<PAGE 1>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C. 20549-1004

                                   Form 10-K

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

(Mark One)
[ 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 2-7909

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
            (Exact name of registrant as specified in its charter)

         Massachusetts                                    04-1144610    
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

One Main Street, Cambridge, Massachusetts                 02142-9150
(Address of principal executive offices)                  (Zip Code)

                                (617) 225-4000                  
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

    Title of each class        Name of each exchange on which registered
          None                                   None

          Securities registered pursuant to Section 12(g) of the Act:

                                Title of Class
                                     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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                               Outstanding at
           Class of Common Stock               March 16, 1999
        Common Stock, $25 par value            346,600 shares

The Company meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K as a wholly-owned subsidiary and is therefore filing this
Form with the reduced disclosure format.

Documents Incorporated by Reference           Part in Form 10-K
                None                           Not Applicable

              List of Exhibits begins on page 47 of this report.


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                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1998
                               TABLE OF CONTENTS

                                    PART I
                                                                  PAGE

Item  1. Business...........................................        3

            General.........................................        3
            Electric Power Supply...........................        4
            ISO - New England...............................        5
            Energy Mix......................................        6
            Rates, Regulation and Legislation...............        6
                (a) Restructuring Legislation...............        6
                (b) Unbundled Rates.........................        8
                (c) Customer Transition Charge..............        9
                (d) Wholesale Rate Proceedings..............        9
                      Net Requirements Power Supply Agreement       9
                      Transmission Services Agreement              10
                (e) Conservation and Load Management........       11
                (f) Transmission Rate Matters...............       12
                (g) Energy Rate Matters.....................       12
              Competition...................................       12
              Construction and Financing....................       13
              Employees.....................................       13

Item  2.    Properties......................................       13

Item  3.    Legal Proceedings...............................       13



                                    PART II


Item  5.    Market for the Registrant's Common Stock and
            Related Stockholder Matters.....................       14

Item  7.    Management's Discussion and Analysis of
            Results of Operations...........................       15

Item 7A.    Quantitative and Qualitative Disclosures About
            Market Risk.....................................       23

Item  8.    Financial Statements and Supplementary Data.....       23

Item  9.    Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure..........       23

                                    PART IV

Item 14.    Exhibits, Financial Statement Schedules and
            Reports on Form 8-K.............................       47


Signatures..................................................       59
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                    PART I.

Item 1. Business

    General

    Cambridge Electric Light Company (the Company) has been engaged in the
generation, transmission and distribution and sale of electricity to approxi-
mately 45,900 retail customers in the city of Cambridge, Massachusetts.  The
service territory encompasses a seven square mile area with a population of
approximately 96,000.  In addition, the Company sells power for resale to the
Independent System Operator (ISO) - New England (the agency that operates a
centralized facility to ensure reliability of service and dispatch of economi-
cally available generating units throughout New England), the Town of Belmont,
Massachusetts (Belmont), and sold steam from its electric generating stations
at wholesale to an affiliated company for distribution to customers for space
heating and other purposes.  In early 1997, the Company received approval to
participate as a broker in the purchase and sale of electricity.

    The Company, which was organized on January 28, 1886 pursuant to a special
act of the legislature of the Commonwealth of Massachusetts, operates under
the jurisdiction of the Massachusetts Department of Telecommunications and
Energy (DTE), which regulates retail rates, accounting, issuance of securities
and other matters.  In addition, the Company files its wholesale rates with
the Federal Energy Regulatory Commission (FERC).  The Company is a wholly-
owned subsidiary of Commonwealth Energy System (the Parent), which, together
with its subsidiaries, is collectively referred to as "COM/Energy."

    In response to the significant changes that have taken place in the
electric utility industry, the Company sold substantially all of its generat-
ing assets in late 1998 to focus on the transmission and distribution of
energy and related services.  For additional information, refer to the
"Restructuring Legislation" section under the "Rates, Regulation and Legisla-
tion" section of this Item 1.

    In December 1998, the Parent signed an Agreement and Plan of Merger with
BEC Energy, the parent company of Boston Edison Company, that will create an
energy delivery company serving approximately 1.3 million customers located
entirely within Massachusetts including more than one million electric cus-
tomers in 81 communities and 240,000 gas customers in 51 communities.  The
merger is expected to occur shortly after the satisfaction of certain con-
ditions, including receipt of certain regulatory approvals.  The regulatory
approval process is expected to be completed during the second half of 1999.

    By virtue of its charter, which is unlimited in time, the Company has been
involved in the production, purchase, distribution and sale of electricity
without direct competition in kind from any privately or municipally-owned
utility.  Alternate sources of energy are available to customers within the
service territory, but competition from these sources has not been signifi-
cant.  However, on November 25, 1997, the Governor of Massachusetts signed
into law the Electric Industry Restructuring Act that subjects the generation
element of electric utility operations to competition, effective March 1,
1998, and further allows consumers for the first time to choose their electric
energy supplier.  While competition to provide electric supply has not yet
achieved the starting point for residential customers in Massachusetts,
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

several of the Company's commercial and industrial customers (as of March
1999) are already buying power in the competitive market.  For additional
information, refer to the "Unbundled Rates" section under the "Rates, Regula-
tion and Legislation" section of this Item 1.  In early 1995, the Massachu-
setts Institute of Technology, one of the Company's largest customers,
completed and placed into service a natural gas cogeneration facility which
will meet approximately 94% of its power needs.  For further information on
this facility refer to the "Customer Transition Charge" section discussion
included in the "Rates, Regulation and Legislation" section.  Of the Company's
1998 retail electric unit sales (86% of total sales), 12% was sold to residen-
tial customers, 82% to commercial customers, 5% to industrial and 1% to
streetlighting and similar types of customers.

    Electric Power Supply

    The Company sold its generating assets that consisted of the Kendall
Station facility (67 megawatts (MW)) and the adjacent Kendall Jets (46 MW),
located in Cambridge, MA to an affiliate of The Southern Company of Atlanta,
Georgia effective December 30, 1998.  The sale was the result of an auction
process initiated during 1997 in response to electric industry restructuring
legislation enacted in Massachusetts in November 1997.  The Company will now
rely on purchased power to meet its energy requirements.  For further informa-
tion refer to the "Restructuring Legislation" section under the "Rates,
Regulation and Legislation" section of this Item 1.

    Power purchases for the Company and Commonwealth Electric Company (Common-
wealth Electric), the other wholly-owned electric distribution subsidiary of
the Parent, are arranged in accordance with their requirements.  These
arrangements have included purchases from Canal Electric Company (Canal
Electric), another wholly-owned subsidiary of the Parent.  These purchases
included power generated at Canal Electric's generating facilities located in
Sandwich, MA which were also part of the aforementioned auction and sale. 
However, the Company and Commonwealth Electric continue to purchase energy and
capacity under a series of long-term contracts, and these entitlements include
one-quarter (139.8 MW) of the capacity and energy of Canal Unit 1, which is
now purchased from the new plant owner, Southern Energy Canal, L.L.C.
(Southern).  The Company's entitlement in Unit 1 is 28.7 MW.  The Company's
and Commonwealth Electric's cost of service agreements with Canal Electric for
one-half (275.7 MW) of the capacity and energy purchased from Canal Unit 2
were terminated as part of the generating asset sale on December 30, 1998. 
The Company's entitlement in this unit was 55 MW.  The former Unit 2 agreement
was replaced by a new agreement under which Southern sells energy and capacity
to the Company in order to support its customer load obligation, at fixed
rates that are equivalent to the Company's standard offer (wholesale) rates. 
The Company also has an equity ownership interest of 2 1/2% in the Vermont
Yankeee nuclear unit, with a power entitlement of 11.3 MW.  Vermont Yankee has
granted AmerGen Energy Co. an exclusive right to negotiate an agreement to buy
the plant.

