminate employment as a result
of the divestiture of Pilgrim Station in 1999.  Refer to the Generating Assets
Divestiture section of Item 7 for information regarding employees affected by
the nuclear divestiture.

<PAGE> 5
(d) Financial Information about Foreign and Domestic Operations and Export
--------------------------------------------------------------------------
Sales
-----

Boston Edison delivers electricity to retail and wholesale customers in the
Boston area.  Boston Edison does not have any foreign operations or export
sales.

(e) Additional Information
--------------------------

Regulation

Boston Edison and its wholly owned subsidiary, Harbor Electric Energy Company
(HEEC), operate primarily under the authority of the DTE, whose jurisdiction
includes supervision over retail rates for electricity and financing and
investing activities.  In addition, the Federal Energy Regulatory Commission
(FERC) has jurisdiction over various phases of Boston Edison's business
including rates for power sold at wholesale for resale, facilities used for
the transmission or sale of that power, certain issuances of short-term debt
and regulation of the system of accounts.

The Nuclear Regulatory Commission (NRC) has broad jurisdiction over the
siting, construction and operation of nuclear reactors with respect to public
health and safety, environmental matters and antitrust considerations.  A
license granted by the NRC may be revoked, suspended or modified for failure
to construct or operate a facility in accordance with its terms.  Boston
Edison currently holds an operating license for Pilgrim Station which expires
in 2012.  Continuing NRC review of existing regulations and certain operating
occurrences at other nuclear plants have periodically resulted in the
imposition of additional requirements for all nuclear plants in the United
States, including Pilgrim Station.  NRC inspections and investigations can
result in the issuance of notices of violation.  These notices can also be
accompanied by orders directing that certain actions be taken or by the
imposition of monetary civil penalties.

In addition, management could undertake certain actions regarding Pilgrim
Station at the request or suggestion of its insurers or the Institute of
Nuclear Power Operations, a voluntary association of nuclear utilities
dedicated to the promotion of safety and reliability in the operation of
nuclear power plants.  Nuclear power continues to be a subject of political
controversy and public debate manifested from time to time in the form of
requests for various kinds of federal, state and local legislative or
regulatory action, direct voter initiatives or referenda or litigation.
Management cannot predict the extent, cost or timing of any modifications to
Pilgrim which could be necessary as a result of additional regulatory or other
requirements.  As discussed in Sources and Availability of Fuel of this item,
Boston Edison entered into a purchase and sale agreement with Entergy for the
sale of Pilgrim Station.  The DTE approved the sale of Pilgrim in March 1999.
Other required approvals are anticipated in the second quarter of 1999.  Such
approvals are required for the completion of the Pilgrim sale.  Provided that
all required approvals are received and the sale of Pilgrim proceeds as
planned, Boston Edison will transfer its regulatory and legal liability and
responsibility for Pilgrim to Entergy, except for any outstanding liabilities
related to pre-closing occurrences.  If the required approvals are not
received as anticipated, the agreement with Entergy could be terminated.  If
Boston Edison is ultimately unable to sell Pilgrim, management expects it
would recover all stranded Pilgrim costs, including decommissioning under the
Boston Edison settlement agreement.

<PAGE> 6
Plant Expenditures and Financings

The most recent estimates of plant expenditures (excluding nuclear fuel),
allowance for funds used during construction (AFUDC), long-term debt
maturities and preferred stock payment requirements for the years 1999 through
2003 are as follows:

<TABLE>
<CAPTION>
(in thousands)        1999         2000         2001         2002         2003
------------------------------------------------------------------------------
<S>               <C>          <C>          <C>          <C>          <C>
Plant
 expenditures     $127,000     $113,000     $ 96,000     $ 75,000     $ 78,000
AFUDC             $  1,200     $  1,200     $  1,200     $  1,200     $  1,200
Long-term debt    $  1,600     $166,600     $  1,600     $  1,600     $151,650
Preferred stock   $      -     $      -     $ 50,000     $      -     $      -
==============================================================================
</TABLE>

Management continuously reviews its plant expenditure and financing programs.
These programs and, therefore, the estimates included in this Form 10-K/A are
subject to revision due to changes in regulatory requirements, environmental
standards, availability and cost of capital, interest rates and other
assumptions.

Plant expenditures in 1998 were $118 million and consisted primarily of
additions to Boston Edison's distribution and transmission systems.  The
majority of these expenditures were for system reliability and control
improvements, customer service enhancements and capacity expansion to allow
for long range growth in the Boston Edison service territory.

Refer to the Liquidity section of Item 7 for more information regarding
capital resources to fund construction programs.

Item 2.  Properties and Power Supply
------------------------------------

Total electric generation capacity from facilities owned by Boston Edison
consisted of the following:

<TABLE>
<CAPTION>
                                                                    Year
Unit (a)             Location            Capacity (b)   Type      Installed
------------------------------------------------------------------------------
<S>                  <C>                    <C>        <C>        <C>
Pilgrim Nuclear      Plymouth, Mass.        670        Nuclear      1972
 Power Station

New Boston Station   South Boston, Mass.    760        Fossil     1965-1967
 Units 1 and 2

Mystic Station       Everett, Mass.
 Units 4-5-6                                388        Fossil     1957-1961
 Unit 7                                     592        Fossil       1975
 Combustion turbine                          14        Fossil       1969
 generator

Combustion turbine   Various                276        Fossil     1966-1971
 generators (nine)
==============================================================================

<FN>
(a)  As discussed in Sources and Availability of Fuel of this item, Boston
     Edison completed the sale of its fossil generating assets to Sithe
     Energies in May 1998.  In addition, Pilgrim Station is expected to be
     sold to Entergy in 1999.

(b)  In megawatts (MW) based on winter capability audit results in 1997.
</TABLE>

<PAGE> 7
Boston Edison's high-tension transmission lines are generally located on land
either owned or subject to easements in its favor.  Its low-tension
distribution lines are located principally on public property under permission
granted by municipal and other state authorities.

As of December 31, 1998, Boston Edison's transmission system consisted of 376
miles of overhead circuits operating at 115, 230 and 345 kilovolts (kV) and
171 miles of underground circuits operating at 115 and 345 kV.  The
substations supported by these lines are 45 transmission or combined
transmission and distribution substations with transformer capacity of 11,053
megavolt amperes (MVA), 57 4 kV distribution substations with transformer
capacity of 932 MVA and 16 primary network units with 79 MVA capacity.  In
addition, high tension service was delivered to 248 customers' substations.
The overhead and underground distribution systems cover approximately 3,700
and 3,200 circuit miles, respectively.  HEEC, Boston Edison's regulated
subsidiary, has a distribution system that consists principally of a 4.1 mile
115 kV submarine distribution line and a substation which is located on Deer
Island in Boston, Massachusetts.  HEEC provides the ongoing support required
to distribute electric energy to its one customer, the Massachusetts Water
Resources Authority, at this location.

Purchased Power Contracts

Boston Edison entered into a 13-month agreement effective December 1, 1998 to
transfer all of the unit output entitlements from its long-term power purchase
contracts to Select Energy (Select), a subsidiary of Northeast Utilities, Inc.
In return, Select will provide full energy service requirements to Boston
Edison, including New England Power Pool (NEPOOL) capability responsibilities,
at FERC approved tariff rates through December 31, 1999.  For more information
regarding these long-term contracts refer to Note L to the Consolidated
Financial Statements in Item 8.

Sales Contracts

Boston Edison currently sells a percentage of Pilgrim Station's output to
Commonwealth Electric Company (Commonwealth), Montaup Electric Company
(Montaup) and various municipalities under long-term contracts.  Under these
contracts, the utilities and municipalities pay their proportionate share of
the costs of operating the station and associated transmission facilities.
The long-term power sales contracts with Commonwealth and Montaup will be
terminated upon the closing of the sale of Pilgrim Station to Entergy.  The
contracts with the municipalities remain in place whereby Boston Edison will
purchase power for resale to the municipalities under a purchase power
agreement entered into with Entergy.  Refer to Notes K and L to the
Consolidated Financial Statements in Item 8 for more information regarding
these contracts.

New England Power Pool

Boston Edison is a member of NEPOOL, a voluntary association of electric
utilities and other electricity suppliers in New England responsible for the
coordination, monitoring and directing of the operations of the major
generating and transmission facilities in the region.  To obtain maximum
benefits of power pooling, the electric facilities of all member companies are
directed by an Independent System Operator (ISO New England) as if they were a
single power system.  This is accomplished through the use of a central
dispatching system that uses the lowest-priced generation and transmission
equipment available at any given time.  NEPOOL's goal is to ensure a reliable
energy supply for the New England region at the lowest possible price.

<PAGE> 8
During 1997, the power pool was restructured with changes taking effect to the
membership and governance provisions of the power pooling agreement along with
the transfer of operating responsibility of the integrated transmission and
generation system in New England to ISO New England.  Previously, NEPOOL
dispatched generating units for operation based on the lowest operating costs
of available generation and transmission.  Under the new structure, generators
will be required to provide ISO New England with market prices at which they
will sell short-term energy supply.  These prices will form the basis for
dispatch anticipated to begin in the second quarter of 1999.  As noted in the
Purchased Power Contracts section above, Boston Edison will receive all of its
power supply requirements from Select in 1999.  Therefore, the change to
NEPOOL's operations and pricing structure is expected to have no material
impact on Boston Edison's costs for purchased electric energy.

Item 3.  Legal Proceedings
--------------------------

Industry and corporate restructuring legal proceedings

The DTE order approving the Boston Edison settlement agreement and the DTE
order approving the formation of BEC as a holding company were appealed by
certain parties to the Massachusetts Supreme Judicial Court (SJC).  In
December 1998, the SJC dismissed the appeal of the order approving the holding
company formation.  One settlement agreement appeal remains pending, however
there has to date been no briefing, hearing or other action taken with respect
to this proceeding.

In addition, along with other Massachusetts investor-owned utilities, Boston
Edison has been named as a defendant in a class action suit seeking to declare
certain provisions of the Massachusetts electric industry restructuring
legislation unconstitutional.

Management is currently unable to determine the outcome of these outstanding
proceedings however, if an unfavorable outcome were to occur, there could be a
material adverse impact on business operations, the consolidated financial
position or results of operations for a reporting period.

A referendum seeking repeal of the Massachusetts electric industry
restructuring legislation that was enacted in November 1997 was overwhelmingly
defeated by a better than 70% to 30% margin in a state-wide general election
held on November 3, 1998.  This outcome allows the comprehensive framework
established for the restructuring of the electric industry to continue as
intended under the enacted legislation.

Regulatory proceedings

In October 1997, the DTE opened a proceeding to investigate Boston Edison's
compliance with the 1993 order which permitted the formation of BETG and
authorized Boston Edison to invest up to $45 million in unregulated
activities.  Hearings began in the fourth quarter of 1998 and are expected to
be completed in the first half of 1999.

Each of the Reading Municipal Light Department, the Littleton Electric Light
Department and the West Boylston Municipal Light Department have filed
separate claims for arbitration in Massachusetts alleging that the proposed
transfer of Pilgrim Station constitutes a breach of their respective power
sale agreements and seeking to terminate those agreements.  The remaining
municipal light departments have also indicated that they plan to file similar
claims for arbitration.  Boston Edison has requested the FERC to exercise its
pre-emptive authority to consider the claims of the municipal light

<PAGE> 9
departments.  In the event that either the FERC determines, or as a result of
the arbitrations, that the contracts should be terminated, Boston Edison would
continue to be obligated to purchase power from Entergy that it intended to
resell to the municipal light departments.  Boston Edison may not be able to
resell such power in the short-term power exchange at a price equal to or
greater than the price it is required to pay to Entergy.  However, Boston
Edison has filed at the DTE for recovery of any such shortfall as part of its
Pilgrim divestiture filing through the transition charge.

Management is currently unable to determine the outcome of these proceedings
however, if an unfavorable outcome were to occur, there could be a material
adverse impact on business operations, the consolidated financial position or
results of operations for a reporting period.

Other litigation

In October 1998, the town of Plymouth, Massachusetts, the site of Pilgrim
Station, filed suit against Boston Edison.  The town claimed that Boston
Edison wrongfully failed to execute an agreement with the town for payments in
addition to taxes due to the town under the Massachusetts electric industry
restructuring legislation.  Boston Edison and the town agreed on a 15-year,
$141 million property tax package in March 1999.  Payments in each of the
first four years are approximately $15 million after which payments gradually
decline.  All payments under this agreement will be recovered from customers
through the transition charge.

In the normal course of its business Boston Edison is also involved in certain
other legal matters.  Management is unable to fully determine a range of
reasonably possible legal costs in excess of amounts accrued.  Based on the
information currently available, it does not believe that it is probable that
any such additional costs will have a material impact on its consolidated
financial position.  However, it is reasonably possible that additional legal
costs that may result from a change in estimates could have a material impact
on the results of a reporting period in the near term.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

Not applicable.

<PAGE> 10
Executive Officers of the Registrant
------------------------------------

The names, ages, positions and business experience during the past five years
of all the executive officers of Boston Edison as of March 1, 1999 are listed
below.  There are no family relationships between any of the officers, nor any
arrangement or understanding between any officer and another person pursuant
to which the position as officer is held.  Officers hold office until the
first meeting of the directors following the next annual meeting of the
stockholders and until their respective successors are chosen and qualified.

<TABLE>
<CAPTION>
                                            Business Experience
Name, Age and Position                      During Past Five Years
----------------------                      ----------------------
<S>                                         <C>
Thomas J. May, 51                           Chairman of the Board, President
Chairman of the Board, President            and Chief Executive Officer (since
and Chief Executive Officer                 1995), Chairman of the Board and
                                            Chief Executive Officer (1994-
                                            1995), President and Chief
                                            Operating Officer (1993-1994);
                                            Director (since 1991)


Ronald A. Ledgett, 60                       Executive Vice President (since
Executive Vice President                    1997), Senior Vice President -
                                            Fossil, Field Service and Electric
                                            Delivery (1996-1997), Senior Vice
                                            President - Power Delivery (1991-
                                            1995)


Alison Alden, 50                            Senior Vice President - Sales,
Senior Vice President - Sales,              Services and Human Resources
Services and Human Resources                (since 1996), Vice President -
                                            Sales & Service (1993-1996)


L. Carl Gustin, 55                          Senior Vice President - Corporate
Senior Vice President - Corporate           Relations (since 1995), Senior
Relations                                   Vice President - Marketing &
                                            Corporate Relations (1989-1995)


Douglas S. Horan, 49                        Senior Vice President - Strategy
Senior Vice President - Strategy            and Law and General Counsel
and Law and General Counsel                 (since 1995), Vice President and
                                            General Counsel (1994-1995),
                                            Deputy General Counsel (1991-1994)
</TABLE>

<PAGE> 11
<TABLE>
<CAPTION>
                                            Business Experience
Name, Age and Position                      During Past Five Years
----------------------                      ----------------------
<S>                                         <C>
James J. Judge, 43                          Senior Vice President - Corporate
Senior Vice President - Corporate           Services and Treasurer (since
Services and Treasurer                      1995), Assistant Treasurer (1989-
                                            1995), Director - Corporate
                                            Planning (1993-1995)


Robert J. Weafer, Jr., 52                   Vice President - Finance,
Vice President - Finance,                   Controller and Chief Accounting
Controller and Chief                        Officer (since 1991)
Accounting Officer


Theodora S. Convisser, 51                   Clerk of the Corporation (since
Clerk of the Corporation                    1986) and Assistant General
                                            Counsel (since 1984)
</TABLE>

<PAGE> 12
                                   Part II
                                   -------

Item 5.  Market for the Registrant's Common Stock and Related Stockholder
-------------------------------------------------------------------------
Matters
-------

Market information for Boston Edison's common stock prior to the formation of
the holding company structure is included in Item 5 of BEC Energy's report on
Form 10-K/A.

The following information is furnished in connection with the Registration
Statement on Form S-3 of the Registrant (File No. 33-57840), filed on
February 3, 1993.

Ratio of earnings to fixed charges and ratio of earnings to fixed charges and
preferred stock dividend requirements for the year ended December 31, 1998:

<TABLE>
     <S>                                                <C>
     Ratio of earnings to fixed charges                 3.38

     Ratio of earnings to fixed charges and
     preferred stock dividend requirements              2.98
</TABLE>

Item 6.  Selected Financial Data
--------------------------------

The following table summarizes five years of selected consolidated financial
data (in thousands).

<TABLE>
<CAPTION>
                  1998         1997          1996         1995         1994
-----------------------------------------------------------------------------
<S>         <C>          <C>          <C>          <C>           <C>
Operating
 revenues   $1,622,972   $1,778,531   $1,668,856   $1,628,503    $1,544,735

Net income  $  157,337   $  144,642   $  141,546   $  112,310    $  125,022

Total
 assets     $3,104,478   $3,622,347   $3,729,291   $3,637,170    $3,608,699

Long-term
 debt       $  955,563   $1,057,076   $1,058,644   $1,160,223    $1,136,617

Redeemable
 preferred
 stock      $   92,040   $  163,093   $  203,419   $  206,514    $  208,514
===========================================================================
</TABLE>

<PAGE> 13
Item 7.  Management's Discussion and Analysis
---------------------------------------------


BEC Energy

Boston Edison Company (Boston Edison) received final approval of its
reorganization plan to form a holding company structure from the Securities
and Exchange Commission (SEC) in May 1998.  Effective May 20, 1998, BEC Energy
(BEC) was formed with Boston Edison as a wholly owned subsidiary of BEC.
Effective June 25, 1998, Boston Energy Technology Group (BETG) ceased being a
subsidiary of Boston Edison and became a wholly owned subsidiary of BEC.  The
holding company structure clearly separates the unregulated and regulated
operations of BEC and provides management with greater organizational
flexibility in order to take advantage of utility and nonutility business
opportunities in a more timely manner, including the merger with Commonwealth
Energy System (CES).

Merger with COM/Energy

The utility industry has continued to change in response to the marketplace
demands for improved customer service and lower prices for energy.  These
pressures have resulted in an increasing trend in the industry to seek
competitive advantages and other benefits through business combinations.  On
December 5, 1998, BEC and CES, headquartered in Cambridge, Massachusetts,
entered into an Agreement and Plan of Merger (the Merger Agreement).  Pursuant
to the Merger Agreement, BEC and CES will be merged into a new holding company
which has not yet been named (Newco).  Holders of BEC common shares will
receive one share of Newco common stock for each share held while CES common
shareholders will receive 1.05 shares of Newco common stock for each share
held.  Alternatively, current BEC and CES common shareholders have the right
to receive $44.10 of cash for each share held, up to an aggregate maximum of
$300 million.  At the close of the merger, BEC shareholders are expected to
own approximately 68% of Newco common stock and CES shareholders are expected
to own approximately 32%.  The merger is expected to occur shortly after the
satisfaction of certain conditions, including the receipt of certain
regulatory approvals including that of the Massachusetts Department of
Telecommunications and Energy (DTE).  The regulatory approval process is
expected to be completed during the second half of 1999.

The merger will create an energy delivery company serving approximately
1.3 million customers located entirely within Massachusetts, including more
than one million electric customers in 81 communities and 240,000 gas
customers in 51 communities.

The Merger Agreement may be terminated under certain circumstances, including
by any party if the merger is not consummated by December 5, 1999, subject to
an automatic extension of six months if the requisite regulatory approvals
have not yet been obtained by such date.  The merger will be accounted for
using the purchase method of accounting.

Upon effectiveness of the merger, Thomas J. May, BEC's current Chairman,
President and Chief Executive Officer (CEO), will become the Chairman and CEO
of Newco.  Russell D. Wright, CES' current President and CEO, will become the
President and Chief Operating Officer of Newco and will serve on Newco's board
of trustees.  Also, upon the effective date of the merger, Newco's board of
trustees will consist of BEC's and CES' current trustees.