    Pursuant to a Capacity Acquisition and Disposition Agreement (CADA), Canal
Electric seeks to secure bulk electric power on a single system basis to
provide cost savings for the customers of the Company and Commonwealth
Electric.  The CADA has been accepted for filing as an amendment to Canal
Electric's FERC rate schedule and allows Canal Electric to act on behalf of
the Company and Commonwealth Electric in the procurement of additional
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

capacity for one or both companies.  The CADA is in effect for Seabrook 1 and
Phases I and II of Hydro-Quebec.  Exchange agreements are in place with these
utilities whereby, in certain circumstances, it is possible to exchange
capacity so that the mix of power improves the pricing for dispatch for both
the seller and the purchaser.  Power contracts are in place whereby Canal
Electric bills or credits the Company and Commonwealth Electric for the costs
or revenues associated with these facilities.  The Company and Commonwealth
Electric, in turn, have billed or are billing these charges (net of revenues
from sales) to their customers through rates subject to DTE approval.

    Information relevant to life-of-the-unit contracts with nuclear units that
are no longer operating in which the Company has an equity ownership is as
follows:
                                          Connecticut    Maine     Yankee
                                             Yankee      Yankee    Atomic
                                               (Dollars in thousands)

Equity Ownership (%)                           4.50       4.00       2.00
Equity Ownership Balance                     $4,713     $3,476       $395
Year of Shutdown                               1996       1997       1992

For further information on Maine Yankee, Connecticut Yankee and Yankee Atomic,
refer to Note 3(b)in the Company's Notes to Financial Statements filed under
Item 8 of this report.

    In addition, the Company has entitlements of 19.7 MW and 8.1 MW through
Canal Electric's equity ownership in Hydro-Quebec Phase II and joint-ownership
in the Seabrook nuclear unit, respectively.

    ISO - New England

    The Company, together with other electric utility companies in the New
England area, is a member of ISO - New England, which was formed in 1971 to
provide for the joint planning and operation of electric systems throughout
New England.

    ISO - New England operates a centralized dispatching facility to ensure
reliability of service and to dispatch the most economically available
generating units of member companies to fulfill the region's energy require-
ments.  This concept is accomplished through the use of computers to monitor
and forecast load requirements.

    The Company and the Parent's other electric subsidiaries are also members
of the Northeast Power Coordinating Council (NPCC), an advisory organization,
which includes the major power systems in New England and New York plus the
provinces of Ontario and New Brunswick in Canada.  The NPCC establishes
criteria and standards for reliability and serves as a vehicle for coordina-
tion in the planning and operation of these systems.

    The reserve requirements used by ISO - New England participants in
planning future additions are determined by ISO - New England to meet the
reliability criteria recommended by the NPCC.  COM/Energy estimates that,
during the next ten years, reserve requirements so determined will be approxi-
mately 20% of peak load.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Energy Mix

    The Company's energy mix, including purchased power, was as follows:

                                     1998       1997      1996

        Oil                           60%        55%       21%
        Nuclear                       10         11        39
        Natural gas                   30         30        33
        Hydro                          -          4         7
          Total                      100%       100%      100%

    The Company's energy mix in 1998 and 1997 reflects the greater availabili-
ty of the oil-fired Canal Units 1 and 2 as compared to 1996 when significant
scheduled and unscheduled maintenance resulted in reduced output.  The
significantly reduced nuclear fuel component in 1997 reflects the permanent
shutdown of the Maine and Connecticut Yankee plants.

Rates, Regulation and Legislation

    The Company operates under the jurisdiction of the DTE, which regulates
retail rates, accounting, issuance of securities and other matters.  In
addition, the Company files its wholesale rates with the FERC.

    (a) Restructuring Legislation

    On November 25, 1997, the Governor of Massachusetts signed into law the
Electric Industry Restructuring Act (the Act).  This legislation provided,
among other things, that customers of retail electric utility companies who
take standard offer service receive a 10 percent rate reduction and be allowed
to choose their energy supplier, effective March 1, 1998.  The Act also pro-
vides that utilities be allowed full recovery of transition costs subject to
review and an audit process.  The rate reduction mandated by the legislation
increases to 15 percent effective September 1, 1999 for customers who continue
to take standard offer service.  A statewide ballot referendum that sought to
repeal the legislation was defeated by a wide margin on November 3, 1998.

    The Company, together with Commonwealth Electric and Canal Electric, had
filed a comprehensive electric restructuring plan with the DTE in November
1997, that was substantially approved by the DTE in February 1998.  The
divestiture of COM/Energy's generation assets and the entitlements associated
with purchased power contracts through an auction process was an integral part
of the restructuring plan and is consistent with the Act.  While the Company
is encouraged with the treatment afforded net non-mitigable transition costs
(which, for the Company, are primarily the result of above-market purchased
power contracts with non-utility generators) by the legislation and the DTE,
the mandated rate reduction has had a significant impact on cash flows of the
Company.  However, the successful sale of the generating assets, as discussed
below, will reduce the negative impact that the rate reductions will have on
future cash flows.

    On May 27, 1998, COM/Energy selected affiliates of Southern Energy New
England, L.L.C., an affiliate of The Southern Company of Atlanta, Georgia, to
buy substantially all of its non-nuclear electric generating assets including
the Company's Kendall Station facility and the adjacent Kendall Jets.  As a 
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

result of construction-related adjustments at the closing on December 30,
1998, the final amount of proceeds from the sale was approximately $454
million.  These facilities represented 984 MW of electric capacity and had a
book value of $74 million.  The plants sold include: Canal Unit 1 (566 MW) and
a one-half interest in Canal Unit 2 (282.5 MW) located in Sandwich, MA and
owned by Canal Electric; the Kendall Station facility (67 MW) and the adjacent
Kendall Jets (46 MW), located in Cambridge, MA and owned by the Company; five
diesel generators (13.8 MW) in Oak Bluffs and West Tisbury on the island of
Martha's Vineyard that are owned by Commonwealth Electric, and a 1.4 percent
joint-ownership interest (8.9 MW) in Wyman Unit No. 4 located in Yarmouth, ME,
also owned by Commonwealth Electric.  The final amount of the proceeds from
the sale of the Company's generating assets was approximately $58.2 million. 
These facilities, which represented 113 MW, had a book value of $7.1 million. 
No gain was recorded on the sale of the Company's generating assets because
the Company is obligated to reduce its transition costs by the net proceeds of
the sale.

    The Company continues to evaluate bids related to its purchased power
contracts and is also evaluating the disposition of the Blackstone Station
generating unit (15.3 MW) located in Cambridge, MA that is subject to a right
of first offer by Harvard University on any divestiture of the facility.

    On July 31, 1998, a divestiture filing was submitted to the FERC and the
DTE that requested approval of the sale of the generating assets to Southern
Energy and further proposed (subject to completion of the sale) that the
current 10 percent rate reduction increase, effective January 1, 1999.  On
October 30, 1998, the DTE approved COM/Energy's sale of assets to Southern
Energy.  However, at that time, the DTE deferred ruling on the allocation of
the net proceeds from the sale of Canal Units 1 and 2 between the Company and
Commonwealth Electric and on the rate of return to be paid to customers on the
net proceeds from the sale over an eleven-year period.  The FERC approved the
sale on November 12, 1998.

    On December 23, 1998, the DTE approved COM/Energy's proposal to establish
a special purpose affiliate, Energy Investment Services, Inc. (EIS), that will
administer the above-book value net proceeds from the sale of the Canal units
with the goal of preserving capital and maximizing earnings for the benefit of
retail customers.  EIS will credit the proceeds and any return earned to the
accounts of the Company and Commonwealth Electric, resulting in a reduction in
the transition costs to be billed to customers.

    On December 23, 1998, the DTE approved the divestiture filing that was
submitted to the FERC and the DTE on July 31, 1998 that requested approval of
the sale of the generating assets to Southern Energy and further proposed
(subject to completion of the sale which occurred on December 30, 1998) that
the 10 percent rate reduction increase, effective January 1, 1999, to approxi-
mately 16 percent.  In addition, the Company proposed to increase the retail
price of standard offer service, starting January 1, 1999, from 2.8 cents per
kilowatthour (kwh) to 3.5 cents.  At the same time, the transition charge for
the Company's customers declined from 2.73 cents per kwh to 1.447 cents. 
These changes are intended to further reduce the cost of electricity to
customers, to make the market increasingly more attractive for independent
power suppliers to sell electricity directly to consumers, and to reduce the
Company's cost deferrals associated with the pricing of standard offer
service.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    (b) Unbundled Rates

    As a result of electric industry restructuring, the Company has unbundled
its rates, provided customers with a 10 percent rate reduction as of March 1,
1998 and has afforded customers the opportunity to purchase generation supply
in the competitive market.  Unbundled delivery rates are composed of a
customer charge (to collect metering and billing costs), a distribution charge
(to collect the costs of delivering electricity), a transition charge (to
collect past costs for investments in generating plants and costs related to
power contracts), a transmission charge (to collect the cost of moving the
electricity over high voltage lines from a generating plant), an energy
conservation charge (to collect costs for demand-side management programs) and
a renewable energy charge (to collect the cost to support the development and
promotion of renewable energy projects).  Electricity supply services provided
by the Company include optional standard offer service and default service. 
Standard offer service is the electricity that is supplied by the local
distribution company (such as the Company) until a competitive power supplier
is chosen by the customer.  It is designed as a seven-year transitional
service to give the customer time to learn about competitive power suppliers. 
The price of standard offer service will increase over time.  Default service
is supplied by the local distribution company when a customer is not receiving
power from either standard offer service or a competitive power supplier.  The
market price for default service will fluctuate based on the average market
price for power.  Amounts collected through these various charges will be
reconciled to actual expenditures on an on-going basis.

    Prior to the implementation of industry restructuring on March 1, 1998,
the Company had a Fuel Charge rate schedule that generally allowed for current
recovery, from retail customers, of fuel used in electric production, pur-
chased power and transmission costs.  This schedule required a quarterly
computation and DTE approval of a Fuel Charge decimal based upon forecasts of
fuel, purchased power, transmission costs and billed unit sales for each
period.  To the extent that collections under the rate schedule did not match
actual costs for that period, an appropriate adjustment was reflected in the
calculation of the next subsequent calendar quarter decimal.  This rate
schedule is no longer in effect.

    Also prior to March 1, 1998, the Company collected a portion of capacity-
related purchased power costs associated with certain long-term power arrange-
ments through base rates as approved by the DTE.

    Also, prior to March 1, 1998, revenues collected through base rates were
generally designed to reimburse the Company for all costs of operation other
than fuel, the energy portion of purchased power, transmission and C&LM costs
while providing a fair return on capital invested in the business.  However,
as a result of a DTE-mandated recovery mechanism for these costs (described
above), the Company experienced a revenue excess or shortfall when unit sales
and/or the costs recoverable in base rates varied from test-period levels. 
The issue, which had a significant impact on the Company's net income, was
addressed in a settlement agreement approved by the DTE in May 1995 that
permitted deferral of up to $2 million annually for these capacity-related
purchased power costs.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    (c) Customer Transition Charge

     In September 1995, the DTE issued a ruling largely approving four rate
tariffs, including a Customer Transition Charge (CTC), that were filed by the
Company on March 15, 1995.  The CTC was intended to protect remaining
customers from paying certain stranded costs that were incurred in the event
that the Company's largest customers discontinued full service, yet still
remain connected for back-up and other services.  These costs included long-
term power contracts entered into to meet projected energy requirements,
investments in substations, underground and overhead lines and current and
future decommissioning costs associated with nuclear plants.  This ruling is
believed to be the first retail stranded cost charge approved nationally and
follows the DTE restructuring order which endorsed, in principle, the recovery
of stranded costs.

    Through the CTC, the Company recovered 75% of net stranded costs as
calculated in its proposal.  The Company's other rates include a Supplemental
Service Rate, a Standby Service Rate and a Maintenance Service Rate each of
which were approved with only minor changes.

    The Company was an intervenor in an appeal at the Massachusetts Supreme
Judicial Court (SJC) filed by the Massachusetts Institute of Technology (MIT)
involving this DTE decision approving the CTC for the recovery of stranded
investment costs.  By its terms, the CTC was terminated on March 1, 1998,
coincident with the retail access date established by the Massachusetts
Legislature in the Electric Industry Restructuring Act.  On September 18,
1997, the SJC remanded the CTC matter to the DTE for further consideration. 
The SJC stated that, although recovery of prudent and verifiable stranded
costs by utility companies is in the public interest and consistent with the
Public Utility Regulatory Policies Act, the insufficiencies of the DTE's
subsidiary findings precluded the SJC from undertaking a meaningful review of
the DTE's calculations that formed the basis of the CTC.  The DTE is in the
process of determining whether to hear additional evidence in the remand or to
rely on the record and pleadings already filed.

    (d) Wholesale Rate Proceedings

    The Town of Belmont Massachusetts Municipal Light Department (Belmont) is
a municipally-owned utility that provides electric service to approximately
25,000 residential customers as well as commercial customers.  Belmont
purchases approximately 80 percent of its electric requirements from the
Company under a Net Requirements Power Supply Agreement (NRA).  The balance of
its electric requirements are currently purchased from the New York Power
Authority (NYPA) and Boston Edison Company and transmitted to Belmont under a
Transmission Services Agreement with the Company.