<PAGE> 14
Retail Access

Boston Edison has been anticipating and responding to the changes in the
electric energy business as a result of industry restructuring proceedings at
both federal and state levels.  In January 1998, the DTE approved Boston
Edison's restructuring settlement agreement.  The DTE found that the
settlement agreement substantially complied or was consistent with key
provisions of a Massachusetts law enacted in November 1997 establishing a
comprehensive framework for the restructuring of the electric utility
industry.  Prior to this settlement agreement, retail electric customers
within Boston Edison's service territory received all services related to the
provision of electricity from Boston Edison.  This included the procurement of
the electricity supply (either through purchase contracts or generation) and
the transmission and distribution to customers' facilities.  Major provisions
of the settlement agreement included the ability for retail electric customers
to choose their electricity supplier (referred to as retail access) effective
March 1, 1998 (the retail access date).  Boston Edison will continue to
provide all transmission and distribution of electricity services to all of
its retail customers.  Under its settlement agreement, Boston Edison provides
standard offer service to all customers of record as of the retail access
date.  Customers continuing to buy electricity under the standard offer are
receiving service at rates designed to give 10% savings from the rates in
effect prior to the retail access date.  These standard offer customers will
realize an additional 5% average savings, after an adjustment for inflation,
by September 1, 1999.  Boston Edison expects to be able to meet this
additional rate reduction as a result of the divestiture of the fossil
generating assets which is discussed below.  The proceeds from the divestiture
are being utilized to reduce customer rates.  New retail customers in the
Boston Edison service territory and previously existing customers that are no
longer eligible for the standard offer due to choosing a competitive supplier
are on default service.  The price of default service is intended to reflect
the average competitive market price for power.  As of December 31, 1998, 87%
of customers are receiving standard offer service, while 13% are receiving
default service.  No customers received generation service from competitive
suppliers during 1998.  Refer also to the Electric revenues section for more
information.

Generating Assets Divestiture

The Boston Edison restructuring settlement agreement included a provision for
the divestiture of its fossil generating assets no later than six months after
the retail access date.  On May 15, 1998, Boston Edison completed the sale of
its non-nuclear generating assets to Sithe Energies, Inc. (Sithe).  Boston
Edison received proceeds from the sale of $655 million, including $121 million
for a six-month transitional power purchase contract.  The amount received
above net book value on the sale of these assets is being returned to Boston
Edison's customers over the settlement period.  That amount is partially
offset by the costs to provide standard offer service incurred by Boston
Edison's fossil generating assets prior to the divestiture which are
recoverable under Boston Edison's settlement agreement.

In April 1998, Boston Edison began soliciting expressions of interest for the
sale of its nuclear generating unit, Pilgrim Nuclear Power Station (Pilgrim)
as part of the previously announced strategy to exit the generation business.
On November 19, 1998, Boston Edison announced that Entergy Nuclear Generating
Company (Entergy), a subsidiary of New Orleans-based Entergy Corporation, had
been selected as the winning bidder for Pilgrim.  In the nation's first
competitive bid process for a nuclear power plant, Entergy is expected to
purchase Pilgrim in a deal valued at an estimated $121 million.  In addition,

<PAGE> 15
under the agreement Boston Edison will fully fund and transfer its
decommissioning trust fund to Entergy and Entergy will then assume full
liability and responsibility for decommissioning the Pilgrim site.  A purchase
and sale agreement has been signed and all required approvals are anticipated
in the second quarter of 1999.  The purchase price includes reimbursement for
costs to be expended by Boston Edison in 1999 primarily related to the
refueling and maintenance outage scheduled for May 1999.  Therefore, the
actual proceeds could be impacted by the ultimate timing of the transaction.

As part of a benefits package offered to employees affected by the nuclear
divestiture, eligible non-represented nuclear and designated nuclear support
employees were offered unreduced retirement and transition benefits under a
voluntary early retirement program (VERP).  Sixteen employees elected to
participate in the VERP.  A retention benefit program was offered to all non-
represented nuclear and designated nuclear support employees that did not
elect or were ineligible to retire under the VERP who continue to work through
the sale closing date.  It is anticipated that approximately 300 non-
represented nuclear and designated nuclear support employees will receive one-
time retention payments under this program.  Costs associated with the VERP
and retention program are recoverable under Boston Edison's settlement
agreement.  At December 31, 1998, approximately $24 million in one-time
benefit charges were deferred as a regulatory asset related to the nuclear
divestiture.

For more information on the nuclear divestiture refer to the November 23, 1998
Boston Edison Report on Form 8-K announcing the purchase and sale agreement
with Entergy.

Results of Operations

1998 versus 1997

Net income was $157 million in 1998 compared to $145 million in 1997.  This
increase of 8.8% is described below.

Operating revenues

Operating revenues decreased 8.7% from 1997 as follows:

<TABLE>
<CAPTION>
(in thousands)
------------------------------------------------------
<S>                                          <C>
Retail revenues                              $(148,272)
Wholesale revenues                              (3,721)
Short-term sales and other revenues             (3,566)
------------------------------------------------------
  Decrease in operating revenues             $(155,559)
======================================================
</TABLE>

Retail revenues were $1,375 million in 1998 compared to $1,523 million in
1997, a decrease of $148 million or 10%.  Retail revenues reflect the impact
of the mandated 10% retail rate reduction.  A 2.0% increase in retail
kilowatt-hour (kWh) sales in 1998 partially offset the impact of the rate
reduction.  Retail revenues also reflect a decrease due to the timing effect
of fuel and purchased power cost recovery.  Prior to its cessation as of
March 1, 1998, the fuel clause charge was lower than the prior year as the
1997 charge reflected the recovery of substantial prior year undercollections.
Fuel clause revenues were offset by fuel and purchased power expenses and,
therefore, had no net effect on earnings.

Short-term sales and other revenues were $106 million in 1998 compared to $109
million in 1997, a decrease of $3 million or 3%.  Boston Edison experienced a
$20 million decrease in short-term power sales revenues consistent with an 11%

<PAGE> 16
reduction in short-term kWh sales, primarily as a result of the expiration of
certain short-term sales contracts.  The decrease has no net impact on
earnings as it is offset by a corresponding decrease in fuel and purchased
power expenses.  In addition, the decrease includes a $2 million decrease from
Harbor Electric Energy Company.  These decreases were partially offset by the
recognition of $20 million of revenue related to the support of standard offer
service provided by Boston Edison's fossil generating units prior to
divestiture.

Operating expenses

Fuel and purchased power expense was $568 million in 1998 compared to $679
million in 1997, a decrease of $111 million or 16%.  Fuel expense related to
fossil generation units decreased approximately $161 million.  This decrease
reflects the divestiture of those units in May 1998.  Purchased power expense
increased approximately $94 million, an increase of 26%.  This increase
reflects Boston Edison's purchased power requirements in the absence of its
fossil generating units.  Prior to the retail access date, the fuel and
purchased power clause component of its electric rates allowed Boston Edison
to adjust its rates to fully collect fuel and purchased power costs.  Since
the retail access date, Boston Edison similarly adjusts its electric rates to
fully collect the cost of providing standard offer and default service.  Fuel
and purchased power expense reflects a reduction of approximately $7 million
related to these mechanisms in 1998.  In 1997, fuel and purchased power
expense reflects an increase of approximately $37 million related to these
mechanisms.  Due to the rate adjustment mechanisms, this net reduction in
operating expenses of $44 million had no net impact on earnings.

Operations and maintenance expense was $377 million in 1998 compared to $423
million in 1997, a decrease of $46 million or 11%.  The most significant
driver of this decrease was a $28 million decrease in power production
expenses primarily due to the fossil divestiture in May 1998.  Employee
benefit expenses decreased by approximately $24 million due to lower pension
and other postretirement benefit costs.  These favorable impacts were
partially offset by a $4 million increase in general and administrative
expenses primarily due to spending related to electric industry restructuring
and the year 2000 computer issue.

Depreciation and amortization expense was $192 million in 1998 compared to
$189 million in 1997, an increase of $3 million or 1%.  Depreciation on
distribution utility plant increased approximately $10 million, as Boston
Edison was required to increase this depreciation under the terms of its
settlement agreement.  This increase was partially offset by an $8.7 million
nonrecurring charge recorded in 1997 to reflect the removal of specific
nuclear-related intangible assets from the balance sheet.  These intangible
assets related to costs incurred for plant design and safety studies.  These
studies were superceded by updated studies.

Demand side management (DSM) and renewable energy programs expense was $52
million in 1998 compared to $30 million in 1997, an increase of $22 million or
74%.  This increase reflects an increase in the required spending for DSM
programs in 1998.  In addition, the renewable energy programs expense of $8
million in 1998 is the result of a new state mandate for the funding of
renewable energy that became effective March 1, 1998.  Renewable energy
expenses are collected through a separate rate mechanism and, therefore, have
no net effect on earnings.

<PAGE> 17
Property and other taxes were $84 million in 1998 compared to $106 million in
1997, a decrease of $22 million or 21%.  The decrease is due to a decrease in
municipal property taxes resulting from the fossil divestiture.

Operating income taxes were $100 million in 1998 compared to $94 million in
1997, an increase of $6 million or 7%.  The increase in operating income taxes
is primarily the result of a $4 million reduction in investment tax credit
amortization due to the divestiture of the fossil generating assets.  Refer to
Note C to the Consolidated Financial Statements for more information on income
taxes.

Other income (expense), net

Other expense, net of tax was $2.9 million in 1998 compared to $6.4 million in
1997, a decrease of $3.5 million or 54%.  Prior to the consideration of tax
benefits, other expenses were $20.8 million in 1998 compared to $17.7 million
in 1997, an increase of $3.1 million.  BETG's equity losses in the RCN and
EnergyVision joint ventures were $9.0 million in 1998 compared to $9.2 million
in 1997.  1998 also reflects $23.2 million of costs related to the fossil
divestiture that is offset by the recognition of investment tax credits
disclosed below and $2.6 million of costs associated with the referendum that
sought to repeal the Massachusetts electric industry restructuring law.  These
negative amounts are offset in 1998 by $7.6 million of interest income due to
levels of cash on hand as a result of the proceeds from the fossil
divestiture.  In addition to the other items mentioned, 1997 results reflect a
charge of $12.9 million from the nuclear asset impairment which is discussed
further in Note B to the Consolidated Financial Statements.  Offsetting the
negative impacts in 1997 was $5.0 million of interest income received related
to the favorable outcome of an IRS audit.  Other miscellaneous income was $6.4
million in 1998 and other miscellaneous expense was $0.6 million in 1997.
Income tax benefits related to other expenses were $17.9 million in 1998 and
$11.3 million in 1997.  The 1998 income tax benefit includes $10.9 million
related to the recognition of previously deferred investment tax credits
associated with the fossil generating stations.

Interest charges

Interest charges on long-term debt were $83 million in 1998 compared to $92
million in 1997, a decrease of $9 million or 10%.  The decrease reflects $6
million due to the maturing of $100 million of 5.95% debentures in March 1998
and the cessation of amortization of the associated redemption premiums and $2
million due to the redemption of a $100 million 6.662% bank loan in June 1998.

Short-term interest charges were $8 million in 1998 compared to $15 million in
1997, a decrease of $7 million or 44%.  The decrease is due to the redemption
of Boston Edison's outstanding short-term debt with proceeds from the fossil
divestiture.

Preferred stock dividends

Preferred stock dividends were $9 million in 1998 compared to $13 million in
1997, a decrease of $4 million or 33%.  Preferred stock dividends decreased $1
million as a result of Boston Edison's redemption of 40,000 shares of 7.27%
series cumulative preferred stock in May 1998 and 1997 and the remaining
320,000 shares in July 1998.  An additional $3 million decrease was due to the
redemption of 400,000 shares of 7.75% series cumulative preferred stock in
July 1998 and 400,000 shares of 8.25% series in June 1997.  Refer to Note G to
the Consolidated Financial Statements.

<PAGE> 18
1997 versus 1996

Net income was $145 million in 1997 compared to $142 million in 1996.  This
increase of 2.2% is described below.

Operating revenues

Operating revenues increased 6.6% over 1996 as follows:

<TABLE>
<CAPTION>
(in thousands)
------------------------------------------------------
<S>                                           <C>
Retail revenues                               $ 88,484
Wholesale revenues                                (765)
Short-term sales and other revenues             21,956
------------------------------------------------------
  Increase in operating revenues              $109,675
======================================================
</TABLE>

Retail revenues were $1,523 million in 1997 compared to $1,435 million in
1996, an increase of $88 million or 6%.  Retail base revenues, consistent with
the 0.8% increase in kWh sales in 1997, were $923 million compared to $920
million in 1996.  Increases due to warmer than normal temperatures in June and
July, cooler temperatures in October and December and the stronger local
economy were offset by milder than normal winter conditions during the first
quarter of 1997 and lower industrial sales.  Industrial sales continued to be
adversely affected by the decline in manufacturing activity in the Boston
Edison service territory.  In addition, revenues in 1996 reflect one more day
of sales due to the leap year.  The increase in retail electric revenues is
primarily due to the timing effect of fuel and purchased power cost recovery.
An $88 million increase in fuel and purchased power clause revenues reflects
the recovery of substantial prior year undercollections.  These higher
revenues are offset by higher fuel and purchased power expenses and,
therefore, have no net effect on earnings.  Pilgrim performance revenues,
which varied annually based on the operating performance of Pilgrim Station
prior to the retail access date, decreased $4 million primarily due to a lower
annual capacity factor effective November 1996 reflecting the scheduled
refueling and maintenance outage in the first quarter of 1997.

Short-term sales and other revenues were $109 million in 1997 compared to $87
million in 1996, an increase of $22 million or 25%.  Short-term sales revenues
increased approximately $16 million.  This was due to the continued reduction
in available nuclear energy supply in New England combined with a 42% increase
in fossil generation allowing for increased sales to the power exchange.
Revenues from these short-term sales resulted in a corresponding reduction to
future fuel and purchased power billings to retail customers and, therefore,
had no net effect on earnings.

Operating expenses

Fuel and purchased power expense was $679 million in 1997 compared to $589
million in 1996, an increase of $90 million or 15%.  This increase reflects
$57 million related to the timing effect of fuel and purchased power cost
recovery.  In addition, company fuel expense increased $50 million primarily
due to the increase in fossil generation.  These increases were partially
offset by a $22 million decrease in power exchange purchases.  These fuel and
purchased power expenses are substantially recoverable through fuel and
purchased power revenues.

Operations and maintenance expense was $423 million in both 1997 and 1996.
The $6 million incremental impact associated with service restoration efforts
resulting from the severe snow storm in April 1997 that struck the greater

<PAGE> 19
Boston area offset the impact of lower spending from cost control efforts and
significantly less overhaul activity at the fossil generating units.

Depreciation and amortization expense was $189 million in 1997 compared to
$186 million in 1996, an increase of $3 million or 2%.  An $8.7 million
nonrecurring charge was recorded to depreciation expense in the third quarter
of 1997 to reflect the removal of specific nuclear-related intangible assets
from the balance sheet.  These intangible assets related to costs incurred for
plant design and safety studies.  These studies were superceded by updated
studies.  In 1996 a $5.2 million adjustment was recorded to correct the
accumulated depreciation balance of certain large computer equipment.

Operating income taxes were $94 million in 1997 compared to $88 million in
1996, an increase of $6 million or 6%.  Income taxes increased as a result of
higher net income offset by the impact of the favorable outcome of an Internal
Revenue Service (IRS) appeal received in the third quarter related to
investment tax credits (ITC).  This also resulted in an increase in
unamortized ITC which is being reflected as a reduction to income tax expense
over the life of the related assets.  Refer to Note C to the Consolidated
Financial Statements for more information on income taxes.

Other income (expense), net

Other expense, net was $6 million in 1997 compared to income of $4 million in
1996, a net increase in expense of $10 million.  1997 reflects the charge of
approximately $13 million ($8 million after tax) from the nuclear asset
impairment which is further discussed in Note B to the Consolidated Financial
Statements in addition to BETG equity losses of $9 million ($6 million after
tax).  These decreases were partially offset by approximately $5 million ($3
million after tax) in interest income from the IRS appeal.

Interest charges

Interest charges on long-term debt were $92 million in 1997 compared to $95
million in 1996, a decrease of $3 million or 2%.  The decrease reflects $6
million due to the maturing of $100 million of 5.70% debentures in March 1997
and the cessation of amortization of the associated redemption premiums.  This
was partially offset by a $5 million increase due to the March 1997 issuance
of a $100 million 6.662% bank loan due in 1999.  The decrease also reflects $2
million from the maturity of $100 million of 5 1/8% debentures in March 1996.

Allowance for borrowed funds used during construction (AFUDC), which
represents the financing costs of construction, was $1 million in 1997
compared to $2 million in 1996, a decrease of $1 million or 48%.  AFUDC
decreased primarily due to a lower average construction work in progress
(CWIP) balance in 1997.  The 1996 average CWIP balance included nuclear fuel
purchased in anticipation of Pilgrim Station's scheduled refueling outage in
the first quarter of 1997.

Preferred stock dividends

Preferred stock dividends were $13 million in 1997 compared to $15 million in
1996, a decrease of $2 million or 14%.  The decrease in preferred stock
dividends is the result of the redemption of 20,000 of mandatory and 20,000 of
optional shares of 7.27% series cumulative preferred stock in May 1997 and
400,000 shares of 8.25% series in June 1997.  Refer to Note G to the
Consolidated Financial Statements.

<PAGE> 20
Electric Sales and Revenues

Electric sales

Total kWh sales increased 2.3%.  The 2.0% increase in 1998 retail kWh sales
was primarily due to the positive impact of a continued strong local economy
on commercial customers.  The commercial sector represents approximately 50%
of electric operating revenues.  The Boston area commercial office vacancy
rate is at a 17-year low.  In addition, the Massachusetts employment rate
increased 2.8% over 1997.  These positive impacts associated with the economic
conditions along with warmer than normal summer weather were partially offset
by the mild winter weather conditions in the first quarter of 1998.  Wholesale
sales increased primarily due to a 32% increase in sales to Pilgrim contract
customers.  That increase reflects a 97% capacity factor in 1998, the plant's
highest annual performance ever achieved.  The lower level of sales in 1997
reflected that year's refueling outage.  Short-term sales decreased due to
lower sales to other contract customers.

Retail kWh sales increased 0.8% in 1997.  This was primarily attributable to
the commercial sector.  The commercial increase reflects the impact of a
continued strong economy in the Boston area and very warm temperatures in June
and July and cooler than normal temperatures in the fourth quarter.  Hotel
occupancy rates and non-manufacturing employment continued to increase in
1997.  Residential revenues were also positively impacted by the weather.
These positive impacts were offset by milder winter weather in the first
quarter of 1997 and declines in manufacturing employment affecting the
industrial sector.  In addition, revenues in 1996 reflect one more day of
sales due to the leap year.  Total kWh sales increased 3.1% as a result of the
continued reduction in available nuclear energy supply in New England.  This
reduction, combined with an increase in fossil generation allowed for
increased sales to the power exchange.

Electric revenues

Boston Edison's electric delivery business provides standard offer customers
service at rates designed to give 10% savings from the rates in effect prior
to the retail access date.  As part of the Massachusetts restructuring
legislation enacted in November 1997, these customers will realize an
additional 5% average savings, after an adjustment for inflation, by
September 1, 1999.  Boston Edison expects to meet this additional rate
reduction as a result of the proceeds received from the divestiture of the
fossil generating assets.  All Boston Edison distribution customers must pay a
transition charge as a component of distribution electric rates.  The purpose
of the transition charge is to allow Boston Edison to collect certain costs
from customers which would not be collected in the competitive energy supply
market.  Such costs include the above market costs related to purchased power
contracts and its own generating stations, as well as the cost to decommission
Pilgrim Station.  The plant and regulatory asset balances which will be
recovered through the transition charge until 2009 were approved by the DTE.
The other costs will be reviewed by the DTE on an annual basis.  Under the
settlement agreement, the aggregate amount of the transition charge is reduced
by the net proceeds from fossil divestiture.  The cost of providing standard
offer service, which includes fuel and purchased power costs, is recovered
from customers on a fully reconciling basis.  The price of default service is
intended to reflect the average competitive market price for power.

As part of the settlement agreement, the annual performance adjustment charge
ceased and the cost recovery mechanism for Pilgrim Station changed effective
March 1, 1998.  Approximately 25% of the operations and capital costs,

<PAGE> 21
including a return on investment, continues to be collected under wholesale
contracts with other utilities and municipalities.  Boston Edison's long-term
power sales contracts with the utilities, Commonwealth Electric Company and
Montaup Electric Company, will be terminated upon the closing of the sale of
Pilgrim Station to Entergy.  Boston Edison's contracts with the various
municipalities remain in place.  However, upon the Pilgrim sale closing date,
Boston Edison will purchase power for resale to the municipalities under a
purchase power agreement entered into with Entergy.  Through the sale closing
date, Boston Edison will share 25% of any profit or loss from the sale of
Pilgrim's output with distribution customers through the transition charge.
In addition, Boston Edison will obtain transition payments up to a maximum of
$23 million per year depending on the level of costs incurred for such items
as property taxes, insurance, regulatory fees and security requirements.

Under its settlement agreement, Boston Edison's distribution rates will remain
unchanged through December 31, 2000, subject to a minimum and maximum return
on average common equity (ROE).  The ROE is subject to a floor of 6% and a
ceiling of 11.75%.  If the ROE is below 6%, Boston Edison is authorized to add
a surcharge to distribution rates in order to achieve the 6% floor.  If the
ROE is above 11%, it is required to adjust distribution rates by an amount
necessary to reduce the calculated ROE between 11% and 12.5% by 50%, and a
return above 12.5% by 100%.  No adjustment is made if the ROE is between 6%
and 11%.  The cost of providing transmission service to distribution customers
is recovered on a fully reconciling basis.

Boston Edison filed proposed adjustments to its standard offer and transition
charges with the DTE in November 1998.  The DTE approved these proposed
adjustments to be effective January 1, 1999.  The DTE is continuing to examine
Boston Edison's cost recovery mechanisms.  The rates provide an approximate
12% reduction from inflation-adjusted pre-retail access date rates.

Liquidity

Cash requirements for utility plant expenditures have been met in recent years
with internally generated funds.  These funds are cash flows from operating
activities, adjusted to exclude changes in working capital and the payment of
dividends.  During 1998, 1997 and 1996 internal generation of cash provided
111%, 211% and 177%, respectively of plant expenditures.  Plant expenditures,
excluding nuclear fuel, forecasted for 1999 are $127 million.  This spending
level includes the 1999 portion of business system replacements discussed
below.  Plant expenditures over the next five years are forecasted to be
approximately $490 million.  In addition to plant expenditures, debt and
preferred stock payment requirements are $1.6 million in 1999, $166.6 million
in 2000, $51.6 million in 2001, $1.6 million in 2002 and $151.65 million in
2003.

Boston Edison supplements internally generated funds as needed, primarily
through the issuance of short-term commercial paper and bank borrowings.
Boston Edison has authority from the Federal Energy Regulatory Commission
(FERC) to issue up to $350 million of short-term debt.  Boston Edison has a
$200 million revolving credit agreement with a group of banks as well as other
arrangements with several banks to provide additional short-term credit on an
uncommitted and as available basis.  No amount was outstanding under the
revolving credit agreement as of December 31, 1998.

In December 1998, Boston Edison filed a securitization financing plan with the
DTE.  Under the plan, a special purpose entity (SPE) will be formed as a
wholly owned subsidiary of Boston Edison.  The SPE will pay Boston Edison an

<PAGE> 22
amount equal to the generation-related regulatory assets to be securitized by
issuing debt securities.  A portion of the net proceeds will be used to fund
the nuclear decommissioning trust.  In addition, Boston Edison may also
utilize a portion of the proceeds to reduce capitalization and for general
corporate purposes.  Boston Edison will remit amounts to the SPE as these
amounts are collected from customers through a separate component of the
transition charge over the settlement period.  A DTE order regarding the
securitization plan is expected by the second quarter of 1999.

Refer to Note H to the Consolidated Financial Statements for more information
regarding these debt agreements.

Year 2000 Computer Issue

The year 2000 issue is the result of computer programs that were written using
two digits rather than four to define an applicable year.  If computer
programs with date-sensitive functions are not year 2000 compliant, they may
recognize a date using "00" as the year 1900 rather than the year 2000.  This
could result in system failures or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions and engage in other normal business activities.  BEC has a year
2000 program in place to address the risk of non-compliant internal business
software, internal non-business software and embedded chip technology and
external noncompliance of third parties.

BEC is addressing the year 2000 issue on a coordinated basis.  BEC has
inventoried and assessed all date-sensitive information and transaction
processing computer systems and has determined that approximately one-third of
business critical systems software need modification or replacement.  BEC
defines its business critical systems as those which are necessary for the
delivery of and billing and accounting for electricity to its customers.
Plans have been developed and are being implemented to correct and test all
affected systems, with priorities assigned based on the importance of the
supported activity.  As systems are being remediated or replaced, they are
tested for operational and year 2000 compliance in their own environment.
After completion of implementation, the systems are then tested for their
integration and compliance with other interactive systems.  Management
estimates that approximately 70% of the efforts necessary to implement and
test its critical computer systems to alleviate the year 2000 issue are
complete and expects to complete all efforts by the end of the second quarter
of 1999.  In addition, all other non-critical systems have been inventoried
and assessed.  Approximately one-third of these systems require modification
or replacement.  Under the year 2000 plan, each non-critical system has a form
of readiness acceptance commensurate with its business importance.  The more
important and complex systems are being tested as a means of acceptance.  Less
important and non-complex systems may refer to industry test results, vendor
test results and/or vendor statements of readiness as a means of acceptance.
Management expects to complete the remediation, replacement and testing of at
least 95% of its non-critical computer systems by the end of the second
quarter of 1999.  All non-critical systems are scheduled for completion by the
third quarter of 1999.

BEC has also inventoried its non-information technology systems that may be
date-sensitive and that use embedded technology such as micro-controllers or
micro-processors.  Approximately 27% of these systems require modification or
replacement.  The three categories of these systems are (1)
telecommunications, (2) distribution system controls and (3) other
distribution equipment.  BEC is 55%, 30% and 80% complete, respectively, with
its efforts to resolve and remediate the systems that have been identified as

<PAGE> 23
year 2000 non-compliant within each category.  BEC expects completion of
resolution and testing by the end of the second quarter of 1999.

Costs incurred to remediate non-compliant systems are expensed as incurred.
In addition, a decision has been made to use this opportunity to upgrade some
of BEC's inefficient centralized business systems.  Systems' replacement costs
will be capitalized and amortized over future periods.  BEC expects the
modification and testing of its information and transaction processing systems
to cost $32 million.  BEC has expended $19 million on this project through
December 31, 1998.  BEC has funded and plans on continuing to fund all costs
related to year 2000 with internally generated cash flows.

In addition to its internal efforts, BEC has initiated formal communications
with its significant suppliers, service providers and other vendors to
determine the extent to which BEC may be vulnerable to their failure to
correct their own year 2000 issues.  BEC has received responses from over 500
third party vendors including all business critical vendors.  Approximately
40% of the vendors indicated their systems would not be adversely impacted by
year 2000 issues.  All of the vendors contacted have indicated that they will
be year 2000 compliant by the end of the fourth quarter of 1999.  In addition,
BEC has contacted all of its significant power suppliers.  Each has indicated
that they either are or will be year 2000 compliant by the end of the fourth
quarter of 1999.  In addition to the risk faced from its dependence on third
party suppliers for year 2000 compliance, BEC has a risk that power will not
be available from the New England Power Pool (NEPOOL) for the purchase and
distribution to Boston Edison's customers.  Should NEPOOL fail to resolve its
year 2000 issues as planned, there would be an adverse impact on Boston Edison
and its customers.  To mitigate this risk, efforts are being coordinated with
NEPOOL to establish inter-utility testing guidelines to determine year 2000
readiness.  Boston Edison is also a participant in the NEPOOL/ISO New England
Year 2000 Joint Oversight Committee which has responsibility for the
operational reliability of NEPOOL.  Overall regional activities, including
those of NEPOOL/ISO New England, will be coordinated by the Northeast Power
Coordinating Council, whose activities will be incorporated into the
interregional coordinating effort by the North American Electric Reliability
Council.  The target for the completion of this effort is mid-1999.

In addition, parts of the global infrastructure, including national banking
systems, electrical power grids, gas pipelines, transportation facilities,
communications and government activities, may not be fully functional after
1999 due to the year 2000 issue.  Infrastructure failures could significantly
reduce BEC's ability to acquire energy and its ability to serve its customers
as effectively as they are now being served.

BEC believes that its efforts to address the year 2000 issue will allow it to
successfully avoid any material adverse effect on its operations or financial
condition.  However, it recognizes that failing to resolve year 2000 issues on
a timely basis would, in a most reasonable worst case scenario, significantly
limit its ability to acquire and distribute energy or process its daily
business transactions for a period of time, especially if such failure is
coupled with third party or infrastructure failures.  Similarly, BEC could be
significantly affected by the failure of one or more significant suppliers,
customers or components of the infrastructure to conduct their respective
operations normally after 1999.  Adverse effects on BEC could include, among
other things, business disruption, increased costs, loss of business and other
similar risks.

BEC's year 2000 program includes contingency plans.  If required, these plans
are intended to address both internal risks as well as potential external
risks related to vendors, customers and energy suppliers.  Plans have been

<PAGE> 24
developed in conjunction with available national and regional guidance and are
based on system emergency plans that were developed and successfully tested
over the past several years.  Included within its contingency plans are
procedures for the procurement of short-term power supplies and emergency
distribution system restoration procedures.  The contract with ISO New England
requires that ISO New England dispatch at all times sufficient resources to
meet total New England load requirements.  ISO New England has the
responsibility and authority to dispatch all regional generation sources
including maintaining sufficient operating reserves to respond to
unanticipated system conditions.  ISO New England, in conjunction with the New
England Power Pool has an extensive year 2000 readiness program underway to
ensure that it will have sufficient generation and transmission resources to
reliably serve load.  In addition, ISO New England plans to increase its
operating reserves during the early year 2000 period from approximately 15% to
40%.

The foregoing discussion regarding year 2000 project timing, effectiveness,
implementation and costs includes forward-looking statements that are based on
management's current evaluation using available information.  Factors that
might cause material changes include, but are not limited to, the availability
of key year 2000 personnel, the readiness of third parties and BEC's ability
to respond to unforeseen year 2000 complications.

Other Matters

Environmental

Boston Edison is an owner or operator of approximately 20 properties where oil
or hazardous materials were spilled or released.  Boston Edison also continues
to face possible liability as a potentially responsible party in the cleanup
of five multi-party hazardous waste sites in Massachusetts and other states
where it is alleged to have generated, transported or disposed of hazardous
waste at the sites.  Refer to Note K.4. to the Consolidated Financial
Statements for more information regarding hazardous waste issues.

Uncertainties continue to exist with respect to the disposal of both spent
nuclear fuel and low-level radioactive waste resulting from the operation of
nuclear generating facilities. The United States Department of Energy (DOE) is
responsible for the ultimate disposal of spent nuclear fuel.  However,
uncertainties regarding the DOE's schedule of acceptance of spent fuel for
disposal continue to exist.  Under the purchase and sale agreement with
Entergy, Entergy will assume full liability and responsibility for
decommissioning and waste disposal at Pilgrim Station.  Refer to Note D to the
Consolidated Financial Statements for further discussion regarding nuclear
decommissioning and waste disposal.

Public concern continues regarding electromagnetic fields (EMF) associated
with electric transmission and distribution facilities and appliances and
wiring in buildings and homes.  Such concerns have included the possibility of
adverse health effects caused by EMF as well as perceived effects on property
values.  Some scientific reviews conducted to date have suggested associations
between EMF and potential health effects, while other studies have not
substantiated such associations.  The National Research Council previously
reported that there is no conclusive evidence that exposure to EMF from power
lines and appliances presents a health hazard.  The panel of scientists,
working with the National Academy of Sciences, report that more than 500
studies over the last several years have produced no proof that EMF causes
leukemia or other cancers or harms human health in other ways.  Boston Edison
continues to support research into the subject and participates in the funding

<PAGE> 25
of industry-sponsored studies.  It is aware that public concern regarding EMF
in some cases has resulted in litigation, in opposition to existing or
proposed facilities in proceedings before regulators or in requests for
legislation or regulatory standards concerning EMF levels.  It has addressed
issues relative to EMF in various legal and regulatory proceedings and in
discussions with customers and other concerned persons; however, to date it
has not been significantly affected by these developments.  Boston Edison
continues to monitor all aspects of the EMF issue.

Industry and corporate restructuring legal proceedings

The DTE order approving the Boston Edison settlement agreement and the DTE
order approving the formation of BEC as a holding company were appealed by
certain parties to the Massachusetts Supreme Judicial Court (SJC).  In
December 1998, the SJC dismissed the appeal of the order approving the holding
company formation.  One settlement agreement appeal remains pending, however
there has to date been no briefing, hearing or other action taken with respect
to this proceeding.

In addition, along with other Massachusetts investor-owned utilities, Boston
Edison has been named as a defendant in a class action suit seeking to declare
certain provisions of the Massachusetts electric industry restructuring
legislation unconstitutional.

Management is currently unable to determine the outcome of these outstanding
proceedings however, if an unfavorable outcome were to occur, there could be a
material adverse impact on business operations, the consolidated financial
position or results of operations for a reporting period.

Regulatory proceedings

In October 1997, the DTE opened a proceeding to investigate Boston Edison's
compliance with the 1993 order which permitted the formation of BETG and
authorized Boston Edison to invest up to $45 million in unregulated
activities.  Hearings began in the fourth quarter of 1998 and are expected to
be completed in the first half of 1999.

Each of the Reading Municipal Light Department, the Littleton Electric Light
Department and the West Boylston Municipal Light Department have filed
separate claims for arbitration in Massachusetts alleging that the proposed
transfer of Pilgrim Station constitutes a breach of their respective power
sale agreements and seeking to terminate those agreements.  The remaining
municipal light departments have also indicated that they plan to file similar
claims for arbitration.  Boston Edison has requested the FERC to exercise its
pre-emptive authority to consider the claims of the municipal light
departments.  In the event that either the FERC determines, or as a result of
the arbitrations, that the contracts should be terminated, Boston Edison would
continue to be obligated to purchase power from Entergy that it intended to
resell to the municipal light departments.  Boston Edison may not be able to
resell such power in the short-term power exchange at a price equal to or
greater than the price it is required to pay to Entergy.  However, Boston
Edison has filed at the DTE for recovery of any such shortfall as part of its
Pilgrim divestiture filing through the transition charge.

Management is currently unable to determine the outcome of these proceedings
however, if an unfavorable outcome were to occur, there could be a material
adverse impact on business operations, the consolidated financial position or
results of operations for a reporting period.

<PAGE> 26
Other litigation

In October 1998, the town of Plymouth, Massachusetts, the site of Pilgrim
Station, filed suit against Boston Edison.  The town claims that Boston Edison
has wrongfully failed to execute an agreement with the town for payments in
addition to taxes due to the town under the Massachusetts electric industry
restructuring legislation.  Boston Edison has disputed the town's claim and
will vigorously defend itself.  In addition to this pending litigation, Boston
Edison and the town of Plymouth are also parties in proceedings before the
Appellate Tax Board and the DTE concerning substantially the same dispute.
Management is unable to determine the ultimate outcome of these proceedings
however, if an unfavorable outcome were to occur, there could be a material
adverse impact on business operations, the consolidated financial position or
results of operations for a reporting period.

In the normal course of its business Boston Edison is also involved in certain
other legal matters.  Management is unable to fully determine a range of
reasonably possible legal costs in excess of amounts accrued.  Based on the
information currently available, it does not believe that it is probable that
any such additional costs will have a material impact on its consolidated
financial position.  However, it is reasonably possible that additional legal
costs that may result from a change in estimates could have a material impact
on the results of a reporting period in the near term.

Refer to Note K.6. to the Consolidated Financial Statements for more
information on legal matters.

Interest rate risk

Boston Edison is exposed to changes in interest rates.  Carrying amounts and
fair values of mandatory redeemable cumulative preferred stock, sewage
facility revenue bonds and unsecured debt as of December 31, 1998, are as
follows:

<TABLE>
<CAPTION>
                                       Carrying       Fair   Weighted average
(in thousands)                           amount      value      interest rate
-----------------------------------------------------------------------------
<S>                                    <C>        <C>                   <C>
Mandatory redeemable cumulative
 preferred stock                        $49,040    $54,190              8.00%
Sewage facility revenue bonds           $30,900    $33,914              7.32%
Unsecured debt                         $930,000   $994,294              7.79%
</TABLE>

Safe harbor cautionary statement

Management occasionally makes forward-looking statements such as forecasts and
projections of expected future performance or statements of its plans and
objectives.  These forward-looking statements may be contained in filings with
the SEC, press releases and oral statements.  Actual results could potentially
differ materially from these statements.  Therefore, no assurances can be
given that the outcomes stated in such forward-looking statements and
estimates will be achieved.

The preceding sections include certain forward-looking statements about BEC's
merger with CES, the divestiture of nuclear generating assets, operating
results, year 2000 and environmental and legal issues.

The merger with CES could differ from current expectations.  This could occur
if the requisite approvals are delayed or not obtained.

<PAGE> 27
The nuclear divestiture plan could differ from current expectations.  The
timing and a final closing of the sale may differ from management's
expectations if required approvals are delayed or not obtained.

The impacts of continued cost control procedures on operating results could
differ from current expectations.  The effects of changes in economic
conditions, tax rates, interest rates, technology and the prices and
availability of operating supplies could materially affect the projected
operating results.

The timing and total costs related to the year 2000 plan could differ from
current expectations.  Factors that may cause such differences include the
ability to locate and correct all relevant computer codes and the availability
of personnel trained in this area.  In addition, management cannot predict the
nature or impact on operations of third party noncompliance.

The impacts of various environmental and legal issues could differ from
current expectations.  New regulations or changes to existing regulations
could impose additional operating requirements or liabilities other than
expected.  The effects of changes in specific hazardous waste site conditions
and cleanup technology could affect the estimated cleanup liabilities.  The
impacts of changes in available information and circumstances regarding legal
issues could affect the estimated litigation costs.

<PAGE> 28
Item 8.  Financial Statements and Supplementary Financial Information
---------------------------------------------------------------------

<TABLE>
Consolidated Statements of Income
<CAPTION>
                                                   years ended December 31,
(in thousands)                                 1998        1997        1996
---------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>
Operating revenues                       $1,622,972  $1,778,531  $1,668,856
---------------------------------------------------------------------------

Operating expenses:
     Fuel and purchased power               567,806     679,131     588,893
     Operations and maintenance             377,316     423,040     422,642
     Depreciation and amortization          191,704     189,489     186,117
     Demand side management and
      renewable energy programs              51,839      29,790      30,825
     Taxes-property and other                84,091     106,428     107,086
     Income taxes                           100,492      93,709      88,313
---------------------------------------------------------------------------
      Total operating expenses            1,373,248   1,521,587   1,423,876
---------------------------------------------------------------------------

Operating income                            249,724     256,944     244,980

Other income (expense), net                  (2,941)     (6,392)      3,741
---------------------------------------------------------------------------
Operating and other income                  246,783     250,552     248,721
---------------------------------------------------------------------------

Interest charges:
     Long-term debt                          82,951      92,489      94,823
     Other                                    8,163      14,610      14,644
     Allowance for borrowed funds used
      during construction                    (1,668)     (1,189)     (2,292)
---------------------------------------------------------------------------
      Total interest charges                 89,446     105,910     107,175
---------------------------------------------------------------------------

Net income                               $  157,337  $  144,642  $  141,546
===========================================================================
</TABLE>

<TABLE>
Consolidated Statements of Retained Earnings
<CAPTION>
                                                   years ended December 31,
(in thousands)                                 1998        1997        1996
---------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>
Balance at the beginning of the year     $  328,802  $  292,191  $  257,749
     Net income                             157,337     144,642     141,546
---------------------------------------------------------------------------
      Subtotal                              486,139     436,833     399,295
---------------------------------------------------------------------------
Dividends declared:
     Dividends to common shareholders        22,802      91,208      90,834
     Dividends to BEC Energy                141,000           0           0
     Preferred stock                          8,765      13,149      15,365
     Transfer of BETG to BEC Energy           8,392           0           0
---------------------------------------------------------------------------
      Subtotal                              180,959     104,357     106,199
---------------------------------------------------------------------------
Provision for preferred stock
 redemption and issuance costs (a)            7,833       3,674         905
---------------------------------------------------------------------------
Balance at the end of the year           $  297,347  $  328,802  $  292,191
===========================================================================

<FN>
(a)  Refer to Note A.7. to the Consolidated Financial Statements.
</TABLE>

Per share data is not relevant because Boston Edison Company's common stock is
wholly owned by BEC Energy.