       Net Requirements Power Supply Agreement

    The Company has provided electric service to Belmont for nearly a century. 
Historically, Belmont was a full-requirements customer of the Company,
purchasing a "bundled" power supply and transmission service.  In 1985,
however, when Belmont received an allocation of approximately two megawatts of
low-cost "preference" power from NYPA, the Company agreed to provide
transmission service for Belmont's NYPA power under its firm transmission
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

tariff, and to provide "bundled" power supply and transmission service for the
remainder of Belmont's power needs under a "partial requirements" tariff.

    On March 8, 1993, the Company filed, with the concurrence of Belmont, the
NRA which was approved by FERC's June 18, 1993 letter order.

    Prior to approving the NRA however, FERC Staff advised the Company that
the cost-of-service formula in the NRA needed to be clarified and that the
Company should file such clarification at least sixty days prior to the April
1, 1998 date upon which the formula rate would become applicable under the
NRA.  In compliance with this requirement, on January 21, 1998, the Company
submitted a supplemental filing containing the clarification to the formula
rate set forth in the NRA.  On February 19, 1998, Belmont filed with the FERC
a protest claiming that the Company's announcement of its intention to leave
the power supply business would have profound implications for Belmont as they
were served from the Company's general mix of electric power and that the
divestiture will result in unjust and unreasonable charges.

    On March 30, 1998, the FERC issued its order approving the Company's
filing to become effective April 1, 1998 subject to the outcome of the pending
proceeding.

    On April 29, 1998 Belmont filed a request for rehearing alleging the FERC
erred in its March 30 Order by accepting the Company's proposed modifications
to the NRA without hearing or suspension, and without requiring that the
Company explain the basis for its deletion of certain protective standards. 
On May 29, 1998, the FERC issued its order denying rehearing.

    Subsequently, the Company and Belmont entered into negotiations to settle
certain outstanding issues.  An amendment to the Order has been signed by both
parties and a joint offer of settlement (Joint Offer) was filed January 15,
1999.  The Company awaits FERC action on the Joint Offer.

       Transmission Services Agreement

    The Company and Belmont entered into discussions in early 1993 to
negotiate a transmission services agreement (TSA).  However, there were
significant differences between the parties and final negotiations were held
in late February 1994.

    As the Company and Belmont were unable to agree on the terms of a TSA, the
Company filed a proposed TSA with the FERC on June 29, 1994.  Belmont
intervened in the proceeding.  The FERC set the TSA for hearing to determine
whether or not it was consistent with a previous memorandum of understanding
(MOU) and whether the transmission rates were just and reasonable.  The
Company and Belmont settled on the rate of return before hearings started.

    After the hearing and filing of initial and reply briefs, on September 14,
1995, the presiding administrative law judge (ALJ) issued an initial decision.

    The ALJ found that: (i) the proposed transmission agreement rates were not
just and reasonable and directed the Company to revise the rates based on
directly assigned facilities and further that use rights should be based on
the same direct assigned facilities; (ii) the proposed transmission agreement,
revised in accordance with the findings made in the decision, are consistent
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

with the parties' MOU and; (iii) that the Company's pre-existing firm
transmission tariff rate is just and reasonable.

    On October 16, 1995, Belmont filed a motion for expedited review and
issuance of decision.  On July 2, 1998, Belmont renewed its motion for
issuance of a decision.  On July 20, 1998, the FERC issued its opinion and
order and affirmed certain parts and reversed other parts of the initial
decision.

    On August 19, 1998, both the Company and Belmont filed requests for
rehearing of the July 20, 1998 order each citing issues on which they felt the
FERC had erred.

    On November 4, 1998, the FERC issued its opinion and order by granting a
rehearing for certain issues and denying a rehearing for others.

    In the order on rehearing the FERC granted the Company's rehearing request
on the limited rate issue regarding the method for allocating certain costs. 
The rehearing order resulted in the Company being able to increase its
transmission rate to Belmont.  In addition to the Company receiving increased
transmission revenues in the future, the decision substantially reduced the
Company's refund obligation to Belmont.  The FERC's rehearing order denied all
of Belmont's rehearing requests including when Belmont has the ability to
purchase rights of use from the Company.

    The Order obligated the Company to make a compliance filing to include the
necessary revisions to the TSA.  Once the FERC approved and accepted the
compliance filing, the Company would have 30 days to make refunds to Belmont,
with interest, back to the refund effective date of January 29, 1995.

    On December 4, 1998, the Company made its compliance filing.  On December
28, 1998, Belmont filed its protest claiming the Company's compliance filing
contains proposed revisions to the TSA which were not directed by the FERC and
therefore should be rejected.

    On January 4, 1999, Belmont filed with the United States Court of Appeals
for the District of Columbia Circuit a petition for review of the July 20,
1998 and November 4, 1998 FERC orders.

    On January 12, 1999, the Company filed its response to Belmont's December
28, 1998 protest.  The Company awaits FERC action on Belmont's protest.

    (e) Conservation and Load Management Programs

     The Company has implemented a variety of cost-effective C&LM programs
that are designed to reduce future energy use by its customers.  In 1993, the
DTE began allowing the recovery by the Company of its "lost base revenues"
from customers as a rate component employed by the DTE to encourage effective
implementation of C&LM programs.  These and other C&LM costs were recovered
through a Conservation Charge decimal.  The KWH savings that were realized as
a result of the successful implementation of C&LM programs served as the basis
for determining lost base revenues.  Pursuant to the Restructuring Act, the
Company has agreed to mandatory charges per KWH to fund energy efficiency and
demand-side management activities.
<PAGE>
<PAGE 12>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    (f) Transmission Rate Matters

    On March 29, 1995, the FERC issued two notices of proposed rulemaking
concerning open access transmission and stranded costs.  The FERC's notices
proposed to remove impediments to competition in the wholesale bulk power
marketplace and to bring more efficient, lower-cost power to electric
consumers.  On March 29, 1996, the Company filed transmission tariffs that
implemented the FERC's requirements for non-discriminatory open access
transmission for both point-to-point and network service.  The tariffs were
accepted on May 17, 1996 to be effective on May 28, 1996, but the rates are
subject to an investigation initiated by the FERC itself.  A settlement with
the FERC regarding this investigation was filed on February 6, 1997.

    On April 24, 1996, the FERC issued Order No. 888, a set of three
interrelated rules resolving the above rulemakings.  The FERC required all
public utilities that own, control or operate transmission facilities in
interstate commerce to have on file wholesale Open Access Transmission Tariffs
(OATTs) that conform to the FERC tariff contained in Order No. 888.  On July
9, 1996, the Company filed OATTs that conform to the FERC's tariffs.  On
November 13, 1996, the FERC accepted the non-rate terms and conditions of
these tariffs effective July 9, 1996, subject to a revision of one section
dealing with the scheduling of services.

    On January 21, 1997, the Company filed revised OATTs to be consistent with
the recently filed ISO - New England OATT.  On March 4, 1997, the FERC issued
Order No. 888-A which required revisions to the tariffs filed in compliance
with Order No. 888.  The Company filed revised OATTs on July 14, 1997.  On
July 31, 1997, the FERC issued an order on the July 9, 1996 filings, approving
the rates, pending the outcome of any outstanding proceedings. On November 25,
1997, the FERC issued Order No. 888-B requiring minor changes that did not
require an additional filing.