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE> 29
<TABLE>
Consolidated Balance Sheets
<CAPTION>
                                                                  December 31,
(in thousands)                                     1998                   1997
------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>
Assets
Utility plant in service, at
 original cost                     $2,720,681            $4,457,831
  Less: accumulated depreciation      926,020 $1,794,661  1,713,067 $2,744,764
------------------------------------------------------------------------------
Generation-related regulatory
 asset, net                                      366,336                     0
Nuclear fuel, net                                 68,706                67,935
Construction work in progress                     40,965                33,291
------------------------------------------------------------------------------
  Net utility plant                            2,270,668             2,845,990
Nonutility property                                    0                 8,137
Nuclear decommissioning trust                    172,908               151,634
Equity investments                                20,769                35,455
Other investments                                 10,029                 7,107
Current assets:
  Cash and cash equivalents            92,563                 4,140
  Accounts receivable                 206,003               207,093
  Accrued unbilled revenues            14,322                30,048
  Fuel, materials and supplies,
   at average cost                     15,030                60,834
  Prepaids and other                  102,404    430,322     31,283    333,398
------------------------------------------------------------------------------
Deferred debits:
  Regulatory assets                              167,642               195,370
  Other                                           32,140                45,256
------------------------------------------------------------------------------
   Total assets                               $3,104,478            $3,622,347
==============================================================================

Capitalization and Liabilities
Common equity                                 $1,039,891            $1,073,454
Cumulative preferred stock                        92,040               161,093
Long-term debt                                   955,563             1,057,076
Current liabilities:
  Long-term debt/preferred
   stock due within one year       $      667            $  102,667
  Notes payable                             0               137,013
  Accounts payable                    100,753                87,015
  Accrued interest                     19,991                24,289
  Dividends payable                    25,993                24,748
  Other                               176,823    324,227    128,061    503,793
------------------------------------------------------------------------------
Deferred credits:
  Accumulated deferred income taxes              348,557               485,738
  Accumulated deferred investment
   tax credits                                    45,930                60,736
  Nuclear decommissioning liability              176,578               155,182
  Power contracts                                 58,415                71,445
  Other                                           63,277                53,830
Commitments and contingencies
------------------------------------------------------------------------------
   Total capitalization and liabilities       $3,104,478            $3,622,347
==============================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE> 30
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
                                                     years ended December 31,
(in thousands)                                       1998      1997      1996
-----------------------------------------------------------------------------
<S>                                              <C>       <C>       <C>
Operating activities:
  Net income                                     $157,337  $144,642  $141,546
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                 229,668   223,529   228,259
    Deferred income taxes and investment tax
     credits                                     (152,798)  (21,664)   (4,057)
    Allowance for borrowed funds used during
     construction                                  (1,668)   (1,189)   (2,292)
  Net changes in:
    Accounts receivable and accrued
     unbilled revenues                             29,666    45,678   (11,719)
    Fuel, materials and supplies                   29,834    (5,486)   (2,171)
    Accounts payable                               19,697   (47,068)      609
    Other current assets and liabilities          (25,525)   25,428   (44,514)
    Other, net                                     (7,517)   (4,640)   50,815
-----------------------------------------------------------------------------
Net cash provided by operating activities         278,694   359,230   356,476
-----------------------------------------------------------------------------
Investing activities:
  Plant expenditures (excluding AFUDC)           (117,803) (114,110) (145,347)
  Proceeds from sale of fossil assets             533,633         0         0
  Nuclear fuel expenditures                       (26,182)   (4,089)  (52,967)
  Investments                                     (33,600)  (27,689)  (34,314)
-----------------------------------------------------------------------------
Net cash provided by (used in) investing
 activities                                       356,048  (145,888) (232,628)
-----------------------------------------------------------------------------
Financing activities:
  Issuances:
   Common stock                                         0       144    12,559
   Long-term debt                                       0   100,000         0
  Redemptions:
   Preferred stock                                (71,519)  (44,000)   (4,000)
   Long-term debt                                (201,600) (101,600) (101,600)
  Net change in notes payable                    (101,878)  (64,441)   75,013
  Dividends paid                                 (171,322) (104,956) (106,010)
-----------------------------------------------------------------------------
Net cash used in financing activities            (546,319) (214,853) (124,038)
-----------------------------------------------------------------------------
Net increase (decrease) in cash and cash
 equivalents                                       88,423    (1,511)     (190)
Cash and cash equivalents at the
 beginning of the year                              4,140     5,651     5,841
-----------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 92,563  $  4,140  $  5,651
=============================================================================

Supplemental disclosures of cash flow information:

Cash paid during the year for:
  Interest, net of amounts capitalized           $ 89,531  $100,795  $100,810
  Income taxes                                   $ 79,900  $ 99,326  $ 98,668
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

<PAGE> 31
Notes to Consolidated Financial Statements

Note A. Summary of Significant Accounting Policies

1.  Nature of Operations

Boston Edison Company (Boston Edison) received final approval of its
reorganization plan to form a holding company structure from the Securities
and Exchange Commission (SEC) in May 1998.  Effective May 20, 1998 the holding
company, BEC Energy (BEC), was formed with Boston Edison as a wholly owned
subsidiary of BEC.

Within its newly restructured industry, BEC has announced its intention to
focus its utility operations on the transmission and distribution of energy.
The sale of Boston Edison's fossil generating assets to Sithe Energies, Inc.
(Sithe) was completed in May 1998.  In November 1998, Boston  Edison signed an
agreement with Entergy Nuclear Generating Company (Entergy) to sell its wholly
owned nuclear generating unit, Pilgrim Nuclear Power Station (Pilgrim).  BEC
signed a merger agreement with Commonwealth Energy System (CES) in December
1998 that will create an energy delivery company serving approximately 1.3
million customers located entirely within Massachusetts, including more than
one million electric customers in 81 communities and 240,000 gas customers in
51 communities.

Boston Edison currently supplies electricity at retail to an area of 590
square miles, including the city of Boston and 39 surrounding cities and
towns.  It also supplies electricity at wholesale for resale to other
utilities and municipalities.  Electric operating revenues are approximately
90% retail and 10% wholesale.

2.  Basis of Consolidation and Accounting

Under the new holding company structure the owners of Boston Edison's common
stock became BEC common shareholders.  Existing debt and preferred stock of
Boston Edison remained obligations of the regulated utility business.
Effective June 25, 1998, BETG ceased being a subsidiary of Boston Edison and
became a wholly owned subsidiary of BEC.  The accompanying consolidated
financial statements include the results of operations and cash flows of BETG
prior to the reorganization.  BETG is excluded from the consolidated results
of operations and cash flows beginning in the third quarter of 1998.  The
consolidated balance sheet at December 31, 1997 reflects the financial
position of Boston Edison which also included BETG.  BETG is excluded from the
consolidated balance sheet at December 31, 1998.  The consolidated financial
statements for each period presented include the activities of Boston Edison's
wholly owned subsidiary, Harbor Electric Energy Company (HEEC).  All
significant intercompany transactions have been eliminated.  Certain
reclassifications have been made to the prior year data to conform with the
current presentation.

Boston Edison follows accounting policies prescribed by the Federal Energy
Regulatory Commission (FERC) and the Massachusetts Department of
Telecommunications and Energy (DTE).  In addition, Boston Edison is subject to
the accounting and reporting requirements of the SEC.  The consolidated
financial statements conform with generally accepted accounting principles
(GAAP).  As a rate-regulated company Boston Edison has been subject to
Statement of Financial Accounting Standards No. 71, Accounting for the Effects
of Certain Types of Regulation (SFAS 71), under GAAP.  The application of SFAS
71 results in differences in the timing of recognition of certain expenses
from that of other businesses and industries.  As a result of the

<PAGE> 32
Massachusetts electric industry restructuring legislation enacted in November
1997 and the DTE order regarding the related Boston Edison settlement
agreement, as of December 31, 1997, the provisions of SFAS 71 are no longer
being applied to the generation business.  The distribution business remains
subject to rate-regulation and continues to meet the criteria for application
of SFAS 71.  Refer to Note B to these Consolidated Financial Statements for
more information on the accounting implications of the electric utility
industry restructuring.

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.  Actual results could differ from
these estimates.

3.  Revenues

Estimates of retail base (transmission and distribution) revenues for
electricity used by customers but not yet billed are recorded at the end of
each accounting period.

4.  Utility Plant

Utility plant is stated at original cost of construction.  The costs of
replacements of property units are capitalized.  Maintenance and repairs and
replacements of minor items are expensed as incurred.  The original cost of
property retired, net of salvage value, and the related costs of removal are
charged to accumulated depreciation.

5.  Depreciation and Nuclear Fuel Amortization

Depreciation of utility plant is computed on a straight-line basis using
composite rates based on the estimated useful lives of the various classes of
property.  Excluding the effect of the adjustment discussed below, the overall
composite depreciation rates were 3.28%, 3.30% and 3.33% in 1998, 1997 and
1996, respectively.

Upon the completion of a review of Boston Edison's electric generating units,
management determined that the oldest and least efficient fossil units (Mystic
4, 5 and 6) were unlikely to provide competitively-priced power beyond the
year 2000.  Therefore the estimated remaining economic lives of these units
was revised to five years in 1996.  These units were sold in May 1998.  Refer
to Note B to these Consolidated Financial Statements.

The cost of decommissioning Pilgrim Station is excluded from depreciation
rates.  Refer to Note D to these Consolidated Financial Statements for a
discussion of nuclear decommissioning.  The cost of nuclear fuel is amortized
based on the amount of energy Pilgrim Station generates.  Nuclear fuel expense
also includes an amount for the estimated costs of ultimately disposing of
spent nuclear fuel and for assessments for the decontamination and
decommissioning of United States Department of Energy nuclear enrichment
facilities.

6.  Deferred Nuclear Outage Costs

The incremental costs associated with nuclear refueling and maintenance
outages are deferred when incurred and amortized over Pilgrim Station's two-
year operating cycle.

<PAGE> 33
7.  Costs Associated with Issuance and Redemption of Debt and Preferred Stock

Consistent with the recovery in electric rates, discounts, redemption premiums
and related costs associated with the issuance and redemption of long-term
debt and preferred stock are deferred.  The costs related to long-term debt
are recognized as an addition to interest expense over the life of the
original or replacement debt.  Beginning in 1996, consistent with an
accounting order received from the FERC, costs related to preferred stock
issuances and redemptions are reflected as a direct reduction to retained
earnings upon redemption or over the average life of the replacement preferred
stock series as applicable.

8.  Allowance for Borrowed Funds Used During Construction (AFUDC)

AFUDC represents the estimated costs to finance utility plant construction.
In accordance with regulatory accounting, AFUDC is included as a cost of
utility plant and a reduction of current interest charges.  Although AFUDC is
not a current source of cash income, the costs are recovered from customers
over the service life of the related plant in the form of increased revenues
collected as a result of higher depreciation expense.  AFUDC rates in 1998,
1997 and 1996 were 5.88%, 6.04% and 5.87%, respectively, and represented only
the cost of short-term debt.

9.  Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid securities with
maturities of 90 days or less when purchased.  Boston Edison's banking
arrangement does not require it to fund checks until they are presented for
payment.  Therefore, outstanding checks are included in cash and accounts
payable until presented for payment.

10.  Allowance for Doubtful Accounts

Accounts receivable are substantially recoverable.  This recovery occurs both
from customer payments and from the portion of customer charges that provides
for the recovery of bad debt expense.  Accordingly, a significant allowance
for doubtful accounts balance has not been maintained.

11.  Regulatory Assets

Regulatory assets represent costs incurred which are expected to be collected
from customers through future charges in accordance with agreements with
regulators.  These costs are expensed when the corresponding revenues are
received in order to appropriately match revenues and expenses.  The majority
of these costs is currently being recovered from customers over varying time
periods.  Refer to Note B to these Consolidated Financial Statements for
information regarding the recovery of regulatory assets related to the
generation business.

<PAGE> 34
Regulatory assets consisted of the following:

<TABLE>
<CAPTION>
                                                        December 31,
                                             1998               1997
--------------------------------------------------------------------
<S>                                      <C>                <C>
Power contracts                          $ 58,415           $ 71,445
Income taxes, net                          52,168             51,096
Redemption premiums                        23,419             27,019
Postretirement benefits costs              21,592             22,441
Decontamination and decommissioning        11,351             12,282
Other                                         697             11,087
--------------------------------------------------------------------
                                         $167,642           $195,370
====================================================================
</TABLE>

12.  Related Party Transactions

The December 31, 1998 consolidated balance sheet of Boston Edison includes a
$20 million receivable from BETG's wholly owned subsidiary, BECoCom.  The
receivable is for construction and construction management services provided
by Boston Edison and its contractors.

Note B. Electric Utility Industry Restructuring

1.  Accounting Implications

Under the traditional revenue requirements model, electric rates have been
based on the cost of providing electric service.  Under this model, Boston
Edison has been subject to certain accounting standards that are not
applicable to other businesses and industries in general.  The application of
SFAS 71 requires companies to defer the recognition of certain costs when
incurred if future rate recovery of these costs is expected.  As a result of
the Massachusetts electric industry restructuring legislation enacted in
November 1997 and the DTE order regarding Boston Edison's related settlement
agreement, as of December 31, 1997, the provisions of SFAS 71 are no longer
being applied to the generation business.  Under the settlement agreement,
approximately 75% of the net assets of Pilgrim Station are recoverable through
the non-bypassable transition charge of the utility's distribution business.
The distribution business continues to be subject to rate-regulation.  The
remaining 25% is collected under Pilgrim's wholesale power contracts.  The
1998 consolidated balance sheet reflects a reclassification of the Pilgrim net
assets recoverable through the transition charge from utility plant to
regulatory asset.  This Pilgrim regulatory asset, included in the generation-
related regulatory asset on the consolidated balance sheet continues to be
grouped with utility plant for financial statement presentation.

Completion of the sale of Boston Edison's fossil generating assets took place
in May 1998.  Boston Edison received proceeds from the sale of $655 million,
including $121 million for a six-month transitional power purchase contract.
The amount received above net book value on the sale of these assets is being
returned to Boston Edison's customers over the settlement period.  That amount
is partially offset by certain costs recoverable through the transition charge
due to the support of standard offer service provided by Boston Edison's
fossil generating assets prior to the divestiture.  The net deferred gain is
included as a reduction to the generation-related regulatory asset on the 1998
consolidated balance sheet.  In addition, Boston Edison received $19 million
from Sithe for inventory and other closing adjustments.

The implementation of the Boston Edison settlement agreement had certain
accounting implications.  The highlights of these include:

<PAGE> 35
Generation-related plant and other regulatory assets

Plant and other regulatory assets related to the generation business, except
for those related to Pilgrim's wholesale contracts, are recovered through the
transition charge.  This recovery, which includes a return, will occur over a
twelve-year period that began on March 1, 1998 (the retail access date).

Depreciation

The composite depreciation rate for distribution utility plant increased from
2.38% to 2.98% as of the retail access date.

Fuel and purchased power charge

The fuel and purchased power charge ceased as of the retail access date.  The
net remaining overcollection of fuel and purchased power costs will be
reflected in future customer billings.  These over recovered costs are
included as an offset to the settlement recovery mechanisms on the 1998
consolidated balance sheet.

Standard offer charge

Customers have the option of continuing to buy power from the electric
delivery business at standard offer prices as of the retail access date.  The
standard offer charge began at 2.8 cents/kWh at the retail access date,
increased to 3.2 cents/kWh on June 1, 1998, to 3.69 cents/kWh on January 1,
1999 and is scheduled to increase to 5.1 cents/kWh by 2004.  The cost of
providing standard offer service, which includes fuel and purchased power
costs, is recovered from standard offer customers on a fully reconciling
basis.

Distribution and transmission charges

Distribution rates are subject to a minimum and maximum return on average
common equity (ROE) through December 31, 2000.  The ROE is subject to a floor
of 6% and a ceiling of 11.75%.  If the ROE is below 6%, Boston Edison is
authorized to add a surcharge to distribution rates in order to achieve the 6%
floor.  If the ROE is above 11%, it is required to adjust distribution rates
by an amount necessary to reduce the calculated ROE between 11% and 12.5% by
50%, and a return above 12.5% by 100%.  No adjustment is made if the ROE is
between 6% and 11%.  In addition, distribution rates will be adjusted for any
changes in tax laws or accounting principles that result in a change in costs
of more than $1 million.  The cost of providing transmission service to
distribution customers is recovered on a fully reconciling basis.

Nuclear generation

Under the settlement agreement, the annual performance adjustment charge
ceased and the cost recovery mechanism for Pilgrim Station changed effective
March 1, 1998.  Approximately 25% of the operations and capital costs,
including a return on investment, continues to be collected under Pilgrim's
wholesale contracts.  Through Pilgrim's sale closing date, 25% of any profit
or loss from the sale of Pilgrim's output will be shared with distribution
customers through the transition charge.  In addition, Boston Edison will
obtain transition payments up to a maximum of $23 million per year depending
on the level of costs incurred for such items as property taxes, insurance,
regulatory fees and security requirements.

<PAGE> 36
2.  Generating Assets Divestiture

The Boston Edison restructuring settlement agreement included a provision for
the divestiture of its fossil generating assets no later than six months after
the retail access date.  In December 1997, Boston Edison entered into a
purchase and sale agreement with Sithe Energies, a privately-held company
headquartered in New York, to purchase these non-nuclear generating assets.
The sale of these assets was finalized on May 15, 1998.

In April 1998, Boston Edison began soliciting expressions of interest for the
sale of its nuclear generating unit, Pilgrim Station as part of the previously
announced strategy to exit the generation business.  On November 19, 1998,
Boston Edison announced the selection of Entergy, a subsidiary of New Orleans-
based Entergy Corporation, as the winning bidder for the purchase of Pilgrim.
Entergy is expected to purchase Pilgrim in a deal valued at an estimated $121
million.  In addition, under the agreement Boston Edison will fully fund and
transfer its decommissioning trust fund to Entergy and Entergy will then
assume full liability and responsibility for decommissioning the Pilgrim site.
A purchase and sale agreement has been signed and all required approvals are
anticipated in the second quarter of 1999.  The purchase price includes
reimbursement for certain costs to be expended by Boston Edison in 1999.
Therefore, the actual proceeds could be impacted by the ultimate timing of the
transaction.

As part of a benefits package offered to employees affected by the nuclear
divestiture, eligible non-represented nuclear and designated nuclear support
employees were offered unreduced retirement and transition benefits under a
voluntary early retirement program (VERP).  Sixteen employees elected to
participate in the VERP.  A retention benefit program was offered to all non-
represented nuclear and designated nuclear support employees that did not
elect or were ineligible to retire under the VERP who continue to work through
the sale closing date.  It is anticipated that approximately 300 non-
represented nuclear and designated nuclear employees will receive one-time
retention payments under this program.  Costs associated with the VERP and
retention program are recoverable under Boston Edison's settlement agreement.

3.  Nuclear Asset Impairment

As part of the settlement agreement, the net investment in Pilgrim Station as
of December 31, 1995 (adjusted for depreciation through 1997) is recovered
through the distribution transition charge.  Due to the market pressures in
the industry, the ultimate recovery of investments made in Pilgrim since 1995
is not certain.  Therefore, in 1997 the investment in Pilgrim was reduced by
the $13 million invested in the plant since January 1, 1996 as an impairment
loss under Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of.  An after tax charge of approximately $8 million due to this reduction was
recorded to non-operating expense on the consolidated statement of income in
the fourth quarter of 1997.

Note C. Income Taxes

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109).  SFAS
109 requires the recognition of deferred tax assets and liabilities for the
future tax effects of temporary differences between the carrying amounts and
the tax basis of assets and liabilities.  In accordance with SFAS 109 net
regulatory assets of $52.2 million and $51.1 million and corresponding net
increases in accumulated deferred income taxes were recorded as of

<PAGE> 37
December 31, 1998 and 1997, respectively.  The regulatory assets represent the
additional future revenues to be collected from customers for deferred income
taxes.

Accumulated deferred income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                                  December 31,
(in thousands)                                     1998                   1997
------------------------------------------------------------------------------
<S>                                            <C>                    <C>
Deferred tax liabilities:
  Plant-related                                $412,358               $535,460
  Other                                          85,497                 79,930
------------------------------------------------------------------------------
                                                497,855                615,390
------------------------------------------------------------------------------
Deferred tax assets:
  Plant-related                                  13,174                 11,926
  Investment tax credits                         29,622                 33,125
  Other                                         106,502                 84,601
------------------------------------------------------------------------------
                                                149,298                129,652
------------------------------------------------------------------------------
    Net accumulated deferred income taxes      $348,557               $485,738
==============================================================================
</TABLE>

No valuation allowances for deferred tax assets are deemed necessary.

Previously deferred investment tax credits are amortized over the estimated
remaining lives of the property giving rise to the credits.

Components of income tax expense were as follows:

<TABLE>
<CAPTION>
                                                     years ended December 31,
(in thousands)                                      1998       1997      1996
-----------------------------------------------------------------------------
<S>                                             <C>        <C>        <C>
Current income tax expense                      $242,411   $115,373   $92,370
Deferred income tax expense                     (137,992)   (14,104)       14
Investment tax credit amortization                (3,927)    (7,560)   (4,071)
-----------------------------------------------------------------------------
  Income taxes charged to operations             100,492     93,709    88,313
-----------------------------------------------------------------------------
Taxes on other income                            (17,853)   (11,254)     (331)
-----------------------------------------------------------------------------
     Total income tax expense                   $ 82,639   $ 82,455   $87,982
=============================================================================
</TABLE>

The effective income tax rates reflected in the consolidated financial
statements and the reasons for their differences from the statutory federal
income tax rate were as follows:

<TABLE>
<CAPTION>
                                                    1998       1997      1996
-----------------------------------------------------------------------------
<S>                                                 <C>        <C>       <C>
Statutory tax rate                                  35.0%      35.0%     35.0%
State income tax, net of federal income tax benefit  4.6        4.5       4.3
Investment tax credit amortization                  (6.2)      (3.3)     (1.8)
Other                                                1.0        0.1       0.7
-----------------------------------------------------------------------------
  Effective tax rate                                34.4%      36.3%     38.2%
=============================================================================
</TABLE>

The 1998 effective tax rate declined by 4.5% as a result of the recognition in
net income of the remaining unamortized investment tax credits related to
Boston Edison's fossil generating assets at the time of their sale.  This
shareholder benefit is included in other expense, net on the 1998 consolidated
statement of income.

The 1997 effective tax rate declined by 0.8% as a result of the favorable
outcome of an Internal Revenue Service appeal related to investment tax
credits.

<PAGE> 38
Note D. Nuclear Decommissioning and Nuclear Waste Disposal

1.  Nuclear Decommissioning

As a nuclear generating facility, Pilgrim Station will be required to be
decommissioned upon the expiration of its operating license.  Decommissioning
means to remove nuclear facilities from service safely and reduce residual
radioactivity to a level that permits termination of the Nuclear Regulatory
Commission (NRC) license and release of the property for unrestricted use.
Estimated decommissioning costs are recorded to depreciation expense on the
consolidated statements of income over Pilgrim's expected service life.  These
costs are recovered through charges to retail and wholesale contract
customers.  In November 1998, Boston Edison filed an update of Pilgrim
Station's decommissioning cost study with the DTE.  The updated study includes
an estimate of decommissioning and fuel storage costs of approximately $600
million in 1997 dollars.

2.  Spent Nuclear Fuel

The spent fuel storage facility at Pilgrim Station is expected to provide
storage capacity through approximately 2003.  Boston Edison has a license
amendment from the NRC to modify the facility to provide sufficient room for
spent nuclear fuel generated through the end of Pilgrim's operating license in
2012; however, any further modifications are subject to review by the DTE.

Delays in identifying a permanent storage site have continually postponed
plans for the United States Department of Energy's (DOE) long-term storage and
disposal for spent nuclear fuel.  The DOE's current estimate for an available
site is no earlier than 2010.  In November 1997, the U.S. Court of Appeals for
the District of Columbia Circuit ruled that the lack of an interim storage
facility does not excuse the DOE from meeting its contract obligation to begin
accepting spent nuclear fuel no later than January 31, 1998.  This decision
was in response to petitions filed by Boston Edison and other interested
parties seeking declaratory rulings concerning enforcement and remedies for
the DOE's failure to accept spent fuel in a timely manner.  The court directed
the plaintiffs to pursue relief under terms of their contracts with the DOE.
Based on this ruling, the DOE may have to pay contract damages for not taking
the spent nuclear fuel as scheduled.  Under the Nuclear Waste Policy Act of
1982, it is the ultimate responsibility of the DOE to permanently dispose of
spent nuclear fuel.  Boston Edison currently pays a fee of $1.00 per net
megawatthour sold from Pilgrim Station generation under a nuclear fuel
disposal contract with the DOE.

The DOE denied Boston Edison's petition to suspend payments to the Nuclear
Waste Fund based on its interpretation of the U.S. Court of Appeal's decision
made in November 1997.  The DOE has, however, made an offer to consider
amendments to existing contracts to address the hardships the anticipated
delay in accepting spent fuel may cause individual contract holders.

3.  Nuclear Divestiture

As discussed in Note B to these Consolidated Financial Statements, in November
1998 Boston Edison announced the selection of Entergy as the winning bidder
for the purchase of Pilgrim.  A purchase and sale agreement has been signed
and all required approvals are anticipated in the second quarter of 1999.
Under the agreement Boston Edison will fully fund and transfer its
decommissioning trust fund to Entergy and Entergy will then assume full
liability and responsibility for decommissioning and waste disposal at Pilgrim
Station.

<PAGE> 39
Note E. Pensions and Other Postretirement Benefits

The following information is presented in accordance with Statement of
Financial Accounting Standards No. 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits, effective for fiscal years beginning after
December 15, 1997.

1.  Pensions

Boston Edison has a defined benefit funded retirement plan with certain
contributory features that covers substantially all employees and an unfunded
supplemental retirement plan for certain management employees.

The changes in the benefit obligation and plan assets were as follows:

<TABLE>
<CAPTION>
                                                                December 31,
(in thousands)                                              1998        1997
----------------------------------------------------------------------------
<S>                                                    <C>         <C>
Change in benefit obligation:
  Benefit obligation at the beginning of the year      $ 457,436   $ 409,760
  Service cost                                            13,645      12,625
  Interest cost                                           31,981      31,537
  Plan participants' contributions                           214         248
  Plan amendments                                              -       1,081
  Actuarial loss                                          67,564      32,762
  Curtailment gain                                       (15,644)     (6,916)
  Special termination benefits                               665       3,530
  Settlement payments                                    (16,246)          -
  Benefits paid                                          (41,627)    (27,191)
----------------------------------------------------------------------------
    Benefit obligation at the end of the year          $ 497,988   $ 457,436
============================================================================

Change in plan assets:
  Fair value of plan assets at the beginning of
   the year                                            $ 401,182   $ 331,299
  Actual return on plan assets                            44,589      60,602
  Employer contribution                                   86,440      36,224
  Plan participants' contributions                           214         248
  Settlement payments                                    (16,246)          -
  Benefits paid                                          (41,627)    (27,191)
----------------------------------------------------------------------------
    Fair value of plan assets at the end of the year   $ 474,552   $ 401,182
============================================================================
</TABLE>

The plans' funded status were as follows:

<TABLE>
<CAPTION>
                                                                December 31,
(in thousands)                                              1998        1997
----------------------------------------------------------------------------
<S>                                                    <C>         <C>
Funded status                                          $ (23,436)  $ (56,254)
Unrecognized actuarial net loss                           96,310      50,646
Unrecognized transition obligation                         3,856       5,704
Unrecognized prior service cost                           15,557      19,121
----------------------------------------------------------------------------
    Net amount recognized                              $  92,287   $  19,217
============================================================================

Amount recognized in the consolidated
 balance sheets consist of:
  Prepaid retirement cost                              $  94,049   $  20,584
  Accrued supplemental retirement liability               (9,856)     (9,763)
  Intangible asset                                         8,094       8,396
----------------------------------------------------------------------------
    Net amount recognized                              $  92,287   $  19,217
============================================================================
</TABLE>

The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the supplemental retirement plan with accumulated

<PAGE> 40
benefit obligations in excess of plan assets were $11,387,000, $9,856,000 and
$0, respectively, as of December 31, 1998, and $11,076,000, $9,763,000 and $0,
respectively, as of December 31, 1997.

Weighted average assumptions were as follows:

<TABLE>
<CAPTION>
                                                1998        1997        1996
----------------------------------------------------------------------------
<S>                                            <C>         <C>         <C>
Discount rate at the end of the year            6.50%       7.25%       7.75%
Expected return on plan assets for the year    10.00%      10.00%      10.00%
Rate of compensation increase at the end of
 the year                                       4.00%       4.25%       3.90%
</TABLE>

Components of net periodic benefit cost were as follows:

<TABLE>
<CAPTION>
                                                    years ended December 31,
(in thousands)                                  1998        1997        1996
----------------------------------------------------------------------------
<S>                                        <C>         <C>         <C>
  Service cost                             $  13,645   $  12,625   $  13,452
  Interest cost                               31,981      31,537      32,325
  Expected return on plan assets             (39,140)    (31,250)    (29,826)
  Amortization of prior service cost           1,847       1,827       1,831
  Amortization of transition obligation          860         934         934
  Recognized actuarial loss                      808       1,799       3,790
----------------------------------------------------------------------------
    Net periodic benefit cost              $  10,001   $  17,472   $  22,506
============================================================================
</TABLE>

As a result of the fossil and nuclear divestitures discussed in Note B to
these Consolidated Financial Statements, amounts recognized for curtailment,
settlement and special termination benefit costs were $2,705,000, $0 and
$665,000, respectively for 1998 and $1,300,000, $3,162,000 and $3,530,000,
respectively for 1997.  These amounts are recoverable under Boston Edison's
settlement agreement.

Boston Edison experienced a high number of employee retirements from 1994 to
1996.  A large number of these retirements were as a direct result of the 1995
corporate restructuring.  In 1997, a review of the accounting for the pension
expense related to the retirements revealed that an adjustment to the pension
costs related to these employees was necessary.  Therefore, pension regulatory
asset was increased by $8.6 million in 1997 for the adjustment related to the
period covered by the 1992 Boston Edison settlement agreement.  Through 1995,
in accordance with the 1992 settlement agreement, the difference between the
net pension cost of the retirement plan and its annual funding amount was
deferred.  The remaining adjustment did not have a material impact on the
consolidated results of operations or financial position.

Boston Edison also provides defined contribution 401(k) plans for
substantially all employees.  It matches a portion of employees' voluntary
contributions to the plans.  Matching contributions of $8 million were made in
1998, 1997 and 1996, respectively.

2.  Other Postretirement Benefits

In addition to pension benefits, Boston Edison also provides health care and
other benefits to retired employees who meet certain age and years of service
liability requirements.  These benefits are not available to management
employees hired on or after January 1, 1995.

<PAGE> 41
The changes in the benefit obligation and plan assets were as follows:

<TABLE>
<CAPTION>
                                                                December 31,
(in thousands)                                              1998        1997
----------------------------------------------------------------------------
<S>                                                    <C>         <C>
Change in benefit obligation:
  Benefit obligation at the beginning of the year      $ 237,616   $ 230,905
  Service cost                                             3,892       3,543
  Interest cost                                           16,895      17,006
  Plan participants' contributions                         1,178         395
  Actuarial loss                                          27,845       4,093
  Curtailment gain                                       (14,665)     (5,531)
  Special termination benefits                                75         450
  Benefits paid                                          (14,080)    (13,245)
----------------------------------------------------------------------------
    Benefit obligation at the end of the year          $ 258,756   $ 237,616
============================================================================

Change in plan assets:
  Fair value of plan assets at the beginning of
   the year                                            $ 103,989   $  72,702
  Actual return on plan assets                            14,344      18,852
  Employer contribution                                    8,387      25,285
  Plan participants' contributions                         1,178         395
  Benefits paid                                          (14,080)    (13,245)
----------------------------------------------------------------------------
    Fair value of plan assets at the end of the year   $ 113,818   $ 103,989
============================================================================
</TABLE>

The plan's funded status and amount recognized in the consolidated balance
sheets were as follows:

<TABLE>
<CAPTION>
                                                                December 31,
(in thousands)                                              1998        1997
----------------------------------------------------------------------------
<S>                                                    <C>         <C>
Funded status                                          $(144,938)  $(133,627)
Unrecognized actuarial net loss                           24,922      12,916
Unrecognized transition obligation                        88,814     127,107
Unrecognized prior service cost                           (9,827)    (14,128)
----------------------------------------------------------------------------
    Net amount recognized                              $ (41,029)  $  (7,732)
============================================================================
</TABLE>

Weighted average assumptions were as follows:

<TABLE>
<CAPTION>
                                                1998        1997        1996
----------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>
Discount rate at the end of the year            6.50%       7.25%       7.75%
Expected return on plan assets for the year     9.00%       9.00%       9.00%
</TABLE>

For measurement purposes, a 5% annual rate of increase on the per capita cost
of covered health care benefits was assumed.  A 13% annual rate of increase on
the per capita cost of covered prescription drug benefits was assumed,
decreasing gradually to 5% in the year 2012 and remaining level thereafter.  A
4% annual rate of increase on the per capita cost of covered dental benefits
was assumed.

<PAGE> 42
A 1% change in the assumed health care cost trend rate would have the
following effects:

<TABLE>
<CAPTION>
                                                       One-Percentage-Point
                                                       Increase    Decrease
                                                       --------    --------
<S>                                                    <C>         <C>
Effect on total of service and interest cost
 components for 1998                                   $  3,319    $ (2,605)
Effect on December 31, 1998 postretirement benefit
 obligation                                            $ 34,088    $(27,270)
</TABLE>

Components of net periodic benefit cost were as follows:

<TABLE>
<CAPTION>
                                                    years ended December 31,
(in thousands)                                  1998        1997        1996
----------------------------------------------------------------------------
<S>                                        <C>         <C>         <C>
Service cost                               $   3,892   $   3,543   $   4,616
Interest cost                                 16,895      17,006      16,815
Expected return on plan assets                (8,563)     (6,421)     (4,738)
Amortization of prior service cost              (942)     (1,017)     (1,614)
Amortization of transition obligation          8,474       9,151       9,151
Recognized actuarial loss                        662       1,003       1,977
----------------------------------------------------------------------------
  Net periodic benefit cost                $  20,418   $  23,265   $  26,207
============================================================================
</TABLE>

As a result of the fossil and nuclear divestitures discussed in Note B to
these Consolidated Financial Statements, amounts recognized for curtailment
and special termination benefit costs were $21,187,000 and $79,000,
respectively for 1998 and $7,895,000 and $456,000, respectively for 1997.
These amounts are recoverable under Boston Edison's settlement agreement.

Note F. Stock-Based Compensation

In 1997, Boston Edison initiated a Stock Incentive Plan (the Plan) which was
adopted by the board of directors and approved by common stockholders.  The
Plan permits a variety of stock and stock-based awards, including stock
options and deferred (nonvested) stock to be granted to certain key employees.
The Plan limits the terms of awards to ten years.  Since the reorganization
into a holding company structure, all stock-based compensation involves BEC
Energy common shares.  Subject to adjustment for stock-splits and similar
events, the aggregate number of shares of common stock that may be delivered
under the Plan is 2,000,000, including shares issued in lieu of or upon
reinvestment of dividends arising from awards.  During 1998, 19,150 shares of
deferred stock and 419,200 ten-year non-qualified stock options were granted
under the plan.  During 1997, 73,820 shares of deferred stock and 298,400 ten-
year non-qualified stock options were granted.  The weighted average grant
date fair value of the deferred stock issued during 1998 and 1997 is $39.75
and $27.26, respectively.  The options were granted at the full market price
of the stock on the date of the grant.  Both awards vest ratably over a three-
year period.

<PAGE> 43
Compensation cost for stock-based awards is recognized under the provisions of
Accounting Principals Board Opinion 25, which requires compensation cost to be
measured by the quoted stock market price at the measurement date less the
amount, if any, an employee is required to pay.  The required fair value
method disclosures are as follows:

<TABLE>
<CAPTION>
(in thousands, except per share amounts)                   1998         1997
----------------------------------------------------------------------------
<S>                                                    <C>          <C>
Net income
          Actual                                       $157,337     $144,642
          Pro forma                                    $156,952     $144,572
</TABLE>

Stock option activity of the Plan was as follows:

<TABLE>
<CAPTION>
                                                           1998         1997
----------------------------------------------------------------------------
<S>                                                     <C>          <C>
Options outstanding at January 1                        273,000            0
          Options granted                               419,200      298,400
          Options exercised                              (3,800)           0
          Options forfeited                             (21,800)     (25,400)
----------------------------------------------------------------------------
Options outstanding at December 31                      666,600      273,000
============================================================================
</TABLE>

Summarized information regarding stock options outstanding at December 31,
1998:

<TABLE>
<CAPTION>
       Range of       Weighted Average Remaining        Weighted Average
Exercise Prices         Contractual Life (Years)          Exercise Price
---------------       --------------------------        ----------------
  <S>                                       <C>                   <C>
  $25.75-$26.00                             8.44                  $25.85
  $39.75-$40.50                             9.30                  $39.75
</TABLE>

There were 87,200 stock options exercisable at December 31, 1998 with a
weighted average exercise price of $25.85.

The stock options granted during 1998 have a weighted average grant date fair
value of $4.61.  The fair value was estimated using the Black-Scholes option
pricing model with the following weighted average assumptions:

<TABLE>
          <S>                                                <C>
          Expected life (years)                               4.0
          Risk-free interest rate                            5.66%
          Volatility                                           16%
          Dividends                                          4.88%
</TABLE>

Compensation cost recognized in the consolidated statements of income for
stock-based compensation awards in 1998 and 1997 was $850,000 and $275,000,
respectively.

<PAGE> 44
Note G. Capital Stock

<TABLE>
<CAPTION>
                                                                 December 31,
(dollars in thousands, except per share amounts)             1998        1997
-----------------------------------------------------------------------------
<S>                                                    <C>         <C>
Common equity:
Common stock, par value $1 per share,
 100,000,000 shares authorized; 100
 and 48,514,973 shares issued and
 outstanding:                                          $        -  $   48,515
Premium on common stock                                   742,544     696,137
Retained earnings                                         297,347     328,802
-----------------------------------------------------------------------------
     Total common equity                               $1,039,891  $1,073,454
=============================================================================
</TABLE>

Upon the formation of the holding company in 1998, outstanding shares of
Boston Edison Company were converted into shares of BEC Energy.  In addition,
100 shares of Boston Edison Company common stock were issued to BEC Energy as
part of this transaction.

<TABLE>
Cumulative preferred stock:
Par value $100 per share, 2,890,000 shares
 authorized; issued and outstanding:
   Nonmandatory redeemable series:
<CAPTION>
             Current Shares       Redemption
   Series       Outstanding      Price/Share
-----------------------------------------------------------------------------
    <S>             <C>             <C>                <C>         <C>
    4.25%           180,000         $103.625           $   18,000  $   18,000
    4.78%           250,000         $102.800               25,000      25,000
    7.75%                 -                -                    0      40,000
-----------------------------------------------------------------------------
     Total nonmandatory redeemable series              $   43,000  $   83,000
=============================================================================
</TABLE>

<TABLE>
   Mandatory redeemable series:
<CAPTION>
             Current Shares       Redemption
   Series       Outstanding      Price/Share
-----------------------------------------------------------------------------
    <S>             <C>                    <C>         <C>         <C>
    7.27%                 -                -           $        0  $   36,000
    8.00%           500,000                -               50,000      50,000
-----------------------------------------------------------------------------
                                                           50,000      86,000
   Less:  redemption and issuance costs                      (960)     (5,907)
          due within one year                                   0      (2,000)
-----------------------------------------------------------------------------
     Total mandatory redeemable series                 $   49,040  $   78,093
=============================================================================
</TABLE>

Cumulative Mandatory Redeemable Preferred Stock

Boston Edison redeemed the remaining 360,000 shares of 7.27% sinking fund
series cumulative preferred stock during 1998.  The stock was subject to a
mandatory sinking fund requirement of 20,000 shares each May at par plus
accrued dividends.  Boston Edison also had the noncumulative option each May
to redeem additional shares, not to exceed 20,000, through the sinking fund at
$100 per share plus accrued dividends.  It redeemed, at par value, 40,000
shares in 1998, 1997 and 1996.  In addition, 320,000 shares were redeemed in
1998 at $101.94 per share.

Boston Edison is not able to redeem any part of the 500,000 shares of 8%
series cumulative preferred stock prior to December 2001.  The entire series
is subject to mandatory redemption in December 2001 at $100 per share plus
accrued dividends.

<PAGE> 45
Note H. Indebtedness

<TABLE>
<CAPTION>
                                                                 December 31,
(in thousands)                                         1998              1997
-----------------------------------------------------------------------------
<S>                                              <C>               <C>
Long-term debt:

Debentures:
      5.950%, due March 1998                     $        0        $  100,000
      6.800%, due February 2000                      65,000            65,000
      6.050%, due August 2000                       100,000           100,000
      6.800%, due March 2003                        150,000           150,000
      7.800%, due May 2010                          125,000           125,000
      9.875%, due June 2020                         100,000           100,000
      9.375%, due August 2021                       115,000           115,000
      8.250%, due September 2022                     60,000            60,000
      7.800%, due March 2023                        200,000           200,000
-----------------------------------------------------------------------------
  Total debentures                                  915,000         1,015,000
  Less:  due within one year                              0          (100,000)
-----------------------------------------------------------------------------
  Net long-term debentures                          915,000           915,000
-----------------------------------------------------------------------------

Sewage facility revenue bonds                        30,900            32,500
 Less: due within one year                             (667)             (667)
 Less: funds held by trustee                         (4,670)           (4,757)
-----------------------------------------------------------------------------
  Net long-term sewage facility revenue bonds        25,563            27,076
-----------------------------------------------------------------------------

Massachusetts Industrial Finance Agency bonds:
      5.750%, due February 2014                      15,000            15,000

6.662% bank loan, due 1999                                0           100,000
-----------------------------------------------------------------------------
        Total long-term debt                     $  955,563        $1,057,076
=============================================================================

Short-term debt:

Notes payable:
      Bank loans                                 $        0        $   94,013
      Commercial paper                                    0            43,000
-----------------------------------------------------------------------------
        Total notes payable                      $        0        $  137,013
=============================================================================
</TABLE>

1.  Long-term Debt

The 9 7/8% debentures due 2020 are first redeemable in June 2000 at a
redemption price of 104.483%, the 9 3/8% series due 2021 are first redeemable
in August 2001 at 104.612%, the 8.25% series due 2022 are first redeemable in
September 2002 at 103.780% and the 7.80% series due 2023 are first redeemable
in March 2003 at 103.730%.  No other series are redeemable prior to maturity.
There is no sinking fund requirement for any series of debentures.