    On July 31, 1998, the Company filed a Settlement Agreement at FERC
regarding the outstanding proceeding referred to in the Order.  On September
30, 1998, following the filing of ISO - New England's revised OATT, the
Company filed revised OATTs for consistency with ISO - New England.  On
January 28, 1999. FERC approved the July 31, 1998 Settlement Agreement which
applied to the Company's July 9, 1996 OATT.  Currently, the Company is
awaiting decisions by FERC on the OATTs filed after 1996.

    (g) Energy Rate Matters

    On December 31, 1996, the Company and Commonwealth Electric filed market
based power sales tariffs with the FERC with the intent to make wholesale
power sales at fully negotiated rates.  FERC approved the tariffs on February
27, 1997.  In addition, the Company requested and received authorization to
participate as brokers in the sale and purchase of electricity.

    Competition

    Prior to March 1, 1998, the Company developed and implemented strategies
that dealt with the increasingly competitive environment facing the electric
utility business.  The inherently high cost of providing energy services in
the Northeast had placed the region at a competitive disadvantage as more
<PAGE>
<PAGE 13>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

customers began to explore alternative energy supply options.  Pursuant to
preliminary electric industry restructuring rules issued in late 1996, the DTE
proposed to implement programs under which utility and non-utility generators
could sell electricity to customers of other utilities without regard to
previously closed franchise service areas.  The DTE initially began an inquiry
into incentive ratemaking in 1994.  The Company had developed innovative
pricing mechanisms designed to retain existing customers, add new retail and
wholesale customers and expand beyond current markets.

    On February 6, 1997, due to the dramatically changing nature of the
electric and gas industries, COM/Energy announced the consolidation of 
management personnel of the Company and affiliates Commonwealth Electric,
Commonwealth Gas, COM/Energy Services Company effective on that date.  The
Company and these affiliates continue to operate under their existing company
names.  The consolidation process for these companies involved the merging of
similar functions and activities to eliminate duplication in order to create
the most efficient and cost-effective operation possible.

    Construction and Financing

    Information concerning the Company's construction and financing programs
is contained in Note 3(a) of the Notes to Financial Statements filed under
Item 8 of this report.

    Employees

    The Company has 103 regular employees, 77 employees (75%) are represented
by the Utility Workers' Union of America, A.F.L.-C.I.O.  The existing collec-
tive bargaining agreement is in effect through March 1, 2001.  Employee
relations have generally been satisfactory.

Item 2. Properties

    The Company owns and operates one steam generating plant located in
Cambridge with a total capability of 15.3 MW together with an integrated
system of distribution lines and substations.

    At December 31, 1998, the Company's electric transmission and distribution
system consisted of 93 pole miles of overhead lines, 737 cable miles of
underground line, 246 substations and 46,316 active customer meters.

Item 3. Legal Proceedings

    The Company is an intervenor in an appeal at the Massachusetts Supreme
Judicial Court (SJC) filed by MIT of a decision by the DTE approving a
customer transition charge that allows the Company to recover certain stranded
costs.  For additional information refer to "Rates, Regulation and
Legislation" section in Item 1 of this report.
<PAGE>
<PAGE 14>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                   PART II.

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

      (a) Principal Market

          Not applicable.  The Company is a wholly-owned subsidiary of Common-
          wealth Energy System.

      (b) Number of Stockholders at December 31, 1998

          One

      (c) Frequency and Amount of Dividends Declared in 1998 and 1997

                      1998                            1997           
                            Per Share                       Per Share
          Declaration Date    Amount      Declaration Date    Amount 

          May 8, 1998          $ 7.50     April 25, 1997        $1.70
          July 23, 1998          2.00     October 27, 1997       2.50
          October 23, 1998       2.75     December 22, 1997      4.00
                               $12.25                           $8.20

          Reference is made to Note 7 of the Notes to Financial Statements
          filed under Item 8 of this report for the restriction against the
          payment of cash dividends.

      (d) Future dividends may vary depending on the Company's earnings and
          capital requirements as well as financial and other conditions
          existing at that time.
<PAGE>
<PAGE 15>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Item 7. Management's Discussion and Analysis of Results of Operations

    The following is a discussion of certain significant factors which have
affected operating revenues, expenses and net income during the periods
included in the accompanying Statements of Income and is presented to facili-
tate an understanding of the results of operations.  This discussion should be
read in conjunction with the Notes to Financial Statements filed under Item 8
of this report.

    A summary of the period to period changes in the principal items included
in the accompanying Statements of Income for the years ended December 31, 1998
and 1997 and unit sales for these periods is shown below:

                                        Years Ended          Years Ended
                                        December 31,         December 31,
                                       1998 and 1997        1997 and 1996  
                                             Increase (Decrease)
                                           (Dollars in thousands)

Electric Operating Revenues         $(12,620)  (39.8)%    $12,222    10.3%

Operating Expenses:
 Fuel used in electric production     (1,720)  (21.7)         895    26.1
 Electricity purchased for resale    (18,492)  (23.7)       9,206    13.4
 Transmission                            951    18.6       (1,056)  (17.1)
 Other operation and maintenance        (567)   (2.2)       2,527    10.6
 Depreciation                          3,536    81.6           81     1.9
 Taxes -
   Federal and state income              832    32.1          167     6.9
   Local property and other             (342)   (8.7)          82     2.1
                                     (15,802)  (12.7)      11,902    10.6

Operating Income                       3,182    46.9          320     4.9

Other Income                             462    26.0         (209)  (10.5)

Income Before Interest Charges         3,644    42.5          111     1.3

Interest Charges                          39     1.2           15     0.5

Net Income                           $ 3,605    69.1      $    96     1.9


Unit Sales (MWH)
 Retail                               53,738     4.2       21,983     1.7
 Wholesale                           (38,255)  (14.9)      43,628    20.5
   Total unit sales                   15,483     1.0       65,611     4.4
<PAGE>
<PAGE 16>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Unit Sales

    The following is a summary of unit sales and customers for the periods
indicated:
                                         Years Ended December 31,            
                                1998               1997               1996
                                          %                  %
                                        Change             Change
 Unit Sales (MWH):
   Residential                 163,928    1.8     161,054    2.1     157,803
   Commercial                1,099,867    4.6   1,051,170    2.2   1,028,896
   Industrial                   67,925    3.0      65,948   (5.4)     69,680
   Municipal and other           8,423    2.3       8,233    2.4       8,043
     Total retail            1,340,143    4.2   1,286,405    1.7   1,264,422
   Wholesale                   218,039  (14.9)    256,294   20.5     212,666
     Total                   1,558,182    1.0   1,542,699    4.4   1,477,088

 Customers:
   Residential                  38,724    2.1      37,914    1.1      37,503
   Commercial                    6,802    2.5       6,636    1.7       6,523
   Industrial                       37  (17.8)         45  (13.5)         52
   Municipal and other             321    1.9         315    3.6         304
     Total                      45,884    2.2      44,910    1.2      44,382


    During 1998, the Company's total unit sales increased reflecting higher
retail sales to all classes of customers.  The increase in retail sales was
offset somewhat by a decrease in wholesale sales reflecting lower sales to ISO
- New England due to changes in the Company's capacity needs.