Sewage facility revenue bonds were issued by HEEC.  The bonds are tax-exempt,
subject to annual mandatory sinking fund redemption requirements and mature
through 2015.  Scheduled redemptions of $1.6 million were made in 1998, 1997
and 1996.  The weighted average interest rate of the bonds is 7.3%.  A portion
of the proceeds from the bonds is in reserve with the trustee.  If HEEC should
have insufficient funds to pay for extraordinary expenses, Boston Edison would
be required to make additional capital contributions or loans to the
subsidiary up to a maximum of $1 million.

The 5.75% tax-exempt unsecured bonds due 2014 are redeemable beginning in
February 2004 at a redemption price of 102%.  The redemption price decreases
to 101% in February 2005 and to par in February 2006.

<PAGE> 46
The aggregate principal amounts of Boston Edison's long-term debt (including
HEEC sinking fund requirements) due through 2003 are $1.6 million in 1999,
$166.6 million in 2000, $1.6 million in 2001 and 2002 and $151.6 million in
2003.

2.  Short-term Debt

Boston Edison currently has regulatory authority to issue up to $350 million
of short-term debt.  Boston Edison has a $200 million revolving credit
agreement with a group of banks.  This agreement is intended to provide a
standby source of short-term borrowings.  Under the terms of this agreement
Boston Edison is required to maintain a common equity ratio of not less than
30% at all times.  Commitment fees must be paid on the unused portion of the
total agreement amount.  It also has arrangements with several banks to
provide additional short-term credit on an uncommitted and as available basis.
At December 31, 1998, Boston Edison did not have any short-term debt
outstanding.

Information regarding consolidated short-term borrowings is as follows:

<TABLE>
<CAPTION>
(dollars in thousands)                               1998      1997      1996
-----------------------------------------------------------------------------
<S>                                              <C>       <C>       <C>
Maximum short-term borrowings                    $219,000  $316,100  $272,500
Weighted average amount outstanding               $51,483  $212,663  $208,914
Weighted average interest rates excluding
 commitment fees                                     5.81%     5.85%     5.65%
-----------------------------------------------------------------------------
</TABLE>

Note I. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each class of securities for which it is practicable to estimate the value:

Nuclear decommissioning trust:

The cost of $173 million approximates fair value based on quoted market prices
of securities held.

Cash and cash equivalents:

The carrying amount of $93 million approximates fair value due to the
short-term nature of these securities.

Mandatory redeemable cumulative preferred stock, sewage facility revenue bonds
and unsecured debt:

The fair values of these securities are based upon the quoted market prices of
similar issues.  Carrying amounts and fair values as of December 31, 1998, are
as follows:

<TABLE>
<CAPTION>
                                                          Carrying        Fair
(in thousands)                                              Amount       Value
------------------------------------------------------------------------------
<S>                                                     <C>         <C>
Mandatory redeemable cumulative preferred stock         $   49,040  $   54,190
Sewage facility revenue bonds                           $   30,900  $   33,914
Unsecured debt                                          $  930,000  $  994,294
------------------------------------------------------------------------------
</TABLE>

Note J. Segment and Related Information

Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information, requires the disclosure of
certain financial and descriptive information by operating segments.  Boston

<PAGE> 47
Edison operates primarily as a regulated electric public utility for which
separate segment information is not applicable.

Note K. Commitments and Contingencies

1.  Contractual Commitments

At December 31, 1998, Boston Edison had estimated contractual obligations for
plant and equipment of approximately $27 million.  This includes $13.5 million
for nuclear fuel fabrication.  Under the Pilgrim purchase and sale agreement,
Entergy will assume any unpaid portion of this obligation for the current
refueling and maintenance outage scheduled for May 1999 upon the sale closing
date.

Boston Edison also has leases for certain facilities and equipment.  The
estimated minimum rental commitments under both transmission agreements and
noncancellable leases for the years after 1998 are as follows:

<TABLE>
<CAPTION>
(in thousands)
------------------------------------------------------
<S>                                           <C>
1999                                          $ 18,464
2000                                            17,769
2001                                            14,771
2002                                            13,331
2003                                            11,272
Years thereafter                                89,381
------------------------------------------------------
     Total                                    $164,988
======================================================
</TABLE>

The total of future minimum rental income to be received under noncancellable
subleases related to the above leases is $146,125.

Boston Edison will capitalize a portion of lease rentals as part of plant
expenditures in the future.  The total expense for both lease rentals and
transmission agreements was $29.4 million in 1998, $27.5 million in 1997 and
$26.3 million in 1996, net of capitalized expenses of $1.3 million in 1998,
$1.2 million in 1997 and $2.9 million in 1996.

Boston Edison had previously entered into various take or pay and throughput
agreements, primarily to supply the New Boston fossil generating station with
natural gas.  As part of the fossil divestiture agreement, Sithe Energies
assumed these obligations.  The total expense under these agreements was $47.1
million in 1997 and $49.5 million in 1996.

2.  Electric Company Investments

Boston Edison has an approximately 11% equity investment in two companies
which own and operate transmission facilities to import electricity from the
Hydro-Quebec system in Canada.  As an equity participant Boston Edison is
required to guarantee, in addition to its own share, the total obligations of
those participants who do not meet certain credit criteria.  At December 31,
1998, Boston Edison's portion of these guarantees was $15.2 million.

Boston Edison has a 9.5% equity investment of approximately $2 million in
Yankee Atomic Electric Company (Yankee Atomic).  In 1992 the board of
directors of Yankee Atomic decided to discontinue operations of the Yankee
Atomic nuclear generating station permanently and decommission the facility.

Yankee Atomic received approval from the FERC to continue to collect its
investment and decommissioning costs through 2000, the period of the plant's
operating license.  The estimate of Boston Edison's share of Yankee Atomic's

<PAGE> 48
investment and costs of decommissioning is approximately $8 million as of
December 31, 1998.  This estimate is recorded on the consolidated balance
sheet as a power contract liability and an offsetting regulatory asset.

Boston Edison also has a 9.5% equity investment in Connecticut Yankee Atomic
Power Company (CYAPC) of approximately $10 million.  In December 1996, the
board of directors of CYAPC, which owns and operates the Connecticut Yankee
nuclear electric generating unit (Connecticut Yankee), unanimously voted to
retire the unit.  The decision was based on an economic analysis of the costs
of operating the unit through 2007, the period of its operating license,
compared to the costs of closing the unit and incurring replacement power
costs for the same period.

Boston Edison's share of Connecticut Yankee's remaining investment and
estimated costs of decommissioning is approximately $51 million as of
December 31, 1998.  This estimate is recorded on the consolidated balance
sheet as a power contract liability and an offsetting regulatory asset similar
to Yankee Atomic.

In December 1996, CYAPC filed for rate relief at the FERC seeking to recover
certain post-operating costs, including decommissioning.  In August 1998, the
FERC Administrative Law Judge (ALJ) released an initial decision regarding
CYAPC's filing.  This decision called for the disallowance of the common
equity return on the CYAPC investment subsequent to the shutdown.  The
decision also stated that decommissioning collections should continue to be
based on a previously approved estimate, with an adjustment for inflation,
until a more reliable estimate is developed.  In October 1998, both CYAPC and
Northeast Utilities, a 49% equity investor in CYAPC, filed briefs on
exceptions to the ALJ decision.  If the initial decision is upheld, CYAPC
could be required to write off a portion of its investment in the generating
unit and refund a portion of the previously collected return on investment.
Management is currently unable to determine the ultimate outcome of this
proceeding, however, the estimate of the effect of the ALJ's initial decision
does not have a material impact on its consolidated financial position or
results of operations.

3.  Nuclear Insurance

The federal Price-Anderson Act currently provides $9.8 billion of financial
protection for public liability claims and legal costs arising from a single
nuclear-related accident.  The first $200 million of nuclear liability is
covered by commercial insurance.  Additional nuclear liability insurance up to
$9.6 billion is provided by a retrospective assessment of up to $88.1 million
per incident levied on each of the 109 nuclear generating units currently
licensed to operate in the United States, with a maximum assessment of $10
million per reactor per accident in any year.

Boston Edison has purchased insurance from Nuclear Electric Insurance Limited
(NEIL) to cover some of the costs to purchase replacement power during a
prolonged accidental outage and the cost of repair, replacement,
decontamination or decommissioning of utility property resulting from covered
incidents at Pilgrim Station.  Boston Edison's maximum potential total
assessment for losses which occur during current policy years is $8.1 million
under both the replacement power and excess property damage, decontamination
and decommissioning policies.

<PAGE> 49
4.  Hazardous Waste

Boston Edison is an owner or operator of approximately 20 properties where oil
or hazardous materials were spilled or released.  As such, Boston Edison is
required to clean up these remaining properties in accordance with a timetable
developed by the Massachusetts Department of Environmental Protection.  There
are uncertainties associated with these costs due to the complexities of
cleanup technology, regulatory requirements and the particular characteristics
of the different sites.  Boston Edison also faces possible liability as a
potentially responsible party in the cleanup of five multi-party hazardous
waste sites in Massachusetts and other states where it is alleged to have
generated, transported or disposed of hazardous waste at the sites.  Boston
Edison is one of many potentially responsible parties and currently expects to
have only a small percentage of the total potential liability for these sites.
Through December 31, 1998, BEC had approximately $6 million accrued on its
consolidated balance sheet related to these cleanup liabilities.  Management
is unable to fully determine a range of reasonably possible cleanup costs in
excess of the accrued amount.  Based on its assessments of the specific site
circumstances, it does not believe that it is probable that any such
additional costs will have a material impact on its consolidated financial
position.  However, it is reasonably possible that additional provisions for
cleanup costs that may result from a change in estimates could have a material
impact on the results of a reporting period in the near term.

5.  Generating Unit Performance Program

Boston Edison's generating unit performance program ceased March 1, 1998.
Under this program the recovery of incremental purchased power costs resulting
from generating unit outages occurring through the retail access date is
subject to review by the DTE.  Proceedings relative to generating unit
performance remain pending before the DTE.  These proceedings will include the
review of replacement power costs associated with the shutdown of the
Connecticut Yankee nuclear electric generating unit which is discussed in
item 2.  Management is unable to fully determine a range of reasonably
possible disallowance costs in excess of amounts accrued.  Based on its
assessment of the information currently available, it does not believe that it
is probable that any such additional costs will have a material impact on its
consolidated financial position.  However, it is reasonably possible that
additional disallowance costs that may result from a change in estimates could
have a material impact on the results of a reporting period in the near term.

6.  Legal Proceedings

Industry and corporate restructuring legal proceedings

The DTE order approving the Boston Edison settlement agreement and the DTE
order approving the formation of BEC as a holding company were appealed by
certain parties to the Massachusetts Supreme Judicial Court (SJC).  In
December 1998, the SJC dismissed the appeal of the order approving the holding
company formation.  One settlement agreement appeal remains pending, however
there has to date been no briefing, hearing or other action taken with respect
to this proceeding.

In addition, along with other Massachusetts investor-owned utilities, Boston
Edison has been named as a defendant in a class action suit seeking to declare
certain provisions of the Massachusetts electric industry restructuring
legislation unconstitutional.

<PAGE> 50
Management is currently unable to determine the outcome of these outstanding
proceedings however, if an unfavorable outcome were to occur, there could be a
material adverse impact on business operations, the consolidated financial
position or results of operations for a reporting period.

A referendum seeking repeal of the Massachusetts electric industry
restructuring legislation that was enacted in November 1997 was overwhelmingly
defeated by a better than 70% to 30% margin in a state-wide general election
held on November 3, 1998.  This outcome allows the comprehensive framework
established for the restructuring of the electric industry to continue as
intended under the enacted legislation.

Regulatory proceedings

In October 1997, the DTE opened a proceeding to investigate Boston Edison's
compliance with the 1993 order which permitted the formation of BETG and
authorized Boston Edison to invest up to $45 million in unregulated
activities.  Hearings began in the fourth quarter of 1998 and are expected to
be completed in the first half of 1999.

Each of the Reading Municipal Light Department, the Littleton Electric Light
Department and the West Boylston Municipal Light Department have filed
separate claims for arbitration in Massachusetts alleging that the proposed
transfer of Pilgrim Station constitutes a breach of their respective power
sale agreements and seeking to terminate those agreements.  The remaining
municipal light departments have also indicated that they plan to file similar
claims for arbitration.  Boston Edison has requested the FERC to exercise its
pre-emptive authority to consider the claims of the municipal light
departments.  In the event that either the FERC determines, or as a result of
the arbitrations, that the contracts should be terminated, Boston Edison would
continue to be obligated to purchase power from Entergy that it intended to
resell to the municipal light departments.  Boston Edison may not be able to
resell such power in the short-term power exchange at a price equal to or
greater than the price it is required to pay to Entergy.  However, Boston
Edison has filed at the DTE for recovery of any such shortfall as part of its
Pilgrim divestiture filing through the transition charge.

Management is currently unable to determine the outcome of these proceedings
however, if an unfavorable outcome were to occur, there could be a material
adverse impact on business operations, the consolidated financial position or
results of operations for a reporting period.

Other litigation

In October 1998, the town of Plymouth, Massachusetts, the site of Pilgrim
Station, filed suit against Boston Edison.  The town claims that Boston Edison
has wrongfully failed to execute an agreement with the town for payments in
addition to taxes due to the town under the Massachusetts electric industry
restructuring legislation.  Boston Edison has disputed the town's claim and
will vigorously defend itself.  In addition to this pending litigation, Boston
Edison and the town of Plymouth are also parties in proceedings before the
Appellate Tax Board and the DTE concerning substantially the same dispute.
Management is unable to determine the ultimate outcome of these proceedings
however, if an unfavorable outcome were to occur, there could be a material
adverse impact on business operations, the consolidated financial position or
results of operations for a reporting period.

In the normal course of its business Boston Edison is also involved in certain
other legal matters.  Management is unable to fully determine a range of

<PAGE> 51
reasonably possible legal costs in excess of amounts accrued.  Based on the
information currently available, it does not believe that it is probable that
any such additional costs will have a material impact on its consolidated
financial position.  However, it is reasonably possible that additional legal
costs that may result from a change in estimates could have a material impact
on the results of a reporting period in the near term.

Note L. Long-Term Power Contracts

1.  Long-Term Contracts for the Purchase of Electricity

Boston Edison entered into a 13-month agreement effective December 1, 1998 to
transfer all of the unit output entitlements from its long-term power purchase
contracts to Select Energy (Select), a subsidiary of Northeast Utilities, Inc.
In return, Select will provide full energy service requirements to Boston
Edison, including NEPOOL capability responsibilities, at FERC approved tariff
rates through December 31, 1999.

Information relating to the contracts as of December 31, 1998 is as follows:

<TABLE>
<CAPTION>
                                            proportionate share (in thousands)
                                Units of   -----------------------------------
                                Capacity                      Debt
                  Contract     Purchased   Minimum     Outstanding
                Expiration   -----------      Debt   Through Cont.      Annual
Generating Unit       Date       %    MW   Service       Exp. Date        Cost
------------------------------------------------------------------------------
<S>                  <C>     <C>     <C>   <C>             <C>        <C>
Canal Unit 1         2002     25.0   141   $ 1,433         $ 4,496    $ 22,936
Mass. Bay Trans-
 portation
 Authority - 1       2005    100.0    34         -               -       1,089
Ocean State Power -
 Unit 1              2010     23.5    72     3,996          15,970      22,120
Ocean State Power -
 Unit 2              2011     23.5    72     3,420          14,370      23,111
Northeast Energy
 Associates           (a)      (a)   219         -               -     116,248
L'Energia (b)        2013     73.0    63         -               -      28,220
MassPower            2013     44.3   117    10,727          65,127      53,143
Mass. Bay Trans-
 portation
 Authority - 2       2019    100.0    34         -               -         450
------------------------------------------------------------------------------
     Total                                 $19,576         $99,963    $267,317
==============================================================================

<FN>
(a)  Boston Edison purchases 75.5% of the energy output of this unit under
     two contracts.  One contract represents 135MW and expires in the year
     2015.  The other contract is for 84MW and expires in 2010.  Energy is
     paid for based on a price per kWh actually received.  Boston Edison does
     not pay a proportionate share of the unit's capital and fixed operating
     costs.

(b)  Boston Edison pays for this energy based on a price per kWh actually
     received.  An agreement has been made with L'Energia to terminate this
     contract.  FERC approval of this agreement is pending.
</TABLE>

<PAGE> 52
Boston Edison's total fixed and variable costs associated with these contracts
in 1998, 1997 and 1996 were approximately $267 million, $288 million and $281
million, respectively.  Boston Edison's minimum fixed payments under these
contracts for the years after 1998 are as follows:

<TABLE>
<CAPTION>
(in thousands)
------------------------------------------------------
<S>                                         <C>
1999                                        $   86,072
2000                                            88,291
2001                                            88,662
2002                                            91,431
2003                                            81,927
Years thereafter                               856,790
------------------------------------------------------
     Total                                  $1,293,173
======================================================
Total present value                         $  743,716
======================================================
</TABLE>

2.  Long-Term Power Sales Contracts

In addition to other wholesale power sales, Boston Edison sells a percentage
of Pilgrim Station's output to other utilities and municipalities under long-
term contracts.  Information relating to these contracts is as follows:

<TABLE>
<CAPTION>
                                      Contract          Units of Capacity Sold
                                    Expiration          ----------------------
Contract Customer (a)                     Date             %                MW
------------------------------------------------------------------------------
<S>                                       <C>           <C>              <C>
Commonwealth Electric Company             2012          11.0              73.7
Montaup Electric Company                  2012          11.0              73.7
Various municipalities                    2000 (b)       3.7              25.0
------------------------------------------------------------------------------
     Total                                              25.7             172.4
==============================================================================

<FN>
(a)  Under these contracts, the utilities and municipalities pay their
     proportionate share of the costs of operating Pilgrim Station and
     associated transmission facilities.  These costs include operation and
     maintenance expense, insurance, local taxes, depreciation,
     decommissioning and a return on investment.  The long-term power sales
     contracts with Commonwealth Electric Company and Montaup Electric Company
     will be terminated upon the closing of the sale of Pilgrim Station to
     Entergy.  The contracts with the municipalities remain in place whereby
     Boston Edison will purchase power for resale to the municipalities under
     a purchase power agreement entered into with Entergy.

(b)  Subject to certain adjustments.
</TABLE>

<PAGE> 53
<TABLE>
Selected Consolidated Quarterly Financial Data (Unaudited)

<CAPTION>
(in thousands)

               Operating   Operating         Net
                Revenues      Income      Income
------------------------------------------------
<S>             <C>         <C>          <C>
1998
----

First quarter   $394,117    $ 49,203     $22,859
Second quarter   385,708      65,300      35,340
Third quarter    479,304     100,806      82,492
Fourth quarter   363,843      34,415      16,646

1997
----

First quarter   $422,856    $ 47,138     $20,935
Second quarter   426,835      59,633      33,978
Third quarter    520,414     106,673      81,418
Fourth quarter   408,426      43,500       8,311
</TABLE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
Financial Disclosure
--------------------

Not applicable.

<PAGE> 54
                                   Part III
                                   --------

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

(a)  Identification of Directors
--------------------------------

Information about Nominees and Incumbent Directors

The Boston Edison board has fixed the number of directors at eleven as
permitted under its bylaws.  Boston Edison's restated articles of organization
provides for the classification of the Boston Edison board into three classes
serving staggered three-year terms.  The four persons named below have been
nominated by the Boston Edison board for election as Class II directors for a
term expiring at the year 2002 annual meeting and until their successors are
duly chosen and qualified.  The remaining directors will continue to serve as
provided below, with the Class III directors having terms expiring in 2000 and
the Class I directors having terms expiring in 2001.  If any of the nominees
shall be unavailable as a candidate at the Boston Edison annual meeting by
reason of death, disability or resignation, votes exercised through the
proxies will be cast for a substitute candidate as may be designated by the
Boston Edison board, or in the absence of a designation, in a manner the
directors may determine in their discretion.  Alternatively, in this
situation, the Boston Edison board may take action to fix the number of
directors for the ensuing year at the number of nominees named herein who are
then able to serve.