    For 1997, the Company's total unit sales increase reflects higher retail
unit sales as sales to all classes of customers except industrial increased. 
Also included in the increase in unit sales are higher wholesale sales
reflecting an increase in sales to ISO - New England due to changes in the
Company's capacity needs.

Operating Revenues

    Operating revenues for 1998 decreased approximately $12.6 million or 39.8%
due to the 10 percent rate reduction (further discussed below) and decreases
in electricity purchased for resale ($18.5 million) and fuel used ($1.7
million), offset in part by an increase in transmission ($951,000).  The
decrease in electricity purchased for resale of approximately $18.5 million or
23.7% reflects lower fuel costs and a $7.2 million deferral of costs in
conjunction with the Company's restructuring plan as approved by the
Massachusetts Department of Telecommunications and Energy (DTE).  As a result
of industry restructuring, the Company has unbundled its rates, provided
customers with a 10 percent rate reduction as of March 1, 1998 and has
afforded customers the opportunity to purchase generation supply in the
competitive market consistent with the electric industry restructuring
legislation further discussed below.  Delivery rates are composed of a
customer charge (to collect metering and billing costs), a distribution
charge, a transition charge (to collect stranded costs), a transmission
charge, an energy conservation charge (to collect costs for demand-side
management programs) and a renewable energy charge.  Electricity supply
<PAGE>
<PAGE 17>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

services provided by the Company include optional standard offer service and
default service.  Amounts collected through these various charges will be
reconciled to actual expenditures on an on-going basis.  For additional
information concerning electric industry restructuring, refer to the "Rates,
Regulation and Legislation" section filed under Item 1 of this report.

    Operating revenues for 1997 increased $12.2 million (10.3%) primarily due
to higher electricity purchased for resale costs ($9.2 million), fuel costs
($895,000), retail sales ($753,000) and a higher level of wholesale sales,
offset, in part by lower transmission charges ($1,056,000).

    As a result of a DTE-mandated recovery mechanism implemented in 1993 for
capacity-related costs associated with certain long-term purchased power 
contracts, the Company experienced a revenue excess or shortfall when unit
sales and/or the costs recoverable in base rates varied from test-period
levels.  This issue, which had a significant impact on net income, was
addressed in a settlement agreement approved by the DPU in May 1995 (refer to
the "Unbundled Rates" section in Item 1 of this report for additional
details).  During 1998, 1997 and 1996, the Company over-recovered
approximately $1.4 million, $1.7 million and $290,000, respectively, resulting
in an increase to net income of approximately $850,000, $1 million and
$177,000, respectively.

Electricity Purchased For Resale, Transmission and Fuel

    To satisfy demand requirements and provide required reserve capacity, the
Company has purchased power on a long and short-term basis through
entitlements pursuant to power contracts with other New England and Canadian
utilities, Qualifying Facilities and other non-utility generators through a
competitive bidding process that is regulated by the DTE.  The Company has
supplemented these sources with its own generating capacity.

    During 1998, electricity purchased for resale, transmission and fuel costs
decreased in total by approximately $19.3 million (22.1%) in 1998 primarily
due to lower fuel costs and the aforementioned deferral, offset in part by an
increase in transmission costs.

    Electricity purchased for resale, transmission and fuel costs increased in
total by approximately $9 million (11.6%) in 1997 due to higher fuel costs and
higher costs for replacement power reflecting the permanent shutdown of
Connecticut Yankee during 1996 and the absence of power from Maine Yankee
which did not operate in 1997 and has since been permanently shut down.  Also
reflected in the increase in purchased power is the greater availability of
affiliate Canal Electric Company's Units 1 and 2.

Other Operation and Maintenance

    Other operation expense decreased 5.3% ($1.3 million) primarily due to the
absence of a one-time charge ($2.5 million) related to a Personnel Reduction
Program during 1997.  Also contributing to the decrease were labor savings
realized from the aforementioned personnel reduction program ($1.2 million)
and lower insurance and benefits costs.  The impact of these factors was
somewhat offset by higher costs related to the outsourcing of the information
technology, telecommunications and network services function ($1 million),
including costs associated with Year 2000 compliance, and increases in costs
<PAGE>
<PAGE 18>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

associated with conservation and load management programs ($2 million).  The
increase in maintenance expense during 1998 of 25.1% ($690,000) was due
primarily to a greater level of repairs at the Kendall generating unit.

    During 1997, other operation expense increased 13.7% ($2.8 million) due
primarily to the one-time charge ($2.5 million) related to the personnel
reduction program.  Also contributing to the increase in other operation were
higher costs related to automated meter reading ($346,000).  The decline in
maintenance costs of 10.3% ($315,000) during 1997 was due primarily to a lower
level of repairs at the Company's Kendall generating unit.

Depreciation and Taxes

    The significant increase in depreciation expense reflects the treatment
allowed for production plant pursuant to the electric industry restructuring
legislation.  Depreciation expense increased 1.9% in 1997 due to a higher
level of depreciable property, plant and equipment.  The increase in federal
and state income taxes in 1998 reflects the higher level of pre-tax income
related to normal operations.  During 1998, the 8.7% decrease in local
property and other taxes reflects lower property taxes due to the sale of real
estate and lower payroll taxes reflecting the impact of the aforementioned
personnel reduction program.

Other Income and Interest Charges

    The increase in other income during 1998 reflects the gains related to the
sale of real estate ($1.3 million), offset in part by a lower rate of return
relative to steam production for an affiliate steam company ($120,000) and
lower rental income resulting from the sale of real estate.  The decrease in
other income during 1997 was due primarily to the absence of a gain recognized
in 1996 relating to the sale of a real estate ($402,000).

    Interest charges for 1998 increased slightly (1.2%) as long-term interest
decreased ($118,000) reflecting the retirement of a $6 million (6.25%) debt
issue during the second quarter of 1997, offset by an increase in short-term
interest ($182,000) reflecting a higher average level of short-term
borrowings.  Total interest charges for 1997 were virtually unchanged as long-
term interest decreased ($678,000) reflecting the repayment of a $20 million
(9.97%) debt issue during the second quarter of 1996 and the retirement of the
$6 million debt issue during the second quarter of 1997.  The impact of these
maturing debt issues was offset by an increase in short-term interest
($659,000) reflecting a higher level of short-term borrowings.

Forward-Looking Statements

    This discussion contains statements which, to the extent it is not a
recitation of historical fact, constitute "forward-looking statements" and is
intended to be subject to the safe harbor protection provided by the Private
Securities Litigation Reform Act of 1995.  A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those stated in the forward-looking state-
ments.  Those factors include developments in the legislative, regulatory and
competitive environment, certain environmental matters, demands for capital
expenditures and the availability of cash from various sources.
<PAGE>
<PAGE 19>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Merger with BEC Energy

    The electric utility industry has continued to change in response to
legislative and regulatory mandates that are aimed at lowering prices for
energy by creating a more competitive marketplace.  These pressures have
resulted in an increasing trend in the electric industry to seek competitive
advantages and other benefits through business combinations.  On December 5,
1998, the Parent and BEC Energy (BEC), headquartered in Boston, Massachusetts,
entered into an Agreement and Plan of Merger (the Merger Agreement).  Pursuant
to the Merger Agreement, COM/Energy and BEC will be merged into a new holding
company to be known as NSTAR.  The merger is expected to occur shortly after
the satisfaction of certain conditions, including the receipt of certain
regulatory approvals including that of the 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 custom-
ers in 51 communities.

    Shareholder votes on the merger will be held as part of each of
COM/Energy's and BEC's annual shareholder meetings scheduled for the second
quarter of 1999.  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 NSTAR.  Russell D. Wright, COM/Energy's current President and CEO, will
become the President and Chief Operating Officer of NSTAR and will serve on
NSTAR's board of directors.  Also, upon effectiveness of the merger, NSTAR's
board of directors will consist of COM/Energy's and BEC's current trustees.

Provisions of Statement of Financial Accounting Standards No. 71

    As described in Note 2(b) of the Notes to Financial Statements, the
Company follows the provisions of Statement of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." 
In the event the Company is somehow unable to meet the criteria for following
SFAS No. 71, the accounting impact would be an extraordinary, non-cash charge
to operations in an amount that could be material.  Conditions that could give
rise to the discontinuance of SFAS No. 71 include: 1) increasing competition
restricting the Company's ability to establish prices to recover specific
costs, and 2) a significant change in the current manner in which rates are
set by regulators.  The Company monitors these criteria to ensure that the
continuing application of SFAS No. 71 is appropriate.  Based on the current
evaluation of the various factors and conditions that are expected to impact
future cost recovery, the Company believes that its utility operations,
excluding generation-related assets, remain subject to SFAS No. 71 and its
regulatory assets, including those related to electric generation, remain
probable of future recovery.
<PAGE>
<PAGE 20>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    As a result of electric industry restructuring, the Company discontinued
application of accounting principles applied to its electric generation
facilities effective March 1, 1998.  The Company will not be required to write
off any of its generation-related assets, including regulatory assets.  These
assets will be retained on the Company's Balance Sheets because the legisla-
tion and the DTE's plan for a restructured electric industry specifically
provide for their recovery through the non-bypassable transition charge.

Year 2000

    The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year.  Any computer
program that has date sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000.  This could result in a temporary
inability to process transactions or engage in normal business activities. 
COM/Energy has been involved in Year 2000 compliancy since 1996.

    COM/Energy, on a coordinated basis and with the assistance of RCG Informa-
tion Technologies and other consultants, is addressing the Year 2000 issue. 
COM/Energy has followed a five-phase process in its Year 2000 compliance
efforts, as follows: Awareness (through a series of internal announcements to
employees and through contacts with vendors); Inventory (all computers,
applications and embedded systems that could potentially be affected by the
Year 2000 problem); Assessment (all applications or components and the impact
on overall business operations and a plan to correct deficiencies and the cost
to do so); Remediation (the modification, upgrade or replacement of deficient
hardware and software applications and infrastructure modifications); and
Testing (a detailed, comprehensive testing program for the modified critical
component, system or software that involves the planning, execution and
analysis of results).

    COM/Energy's inventory phase required an assessment of all date sensitive
information and transaction processing computer systems and determined that
approximately 90% of its software systems needed some modifications or
replacement.  Plans were developed and are being implemented to correct and
test all affected systems, with priorities assigned based on the importance of
the activity.  COM/Energy has identified the software and hardware installa-
tions that are necessary.  All installations are expected to be completed and
tested by mid-1999.

    COM/Energy has also inventoried its non-information technology systems
that may be date sensitive (facilities, electric and gas operations, energy
supply/production and distribution) that use embedded technology such as
micro-controllers and micro-processors.  COM/Energy is approximately 86%
complete in its efforts to resolve non-compliance with Year 2000 requirements
related to its non-information technology systems.  COM/Energy anticipates
that these systems will be updated or replaced as necessary and tested by mid-
1999.

    At present, the remediation phase for information technology as it applies
to hardware and non-technology issues is scheduled for completion by June 1,
1999.  The testing phase for Year 2000 compliance is approximately 70%
complete and is scheduled to be concluded by June 30, 1999.  All other phases
are complete.
<PAGE>
<PAGE 21>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Modifying and testing COM/Energy's information and transaction processing
systems from 1996 through 2000 is currently expected to cost approximately $7
million, including approximately $900,000 incurred through 1997 and $3.1
million spent in 1998.  Approximately $3 million is expected to be spent in
1999 and 2000.  Year 2000 costs have been expensed as incurred and will
continue to be funded from operations.

    In addition to its internal efforts, COM/Energy has initiated formal
communications with its significant suppliers to determine the extent to which
COM/Energy may be vulnerable to its suppliers' failure to correct their own
Year 2000 issues.  As of February 1, 1999, COM/Energy has received responses
from approximately 75% of those entities contacted, and nearly all have
indicated that they are or will be Year 2000 compliant.  Failure of
COM/Energy's significant suppliers to address Year 2000 issues could have a
material adverse effect on COM/Energy's operations, although it is not
possible at this time to quantify the amount of business that might be lost or
the costs that could be incurred by COM/Energy.  Contact with significant
vendors is continuing and inadequate or marginal responses are being pursued
by COM/Energy.  COM/Energy is prepared to replace certain suppliers or to
initiate other contingency plans should these vendors not respond to
COM/Energy's satisfaction by July 1, 1999.

    In addition, parts of the global infrastructure, including national
banking systems, electrical power grids, gas pipelines, transportation
facilities, communications and governmental activities, may not be fully
functional after 1999.  Infrastructure failures could significantly reduce
COM/Energy's ability to acquire energy and its ability to serve its customers
as effectively as they are now being served.  COM/Energy is identifying
elements of the infrastructure that are critical to its operations and is
obtaining information as to the expected Year 2000 readiness of these ele-
ments.

    COM/Energy has started its contingency planning for critical operational
areas that might be effected by the Year 2000 issue if compliance by
COM/Energy is delayed.  COM/Energy gas and electric operations currently have
emergency operating plans as well as information technology disaster recovery
plans as components of its standard operating procedures.  These plans will be
enhanced to identify potential Year 2000 risks to normal operations and the
appropriate reaction to these potential failures including contingency plans
that may be required for any third parties that fail to achieve Year 2000
compliance.  All necessary contingency plans are expected to be completed by
June 30, 1999, although in certain cases, especially infrastructure failures,
there may be no practical alternative course of action available to
COM/Energy.

    COM/Energy is working with other energy industry entities, both regionally
and nationally with respect to Year 2000 readiness and is cooperating in the
development of local and wide-scale contingency planning.