The Boston Edison board has adopted the following director retirement policy.
Directors who are employees of BEC Energy or Boston Edison Company, with the
exception of the chief executive officer, retire from the Boston Edison board
when they retire from employment with BEC Energy or Boston Edison Company.
Under the Boston Edison board's current policy, directors who are not
employees of BEC Energy or Boston Edison Company or who have served as chief
executive officer retire from the board at the annual shareholder meeting
following their seventieth birthday.

The Boston Edison board, which held seven regular meetings and one special
meeting in 1998, has an Executive Committee, a Nuclear Oversight Committee,
and a Pricing Committee.  During 1998, the Executive Committee, which is
authorized to exercise in the intervals between Boston Edison board meetings
those powers of the Boston Edison board which can be delegated, to act as a
nominating committee, and to review director compensation, met three times.
The Nuclear Oversight Committee, which is responsible for overseeing Boston
Edison's nuclear generation operations, met three times.  Prior to the
establishment of BEC Energy in May 1998, the Boston Edison board also had an
Audit, Finance and Risk Management Committee, the responsibilities of which
included recommendations as to the selection of independent auditors, review
of the scope of the independent audit, annual financial statements, internal
audit reports, and financial and accounting controls and procedures, and
review of BEC Energy's financial requirements, insurance coverages, and legal
compliance programs, and an Executive Personnel Committee, the
responsibilities of which included reviewing executive officer compensation,
personnel planning and performance, some company benefit programs, and human
resources policies.  Each of these committees met twice in 1998 before their
responsibilities were transferred to the corresponding committees of the BEC
Energy board.  The Pricing Committee, which is authorized to approve the terms
of debt and equity offerings, did not meet in 1998.  All directors attended at
least 75% of the aggregate of the total number of meetings of the Boston
Edison board and the total number of meetings held by all committees of the

<PAGE> 55
Boston Edison board on which he or she served, with the exception of Mr. Egan,
who attended 65% of these meetings.

(b)  Identification of Executive Officers
-----------------------------------------

The information required by this item is included at the end of Part I of this
Form 10-K/A under the caption Executive Officers of the Registrant.

(c)  Identification of Certain Significant Employees
----------------------------------------------------

Not applicable.

(d)  Family Relationships
-------------------------

Not applicable.

(e)  Business Experience
------------------------

The names of the nominees as Class II directors and the incumbent Class I and
Class III directors and selected information concerning them are shown in the
table below.  Unless a specific time period is indicated, each nominee and
director has held the position first listed across from his or her name for at
least five years.

<TABLE>
           Nominees as Class II Directors - Terms Expiring in 2002
           -------------------------------------------------------

<CAPTION>
Nominees                     Principal Occupation and Directorships
--------                     -------------------------------------------------
<S>                          <C>
Charles K. Gifford           Chairman (since 1997 and from 1995-1996) and
Age:  56                     Chief Executive Officer (since 1995), formerly
Boston Edison Company        President (1989-1995), BankBoston Corporation
Director since:  1990        (Bank Holding Company), and Chairman and Chief
Member:  Audit, Finance      Executive Officer (since 1995), formerly
and Risk Management,         President (1989-1996), BankBoston, N.A.;
Executive Personnel          Director, Boston Edison Company, BankBoston
and Pricing Committees       Corporation, BankBoston, N.A., Massachusetts
                             Mutual Life Insurance Company.

Paul A. LaCamera             President and General Manager (since 1997),
Age:  55                     WCVB-TV Channel 5, formerly Vice President and
Boston Edison Company        General Manager (1994-1997); Director, Boston
Director since:  1998        Edison Company.
Member:  Audit, Finance
and Risk Management
Committee

Thomas J. May                Chairman, President and Chief Executive Officer
Age:  51                     (since 1998), BEC Energy, and Chairman,
Boston Edison Company        President (since 1995) and Chief Executive
Director since:  1991        Officer, Boston Edison Company; Director, Boston
Member:  Executive           Edison Company, BankBoston Corporation,
and Pricing Committees       BankBoston, N.A., Liberty Mutual Insurance
                             Company, Liberty Mutual Fire Insurance Company,
                             Liberty Financial Companies, Inc., RCN
                             Corporation.
</TABLE>

<PAGE> 56
<TABLE>
<CAPTION>
Nominees                     Principal Occupation and Directorships
--------                     -------------------------------------------------
<S>                          <C>
Sherry H. Penney             Chancellor (1988-1995 and 1996 to present),
Age:  61                     University of Massachusetts at Boston, formerly
Boston Edison Company        President (1995) (interim), University of
Director since:  1990        Massachusetts; Director, Boston Edison Company.
Member:  Audit, Finance
and Risk Management and
Executive Personnel
Committees
</TABLE>

<TABLE>
           Incumbent Class III Directors - Terms Expiring in 2000
           ------------------------------------------------------

<CAPTION>
Directors                    Principal Occupation and Directorships
---------                    -------------------------------------------------
<S>                          <C>
Gary L. Countryman           Chairman of the Board, Liberty Mutual Insurance
Age:  59                     Company and Liberty Life Assurance Company of
Boston Edison Company        Boston, formerly Chief Executive Officer (1985-
Director since:  1986        1998), Liberty Mutual Insurance Company and
Member:  Executive           Liberty Life Assurance Company of Boston;
and Executive                Director, Boston Edison Company, Liberty Mutual
Personnel Committees         Insurance Company, Liberty Life Assurance
                             Company of Boston, Liberty Mutual Fire Insurance
                             Company, Liberty Financial Companies, Inc.,
                             BankBoston Corporation, BankBoston, N.A., The
                             Neiman-Marcus Group, Inc., Alliance of American
                             Insurers.

Thomas G. Dignan, Jr. (1)    Partner, Ropes & Gray (Law Firm); Director,
Age:  58                     Boston Edison Company.
Boston Edison Company
Director since:  1983
Member:  Executive
Committee

Herbert Roth, Jr.            Former Chairman of the Board (1978-1985) and
Age:  70                     Chief Executive Officer (1968-1985), LFE
Boston Edison Company        Corporation (Traffic and Industrial Process
Director since:  1978        Control Systems); Director/Trustee, Boston
Member:  Audit,              Edison Company, Landauer, Inc., Tech/Ops Sevcon,
Finance and Risk             Inc., Phoenix Home Life Mutual Insurance
Management Committee         Company, Phoenix Series Fund, Phoenix Total
                             Return Fund, Inc., Phoenix Multi-Portfolio Fund,
                             The Bid Edge Series Fund, Mark IV Industries.

Stephen J. Sweeney           Former Chairman of the Board (1986-1992) and
Age:  70                     Chief Executive Officer (1984-1990), Boston
Boston Edison Company        Edison Company; Director, Boston Edison Company,
Director since:  1983        Selecterm, Inc., Liberty Mutual Insurance
Member:  Audit,              Company, Liberty Mutual Fire Insurance Company,
Finance and Risk             Liberty Life Assurance Company of Boston,
Management Committee         Liberty Financial Companies, Inc., Uno
                             Restaurant Corporation.
</TABLE>

<PAGE> 57
<TABLE>
            Incumbent Class I Directors - Terms Expiring in 2001
            ----------------------------------------------------

<CAPTION>
Directors                    Principal Occupation and Directorships
---------                    -------------------------------------------------
<S>                          <C>
Nelson S. Gifford            Principal, Fleetwing Capital (Venture
Age:  68                     Investments); formerly Chairman (1986-1990) and
Boston Edison Company        Chief Executive Officer (1975-1990), Dennison
Director since:  1981        Manufacturing Company (Stationery Products,
Member:  Executive           Systems and Packaging); Director, Boston Edison
Committee                    Company, John Hancock Mutual Life Insurance
                             Company, Reed and Barton, J.M. Huber Corp.,
                             Nypro Inc, Partners Fund.

Richard J. Egan              Chairman of the Board, EMC Corporation (Storage
Age:  63                     Related Computer System Products); Director,
Boston Edison Company        Boston Edison Company, Cognition Inc., Shiva
Director since:  1997        Corporation, New York Stock Exchange Listed
Member:  Executive           Company Advisory Committee.
Personnel Committee

Matina S. Horner             Executive Vice President, Teachers Insurance and
Age:  59                     Annuity Association/College Retirement Equities
Boston Edison Company        Fund; formerly President (1972-1989), Radcliffe
Director since:  1988        College; Director, Boston Edison Company, The
Member:  Executive,          Neiman-Marcus Group, Inc.
Audit, Finance and
Risk Management and
Pricing Committees

<FN>
(1)  During 1998, Boston Edison Company paid legal fees to the firm of Ropes
     & Gray.
</TABLE>

(f)  Involvement in Certain Legal Proceedings
---------------------------------------------

Not applicable.

(g)  Promoters and Control Persons
----------------------------------

Not applicable.

Item 11.  Executive Compensation
--------------------------------

Director Compensation

In 1998, the compensation programs for directors were reviewed and revised
with the assistance of an external compensation consultant.  The review was
initiated to assure that the level of compensation be appropriate in reference
to comparable programs, the plan design supports BEC Energy's and Boston
Edison's strategic objectives, and the interests of the directors are aligned
with those of BEC Energy's shareholders.

When BEC Energy was established in May of 1998, the persons serving as
directors of Boston Edison were also named as trustees of BEC Energy.  Members
of the Executive Committee of the BEC Energy board also serve on the Executive
Committee of the Boston Edison board.  The compensation program for service on
the two boards was established to take into account the dual responsibilities.
Therefore, the payments described below represent the entire compensation
received by the trustees/directors serving on the boards of both entities.

<PAGE> 58
Each director who is not an employee of Boston Edison receives an annual board
retainer of $20,000 in cash.  Each director also receives an annual retainer
of $20,000 worth of BEC Energy common shares which is deferred until the
director retires from the board.  Each non-employee director who is a member
of the Executive Committees of the two entities receives an additional
retainer of $3,000 and each director who chairs a BEC Energy or Boston Edison
board committee receives an additional retainer of $3,000.  All other
retainers were discontinued as of October 1998.  Each director who is not an
employee of Boston Edison receives $1,000 for attendance in person at each
meeting of the Boston Edison board or a committee and $500 for participating
in a meeting by telephone.  When BEC Energy and Boston Edison board or
executive committee meetings are held consecutively, which is usually the
case, only one meeting fee is paid.  Directors may elect to defer part or all
of their directors' fees under BEC Energy/Boston Edison deferred fee plan.  In
1998, two director compensation programs were discontinued:  the 1991 Director
Stock Plan and the 1993 Directors' Retirement Benefit.  An amount equal to the
present value of the benefit each outside director accrued under the
Directors' Retirement Benefit was deposited in deferred accounts.  Receipt is
deferred until the director's retirement from the BEC Energy/Boston Edison
boards.

Report of the Executive Personnel Committee

As noted above, when BEC Energy was established, the responsibilities of the
Boston Edison Executive Personnel Committee were transferred to the BEC Energy
Executive Personnel Committee.  Below is the report of the BEC Energy
Executive Personnel Committee.

Under the rules established by the SEC, BEC Energy is required to provide
specified data and information with regard to the compensation and benefits
provided to its executive officers, including BEC Energy's chief executive
officer and the four other most highly compensated executive officers.  The
disclosure requirements for these officers (the "Named Executive Officers")
include tables summarizing total compensation and a report explaining the
rationale and considerations that led to fundamental executive compensation
decisions affecting those individuals for the prior year.

The Executive Personnel Committee

BEC Energy's executive compensation program is administered by the Executive
Personnel Committee, a committee of the BEC Energy board composed of the four
non-employee trustees listed as signatories to this report.  Except as
discussed below, none of these non-employee trustees has any interlocking or
other relationship with BEC Energy that would require disclosure to the SEC.
Generally, all decisions of the Executive Personnel Committee regarding the
compensation of the chief executive officer are subject to the approval of the
non-employee trustees of BEC Energy, none of whom is eligible to participate
in the incentive plans described below.  The Executive Personnel Committee
administers the 1997 Stock Incentive Plan discussed below.

The Named Executive Officers

The officers identified as the five most highly compensated executive officers
of BEC Energy are all employees of Boston Edison Company, BEC Energy's
principal subsidiary.  Three of the Named Executive Officers, Messrs. May,
Horan and Judge, also serve as officers of BEC Energy, in the following
capacities:  Mr. May as Chairman, President and Chief Executive Officer;
Mr. Horan as Senior Vice President and General Counsel; and Mr. Judge as

<PAGE> 59
Senior Vice President and Treasurer.  BEC Energy does not have any employees
of its own.

Compensation Philosophy

The executive compensation philosophy of BEC Energy is to provide competitive
levels of compensation that advance BEC Energy's annual and long-term
performance objectives, reward corporate performance, and assist BEC Energy in
attracting, retaining and motivating highly qualified executives.  The
framework for the compensation committee's executive compensation program is
to establish base salaries which are competitive with electric utilities in
general and to incentivize excellent performance by providing executives with
the opportunity to earn additional remuneration under the annual and long-term
incentive plans.  The incentive plan goals are designed to improve the
effectiveness and enhance the efficiency of BEC Energy's operations and to
create value for shareholders.  The committee also seeks to link executive and
shareholder interests through equity-based incentive plans.  Accordingly, in
1997, upon the committee's recommendation, the Boston Edison board approved
stock ownership guidelines of three times base salary for the chief executive
officer and one to one-and one-half times base salary for the other executive
officers of BEC Energy and Boston Edison Company.  These guidelines allow the
executives five years to acquire this amount of stock.

Components of Compensation

Compensation paid to the Named Executive Officers, as reflected in the
following tables, consists of three primary elements:  base salary, annual
incentive awards, and long-term incentive awards.  BEC Energy compares its
compensation levels against those of other growth-oriented investor-owned
electric utility companies.  BEC Energy's strategy is to establish total
compensation, i.e., base salary and annual incentives, at the 60th percentile
of the utility industry, and to compare its long-term incentive plan to those
of more aggressive utilities and general industry companies that focus on
value creation.

During 1998, the committee thoroughly reviewed data collected by nationally
recognized compensation experts as well as by Boston Edison's human resources
group to determine whether BEC Energy's compensation strategy was being met.
The review evaluated base salary and annual incentives of nearly all electric
utility companies, and long-term incentives of a blend of utilities and
general industry.  The data demonstrated that BEC Energy was in conformity
with its compensation strategy to the satisfaction of the committee.

The income tax deductions of publicly traded companies may be limited to the
extent total compensation for particular executive officers exceeds one
million dollars during any year.  This deduction limit, however, does not
apply to payments which qualify as "performance based".  The committee has
reviewed the regulations issued by the Internal Revenue Service and will
continue to review the application of these rules to future compensation.
However, the committee intends to continue basing its executive compensation
decisions primarily upon performance achieved, both corporate and individual,
while retaining the right to make subjective decisions and to award
compensation that may or may not meet all of the Internal Revenue requirements
for deductibility.

Annual Incentive Plan

Annual incentive payments to the Named Executive Officers, reported in the
fourth column of the Summary Compensation Table below, are based on both

<PAGE> 60
corporate and business unit performance objectives which are derived from the
corporate operating plan and approved by the committee.  Corporate performance
objectives include a comparison of target to actual earnings per share from
operations.  Business unit performance objectives include predetermined levels
for operating and capital budgets, as well as key operating goals.  The annual
incentive plan award for Mr. May is based solely on BEC Energy's achieving the
earnings per share objective.  In 1998, BEC Energy's basic earnings per share
were $2.76, which exceeded the plan target.  The annual incentive plan awards
for Messrs. Gustin, Horan, Judge and Ledgett were based 50% on earnings per
share and 50% on specific business unit performance objectives to achieve
various budget and operating plan targets.  All four officers exceeded the
specified business unit performance levels.

Long-Term Compensation

Under the 1997 Stock Incentive Plan, executive officers and other key
employees are eligible to receive grants from time to time of stock-related
awards of seven general types:  (i) stock options, (ii) stock appreciation
rights, (iii) restricted stock awards, (iv) deferred stock awards, (v)
performance unit awards, (vi) dividend equivalent awards, and (vii) other
stock-based awards.  The long-term grant in May of 1998 consisted of non-
qualified stock options, deferred shares and dividend equivalents on the
deferred shares, and was based upon the committee's evaluation of performance
towards key strategic objectives, and competitive award data provided by an
external consultant.  The committee did not weight any of these factors.  The
options and the deferred shares vest at the rate of 33% per year over a three-
year period from the date of grant, and the options may be exercised over a
ten-year period.

Other Plans

At various times in the past, BEC Energy and Boston Edison Company have
adopted various broad-based employee benefit plans in which officers are
permitted to participate on the same terms as non-executive employees who meet
applicable eligibility criteria.  These plans include pension, life, and
health insurance plans, as well as a section 401(k) savings plan which
includes a company matching contribution equal to the first six percent of pay
contributed by the employee up to a maximum excludable 401(k) contribution
allowed by the Internal Revenue Code.  In addition, Boston Edison Company has
a deferred compensation plan in which officers and senior managers may elect
to participate.

In 1996, the committee implemented a supplemental executive retirement plan
which provides eligible participates with supplementary retirement income of
up to 60% of final average cash compensation, depending upon each
participant's years of service, reduced by 50% of the participant's social
security benefit and further reduced by benefits the participant receives
under Boston Edison's pension plan.

Mr. May's 1998 Compensation

The Executive Personnel Committee makes decisions regarding the compensation
of the chief executive officer using the same philosophy and criteria
described above.  As with the compensation of all officers, BEC Energy
compares compensation levels for the chief executive officer to those of all
other investor-owned electric utility companies.

Each year BEC Energy approves the adjustment of salary ranges for the chief
executive officer and other corporate officers based on studies conducted by

<PAGE> 61
external executive compensation consultants and Boston Edison Company's human
resources group.  The 1998 studies found BEC Energy's executive compensation
levels to be within the approved 60th percentile position to market.  Mr. May
received a 5% increase to his base salary in 1998.

Mr. May's annual incentive award, shown in the fourth column of the Summary
Compensation Table below, was in conformity with the provisions of the annual
incentive plan described above, and was based on BEC Energy surpassing its
operating plan targets.  The committee's policy is to base individual long-
term incentive awards on an annual study by the compensation consultant
comparing the value of long-term incentive grants to salary levels for a blend
of electric utility and general industry companies.  The 6,000 deferred shares
and 60,000 options granted Mr. May in 1998 reflect this policy.

Compensation Committee Interlocks and Insider Participation

Charles K. Gifford, who is a member of BEC Energy's Executive Personnel
Committee, is Chairman and Chief Executive Officer of BankBoston Corporation
and BankBoston, N.A.  Thomas J. May, BEC Energy's Chairman, President and
Chief Executive Officer, serves on the boards of directors of BankBoston
Corporation and BankBoston, N.A.

Gary L. Countryman, who is the Chairman of BEC Energy's Executive Personnel
Committee, is Chairman of the Board and Chief Executive Officer of Liberty
Mutual Insurance Company and Liberty Mutual Fire Insurance Company and
Chairman of the Board of Liberty Financial Companies, Inc.  Mr. May serves on
the boards of directors of Liberty Mutual Insurance Company, Liberty Mutual
Fire Insurance Company, and Liberty Financial Companies, Inc.

                                       By the Executive Personnel Committee,


                                       Gary L. Countryman (Chairman)
                                       Richard J. Egan
                                       Charles K. Gifford
                                       Sherry H. Penney

Executive Compensation Tables

The following information is given regarding annual and long-term compensation
earned by the chief executive officer and the four other most highly
compensated executive officers of BEC Energy and Boston Edison Company with
respect to the years 1996, 1997 and 1998.

<PAGE> 62
<TABLE>
                          Summary Compensation Table
                          --------------------------

<CAPTION>
                                Annual                               Long-Term
                             Compensation                       Compensation Awards   Payouts
                          ------------------                   ---------------------  -------
                                                                          Securities
                                                  Other        Deferred   Underlying
Name and                                          Annual         Share     Options/    LTIP      All Other
Principal Position  Year   Salary    Bonus    Compensation(1)  Awards(2)   SARs(#)    Payouts  Compensation(3)
------------------  ----  --------  --------  ---------------  ---------  ----------  -------  ---------------
<S>                 <C>   <C>       <C>             <C>         <C>         <C>          <C>       <C>
Thomas J. May.....  1998  $519,583  $600,000        -           238,500      60,000      -         $ 9,600
 Chairman,          1997   496,875   498,750        -           426,400     100,000      -           9,600
  President and     1996   463,625   324,750        -              -           -         -           9,000
  Chief Executive
  Officer
 BEC Energy and
  Boston Edison
  Company

Ronald A. Ledgett.  1998   277,875   248,850        -            99,375      27,000      -          84,600
 Executive Vice     1997   232,500   216,750        -           118,450      28,600      -           9,600
  President,        1996   193,667   119,300        -              -           -         -           9,000
 Boston Edison
  Company

Douglas S. Horan..  1998   208,750   196,750        -            59,625      14,000      -          59,600
 Senior Vice        1997   195,417   140,000        -           103,000      25,000      -           9,600
  President,        1996   175,833    83,750        -              -           -         -           9,000
 BEC Energy and
  Boston Edison
  Company

James J. Judge....  1998   205,417   196,750        -            59,625      14,000      -          59,600
 Senior Vice        1997   183,667   136,400        -            97,850      23,400      -           9,600
  President,        1996   167,000    80,000        -              -           -         -           9,000
 BEC Energy and
  Boston Edison
  Company

L. Carl Gustin....  1998   194,375   163,875        -            51,675      12,000      -           9,600
 Senior Vice        1997   187,813   121,250        -            97,850      23,800      -           9,600
  President,        1996   182,507    67,262        -              -           -         -           9,000
 Boston Edison
  Company

<FN>
(1)  None of the Named Executive Officers received amounts of other annual
     compensation in 1996, 1997, or 1998 which would require disclosure
     under SEC rules.

(2)  Deferred common share awards are valued at the closing market price as
     of the date of the grant.  The awards vest one-third on each of the
     first, second and third anniversaries of the date of the grant.
     Dividends will accrue on the awards from the date of grant and will be
     be payable in the form of additional shares which will vest at the same
     time the awards vest.  Aggregate deferred common share holdings and
     values based on the closing price of the common shares on December 31,
     1998 are as follows:  Mr. May, 16,933 shares ($697,428); Mr. Ledgett,
     5,567 shares ($229,291); Mr. Gustin, 3,833 shares ($157,872); Mr. Horan,
     4,167 shares ($171,628) and Mr. Judge, 4,033 shares ($166,109).

(3)  Messrs. Ledgett, Horan and Judge received payments in the amounts of
     $75,000, $50,000 and $50,000 respectively, under retention agreements
     entered into in 1996.  All other amounts in this column represent Boston
     Edison's matching contribution under its 401(k) plan.
</TABLE>

<PAGE> 63
<TABLE>
                       Option Grants in Last Fiscal Year
                       ---------------------------------

<CAPTION>
                                    Individual Grants
                     ------------------------------------------------
                                          % of
                                         Total
                                         Options                       Grant
                         Number of       Granted  Exercise              Date
                         Securities        to        or               Present
                         Underlying     Employees   Base   Expiration  Value
Name                 Options Granted(1)  in 1998   Price      Date      (2)
----                 ------------------ --------- -------- ---------- -------
<S>                        <C>            <C>      <C>      <C>       <C>
Thomas J. May.....         60,000         14.3%    $39.75   4/22/08   $276,600
Ronald A. Ledgett.         27,000          6.4%    $39.75   4/22/08   $124,470
L. Carl Gustin....         12,000          2.9%    $39.75   4/22/08   $ 55,320
Douglas S. Horan..         14,000          3.3%    $39.75   4/22/08   $ 64,540
James J. Judge....         14,000          3.3%    $39.75   4/22/08   $ 64,540

<FN>
(1)  Options vest one-third annually beginning April 22, 1999.

(2)  The grant date present values were determined using the Black-Scholes
     option pricing model.  There is no assurance that the value realized
     would be at or near the value estimated by the Black-Scholes model.
     Assumptions used for the model are as follows:  stock volatility, 16%;
     risk-free interest rate, 5.66%; dividend yield, 4.88%; and time
     to exercise, four years.
</TABLE>

<TABLE>
              Aggregated Option/SAR Exercises and Fiscal Year-End
              ---------------------------------------------------
                              Option Value Table
                              ------------------

<CAPTION>
                                               Number of Securities        Value of Securities
                                                    Underlying           Underlying Unexercised
                                                Unexercised Options       In-the-Money Options
                   Shares/SARs                 At Fiscal Year-End        At Fiscal Year-End (1)
                   Acquired on    Value     -------------------------   -------------------------
Name                Exercise     Realized   Exercisable/Unexercisable   Exercisable/Unexercisable
----               -----------   --------   -------------------------   -------------------------
<S>                     <C>         <C>        <C>          <C>          <C>          <C>
Thomas J. May.....      0           $0         33,333   /   126,667      $506,245  /  $1,098,755
Ronald A. Ledgett.      0           $0          9,533   /    46,067      $147,166  /    $333,159
L. Carl Gustin....      0           $0          7,933   /    27,867      $122,466  /    $262,197
Douglas S. Horan..      0           $0          8,333   /    30,667      $128,641  /    $277,422
James J. Judge....      0           $0          7,800   /    29,600      $120,413  /    $260,950

<FN>
(1)  Based on the closing price of BEC Energy common shares on December 31,
     1998 of $41.1875.
</TABLE>

<PAGE> 64
Pension Plan Table

The following table shows the estimated annual retirement benefits payable to
executive officers under the qualified pension plan and the supplemental
executive retirement plan, assuming retirement at age 65.  The Supplemental
executive retirement plan is a non-qualified pension plan providing a maximum
benefit of 60% of compensation after the executive has accumulated 20 years of
credited service and has reached age 60.  The supplemental executive
retirement plan provides the incremental benefits in excess of the benefits
paid under the qualified plan necessary to reach the benefit shown in the
table.  Each of the officers named in the Summary Compensation Table
participates in the supplemental executive retirement plan.  The benefits
presented are based on a straight life annuity and do not take into account a
reduction in benefits of up to 50% of the participant's primary social
security benefit.

<TABLE>
<CAPTION>
                                                   Years of Credited Service
Average Annual                                   ----------------------------
Compensation                                         10        15        20
--------------                                   --------  --------  --------
<S>                                              <C>       <C>       <C>
$200,000.......................................  $ 60,000  $ 90,000  $120,000
$300,000.......................................    90,000   135,000   180,000
$400,000.......................................   120,000   180,000   240,000
$500,000.......................................   150,000   225,000   300,000
$600,000.......................................   180,000   270,000   360,000
$700,000.......................................   210,000   315,000   420,000
$800,000.......................................   240,000   360,000   480,000
$900,000.......................................   270,000   405,000   540,000
</TABLE>

For purposes of the retirement plans, Messrs. May, Ledgett, Gustin, Horan and
Judge currently have 23, 18, 18, 21 and 21 years of credited service,
respectively.

Final average compensation for purposes of calculating the benefits under the
supplemental executive retirement plan is the highest average annual
compensation of the participant during any consecutive 36-month period.
Compensation taken into account in calculating the benefits described above
includes salary and annual bonus, including any amounts deferred under the
terms of the deferred compensation plan.

Mr. May can elect, and Mr. Ledgett receives, an alternative supplemental
retirement benefit equal to 33% of final base salary annually for 15 years,
which at the current level would provide Mr. Ledgett with approximately $7,000
in excess of the amounts shown in the table above.

Change of Control Agreements

Boston Edison Company has change of control agreements with various key
employees, including those named in the Summary Compensation Table, which
provide severance benefits in the event of specified terminations of
employment following a change in control of Boston Edison.  Events which
constitute a change of control under these agreements are described below.
If, following a change in control, the employee's employment is terminated
without cause or the employee terminates employment for good reason, the
employee receives severance pay in an amount equal to two times, three times
in the case of Mr. May, the sum of annual base salary (at the rate in effect
immediately prior to the date of termination or immediately before the change
of control, whichever is higher) plus actual bonus paid in respect of the most
recently completed fiscal year or target bonus for the fiscal year in which
the termination occurs, whichever is higher.  In addition, the change of

<PAGE> 65
agreements provide for a pro rated bonus payment for the year in which the
termination occurs, the immediate vesting of bonus awards, immediate payment
of deferred compensation amounts upon the termination and payments equal to
the benefit the employee would have received under Boston Edison Company's
retirement plan assuming the executive was vested and remained employed for an
additional two years, three years in the case of Mr. May.  For two years,
three years in the case of Mr. May, following termination of employment, the
employee would be entitled to continue to participate in all welfare plans
provided by Boston Edison Company.  The change of control agreements further
provide for a "gross-up" payment under which, if amounts paid under these
agreements would be effectively reduced a federal excise tax on "excess
parachute payments," Boston Edison Company will pay the employee an additional
amount of cash, so that, after payment of all parachute taxes by the employee,
the employee will have received the amount the employee would have received in
the absence of any such tax.  A change of control under these agreements
generally includes the following events:  (i) a person or group becomes the
beneficial owner of more than 30% of the voting power of Boston Edison
Company's securities; (ii) continuing directors cease to be a majority
of the Boston Edison Company board; (iii) a consolidation, merger or other
reorganization or sale or other disposition of all or substantially all of the
assets of Boston Edison Company, other than certain defined transactions; or
(iv) approval by the stockholders of a complete liquidation or dissolution of
Boston Edison Company.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

(a)  Security Ownership of Certain Beneficial Owners
----------------------------------------------------

Boston Edison's common stock is wholly owned by BEC Energy.

(b)  Security Ownership of Management
-------------------------------------

No director or executive officer is the beneficial owner of Boston Edison's
cumulative preferred stock.

(c)  Changes in Control
-----------------------

Not applicable.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

Not applicable.

<PAGE> 66
                                   Part IV
                                   -------

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------

(a) The following documents are filed as part of this Form 10-K/A:

<TABLE>
<CAPTION>
1.  Financial Statements:
                                                                        Page
                                                                        ----
<S>                                                                      <C>
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996                                         28

Consolidated Statements of Retained Earnings for the
years ended December 31, 1998, 1997 and 1996                             28

Consolidated Balance Sheets as of December 31, 1998 and 1997             29

Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996                                   30

Notes to Consolidated Financial Statements                               31

Selected Consolidated Quarterly Financial Data (Unaudited)               53

Report of Independent Accountants                                        74
</TABLE>


2.  Financial Statement Schedules:

No financial statement schedules are included as they are either not required
or not applicable.


3.  Exhibits:

Refer to the exhibits listing beginning on the following page.




(b) Reports on Form 8-K:

A Form 8-K dated November 23, 1998, was filed during the fourth quarter of
1998 disclosing that Entergy Nuclear Generating Company was selected as the
winning bidder for the purchase of Pilgrim Station.

<PAGE> 67
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------


Exhibit 3     Articles of Incorporation and By-Laws
---------     -------------------------------------

Incorporated herein by reference:
     <S>      <C>                                      <C>     <C>
       3.1    Restated Articles of Organization           3.1  1-2301
                                                               Form 10-Q
                                                               for the
                                                               quarter ended
                                                               June 30, 1994


       3.2    Boston Edison Company Bylaws                3.1  1-2301
              April 19, 1977, as amended                       Form 10-Q
              January 22, 1987, January 28, 1988,              for the
              May 24, 1988 and November 22, 1989               quarter ended
                                                               June 30, 1990


Exhibit 4     Instruments Defining the Rights of
---------     ----------------------------------
              Security Holders, Including Indentures
              --------------------------------------

Incorporated herein by reference:

       4.1    Medium-Term Notes Series A - Indenture      4.1  1-2301
              dated September 1, 1988, between                 Form 10-Q
              Boston Edison Company and Bank of                for the
              Montreal Trust Company                           quarter ended
                                                               September 30,
                                                               1988


     4.1.1    First Supplemental Indenture                4.1  1-2301
              dated June 1, 1990 to                            Form 8-K
              Indenture dated September 1, 1988                dated
              with Bank of Montreal Trust Company -            June 28, 1990
              9 7/8% debentures due June 1, 2020


     4.1.2    Indenture of Trust and Agreement among   4.1.26  1-2301
              the City of Boston, Massachusetts                Form 10-K
              (acting by and through its Industrial            for the
              Development Financing Authority) and             year ended
              Harbor Electric Energy Company and               December 31,
              Shawmut Bank, N.A., as Trustee, dated            1991
              November 1, 1991


     4.1.3    Votes of the Pricing Committee of the    4.1.27  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken August 5, 1991 re                  for the
              9 3/8% debentures due August 15, 2021            year ended
                                                               December 31,
                                                               1991
</TABLE>

<PAGE> 68
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------
   <S>        <C>                                     <C>      <C>
     4.1.4    Revolving Credit Agreement dated         4.1.24  1-2301
              February 12, 1993                                Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1992


   4.1.4.1    First Amendment to Revolving Credit      4.1.10  1-2301
              Agreement dated May 19, 1995                     Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1995


   4.1.4.2    Second Amendment to Revolving Credit    4.1.4.2  1-2301
              Agreement dated July 1, 1997                     Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1997


     4.1.5    Votes of the Pricing Committee of the    4.1.25  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken September 10, 1992 re              for the
              8 1/4% debentures due September 15, 2022         year ended
                                                               December 31,
                                                               1992


     4.1.6    Votes of the Pricing Committee of the    4.1.26  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken January 27, 1993 re                for the
              6.80% debentures due February 1, 2000            year ended
                                                               December 31,
                                                               1992


     4.1.7    Votes of the Pricing Committee of the    4.1.27  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken March 5,1993 re                    for the
              6.80% debentures due March 15, 2003,             year ended
              7.80% debentures due March 15, 2023              December 31,
                                                               1992


     4.1.8    Votes of the Pricing Committee of the    4.1.28  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken August 18, 1993 re                 for the
              6.05% debentures due August 15, 2000             year ended
                                                               December 31,
                                                               1993
</TABLE>

<PAGE> 69
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------
     <S>      <C>                                       <C>    <C>
     4.1.9    Votes of the Pricing Committee of the     4.1.9  1-2301
              Board of Directors of Boston Edison              Form 10-K
              Company taken May 10, 1995 re                    for the
              7.80% debentures due May 15, 2010                year ended
                                                               December 31,
                                                               1995
</TABLE>


Management agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of any agreements or instruments defining the rights of
holders of any long-term debt whose authorization does not exceed 10% of total
assets.


<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------


Exhibit 10    Material Contracts
----------    ------------------

Incorporated herein by reference:
    <S>       <C>                                      <C>     <C>
      10.1    Key Executive Benefit Plan               10.3.1  1-2301
              Standard Form of Agreement, May                  Form 10-K
              1986, with modifications                         for the
                                                               year ended
                                                               December 31,
                                                               1991


      10.2    Executive Annual Incentive                 10.5  1-2301
              Compensation Plan                                Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1988


    10.2.1    Supplemental Executive Retirement          10.1  1-2301
              Plan                                             Form 10-Q
                                                               for the
                                                               quarter ended
                                                               June 30, 1997


    10.2.2    1997 Stock Incentive Plan                  10.2  1-2301
                                                               Form 10-Q
                                                               for the
                                                               quarter ended
                                                               June 30, 1997
</TABLE>

<PAGE> 70
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------
    <S>       <C>                                      <C>     <C>
      10.3    Boston Edison Company Deferred            10.11  1-2301
              Fee Plan dated January 14, 1993                  Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1992


      10.4    Deferred Compensation Trust               10.10  1-2301
              between Boston Edison Company                    Form 10-K
              and State Street Bank and                        for the
              Trust Company dated                              year ended
              February 2, 1993                                 December 31,
                                                               1992


    10.4.1    Amendment No. 1 to Deferred              10.5.1  1-2301
              Compensation Trust dated                         Form 10-K
              March 31, 1994                                   for the
                                                               year ended
                                                               December 31,
                                                               1994


      10.5    Boston Edison Company Deferred             10.9  1-2301
              Compensation Plan, Amendment and                 Form 10-K
              Restatement dated January 31, 1995               for the
                                                               year ended
                                                               December 31,
                                                               1994


      10.6    Employment Agreement applicable to        10.10  1-2301
              Ronald A. Ledgett dated April 30, 1987           Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1994


      10.7    Change in Control Agreement applicable     10.2  1-2301
              to Thomas J. May dated July 8, 1996              Form 10-Q
                                                               for the
                                                               quarter ended
                                                               June 30, 1996


      10.8    Form of Change in Control Agreement        10.3  1-2301
              applicable to Ronald A. Ledgett,                 Form 10-Q
              L. Carl Gustin, Douglas S. Horan,                for the
              James J. Judge and certain other                 quarter ended
              officers dated July 8, 1996                      June 30, 1996
</TABLE>

<PAGE> 71
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------
     <S>      <C>                                       <C>    <C>
      10.9    Boston Edison Company Restructuring       10.12  1-2301
              Settlement Agreement dated July 1997             Form 10-K
                                                               for the
                                                               year ended
                                                               December 31,
                                                               1997


     10.10    Boston Edison Company and Sithe            10.1  1-2301
              Energies, Inc. Purchase and Sale                 Form 10-Q
              and Transition Agreements dated                  for the
              December 10, 1997                                quarter ended
                                                               March 31, 1998


Filed herewith:

     10.11    Boston Edison Company Directors'
              Deferred Fee Plan Restatement
              effective October 1, 1998


     10.12    Boston Edison Company and Entergy
              Nuclear Generation Company Purchase
              and Sale Agreement dated November 18,
              1998


Exhibit 12    Statement re Computation of Ratios
----------    ----------------------------------

Filed herewith:

      12.1    Computation of Ratio of Earnings
              to Fixed Charges for the Year
              Ended December 31, 1998


      12.2    Computation of Ratio of Earnings
              to Fixed Charges and Preferred Stock
              Dividend Requirements for the Year
              Ended December 31, 1998


Exhibit 21    Subsidiaries of the Registrant
----------    ------------------------------

      21.1    Harbor Electric Energy Company
              (incorporated in Massachusetts),
              a wholly owned subsidiary of Boston
              Edison Company
</TABLE>

<PAGE> 72
<TABLE>
<CAPTION>
                                                      Exhibit  SEC Docket
                                                      -------  ----------


Exhibit 23    Consent of Independent Accountants
----------    ----------------------------------

Filed herewith:
      <S>     <C>                                        <C>   <C>
      23.1    Consent of Independent Accountants
              to incorporate by reference their
              opinion included with this Form
              10-K/A in the Form S-3 Registration
              Statement filed by Boston Edison
              Company on February 3, 1993 (File
              No. 33-57840)


Exhibit 27    Financial Data Schedule
----------    -----------------------

Filed herewith:

      27.1    Schedule UT


Exhibit 99    Additional Exhibits
----------    -------------------

Incorporated herein by reference:

      99.1    Settlement Agreement between Boston        28.1  1-2301
              Edison Company and Commonwealth                  Form 8-K
              Electric Company, Montaup Electric               dated
              Company and the Municipal                        December 21,
              Light Department of the Town of                  1989
              Reading, Massachusetts, dated
              January 5, 1990


      99.2    Settlement Agreement Between Boston        28.2  1-2301
              Edison Company and City of Holyoke               Form 10-Q
              Gas and Electric Department et. al.,             for the
              dated April 26, 1990                             quarter ended
                                                               March 31, 1990


      99.3    Information required by SEC Form                 1-2301
              11-K for certain employee benefit                Form 10-K/A
              plans for the years ended                        Amendments to
              December 31, 1997, 1996 and 1995                 Form 10-K for
                                                               the years ended
                                                               December 31,
                                                               1997, 1996 and
                                                               1995 dated
                                                               June 25,1998,
                                                               June 26, 1997
                                                               and June 27,
                                                               1996,
                                                               respectively
</TABLE>

<PAGE> 73
                                  SIGNATURE
                                  ---------


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          BOSTON EDISON COMPANY



                                 By:  /s/ Robert J. Weafer, Jr.
                                      ----------------------------------------
                                          Robert J. Weafer, Jr.
                                          Vice President-Finance, Controller
                                          and Chief Accounting Officer



                                 Date:  July 12, 1999

<PAGE> 74
                       Report of Independent Accountants


To the Stockholders and Directors of Boston Edison Company:


In our opinion, the accompanying consolidated financial statements listed in
Item 14(a) of this Form 10-K/A present fairly, in all material respects, the
consolidated financial position of Boston Edison Company and its subsidiary at
December 31, 1998 and 1997 and the consolidated results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of management; our
responsibility is to express an opinion on these financial statements based on
our audits.  We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for the
opinion expressed above.



                                       PricewaterhouseCoopers LLP



Boston, Massachusetts
January 28, 1999