    While COM/Energy believes its efforts to address the Year 2000 issue will
allow it to be successful in avoiding any material adverse effect on
COM/Energy's operations or financial condition, it recognizes that failing to
resolve Year 2000 issues on a timely basis would, in a "most reasonably likely
worst case scenario," significantly limit its ability to acquire and distrib-
ute energy and process its daily business transactions for a period of time, 
<PAGE>
<PAGE 22>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

especially if such failure is coupled with third party or infrastructure
failures.  Similarly, COM/Energy could be significantly effected by the
failure of one or more significant suppliers, customers or components of the
infrastructure to conduct their respective operations after 1999.  Adverse
affects on COM/Energy could include, among other things, business disruption,
increased costs, loss of business and other similar risks.

    The foregoing discussion regarding Year 2000 project timing, effective-
ness, 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
COM/Energy's ability to respond to unforeseen Year 2000 complications.

Environmental Matters

    The Company is subject to laws and regulations administered by federal,
state and local authorities relating to the quality of the environment.  These
laws and regulations affect, among other things, the siting and operation of
electric generating and transmission facilities and can require the installa-
tion of expensive air and water pollution control equipment.  These regula-
tions have had an impact on the Company's operations in the past and will
continue to have an impact on future operations, capital costs and construc-
tion schedules of major facilities.

    On January 1, 1997, the Company adopted the provisions of Statement of
Position (SOP) 96-1, "Environmental Remediation Liabilities."  SOP 96-1
provides authoritative guidance for recognition, measurement, display and
disclosure of environmental remediation liabilities in financial statements. 
The Company has recorded environmental remediation liabilities net of amounts
paid of $114,000 at December 31, 1998.  The adoption of SOP 96-1 did not have
a material adverse effect on the Company's results of operations or financial
position.

New Accounting Principles

    In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."  SFAS No.
133 establishes accounting and reporting standards requiring that every deri-
vative instrument (including certain derivative instruments embedded in other
contracts possibly including fixed-price fuel supply and power contracts) be
recorded on the balance sheet as either an asset or liability measured at its
fair value.  SFAS No. 133 requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met.  Special accounting for qualifying hedges allows a derivative's gains
and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting.

    SFAS No. 133 is effective for fiscal years beginning after June 15, 1999
and may be implemented as of the beginning of any fiscal quarter after
issuance but cannot be applied retroactively.  SFAS No. 133 must be applied to
derivative instruments and certain derivative instruments embedded in hybrid
contracts that were issued, acquired or substantively modified after December
31, 1997 and, at the Company's election, before January 1, 1998.
<PAGE>
<PAGE 23>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The adoption of SFAS No. 133 is not expected to have a material impact on
the Company's results of operations or financial condition.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

    Although the Company has material commodity purchase contracts and
financial instruments (debt), these instruments are not subject to market
risk.  The Company has a rate making mechanism which allows for the recovery
of fuel costs from customers.  The fuel adjustment mechanism allows the
Company to pass all costs related to the purchase of commodities to the
customer, thereby insulating the Company from market risk.

    Similarly, any change in the fair market value of the Company's prudently
incurred debt obligations realized by the Company would be borne by customers
through future rates.

Item 8.   Financial Statements and Supplementary Data

    The Company's financial statements required by this item are filed
herewith on pages 24 through 46 of this report.

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

    None.
<PAGE>
<PAGE 24>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Item 8.              Financial Statements and Supplementary Data


                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Cambridge Electric Light Company:

    We have audited the accompanying balance sheets of CAMBRIDGE ELECTRIC
LIGHT COMPANY (a Massachusetts corporation and wholly-owned subsidiary of
Commonwealth Energy System) as of December 31, 1998 and 1997, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1998.  These financial statements and
schedules referred to below are the responsibility of the Company's manage-
ment.  Our responsibility is to express an opinion on these financial state-
ments and schedules based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards 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.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cambridge Electric Light
Company as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting princi-
ples.

    Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedules listed in the index to
financial statements and schedules are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic financial statements.  These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state, in all material respects, the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.



                                                ARTHUR ANDERSEN LLP


Boston, Massachusetts
February 18, 1999
<PAGE>
<PAGE 25>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

                                   PART II.


FINANCIAL STATEMENTS

      Balance Sheets at December 31, 1998 and 1997

      Statements of Income for the Years Ended December 31, 1998,
      1997 and 1996

      Statements of Retained Earnings for the Years Ended December 31, 1998,
      1997 and 1996

      Statements of Cash Flows for the Years Ended December 31, 1998,
      1997 and 1996

      Notes to Financial Statements


                                   PART IV.


SCHEDULES

      I     Investments in, Equity in Earnings of, and Dividends Received
            From Related Parties for the Years Ended December 31, 1998, 1997
            and 1996

      II    Valuation and Qualifying Accounts for the Years Ended December 31,
            1998, 1997 and 1996

SCHEDULES OMITTED

      All other schedules are not submitted because they are not applicable or
      not required or because the required information is included in the
      financial statements or notes thereto.

      Financial statements of 50% or less owned companies accounted for by the
      equity method have been omitted because they do not, considered individ-
      ually, constitute a significant subsidiary.
<PAGE>
<PAGE 26>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1998 AND 1997
                                    ASSETS



                                                     1998           1997    
                                                    (Dollars in thousands)

PROPERTY, PLANT AND EQUIPMENT, at original cost     $140,642       $163,914
  Less - Accumulated depreciation                     47,179         63,706
                                                      93,463        100,208
  Add - Construction work in progress                    937            757
                                                      94,400        100,965

INVESTMENTS
  Equity in nuclear electric power companies           9,906          9,849
  Other                                                    5              5
                                                       9,911          9,854

LONG-TERM RECEIVABLE - AFFILIATE                       8,990            -  

CURRENT ASSETS
  Cash                                                28,228            521
  Accounts receivable -
    Affiliated companies                               1,729          2,743
    Customers, less reserves of $465 in 1998
      and $297 in 1997                                10,774         12,483
  Unbilled revenues                                    3,489          3,047
  Inventories, at average cost -
    Materials and supplies                               717            540
    Electric production fuel oil                          35            936
  Prepaid taxes -
    Income                                               -            1,192
    Property                                           1,410          1,697
  Other                                                  324            501
                                                      46,706         23,660

DEFERRED CHARGES
  Regulatory assets                                   70,372         70,466
  Deferred tax asset                                  10,687            -  
  Other                                                  536          2,176
                                                      81,595         72,642

                                                    $241,602       $207,121










  The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 27>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1998 AND 1997
                        CAPITALIZATION AND LIABILITIES



                                                     1998           1997    
                                                    (Dollars in thousands)
CAPITALIZATION
  Common Equity -
    Common stock, $25 par value -
      Authorized and outstanding -
        346,600 shares in 1998 and 1997,
        wholly-owned by Commonwealth
        Energy System (Parent)                      $  8,665       $  8,665
    Amounts paid in excess of par value               27,953         27,953
    Retained earnings                                 16,182         11,607
                                                      52,800         48,225
  Long-term debt, including premiums, less
    current sinking fund requirements and
    maturing debt                                      7,301         17,402
                                                      60,101         65,627
CURRENT LIABILITIES
  Interim Financing -
    Notes payable to banks                               -           19,000
    Advances from affiliates                             -           11,290
    Maturing long-term debt                           10,000            -  
                                                      10,000         30,290
  Other Current Liabilities -
    Current sinking fund requirements                    100            100
    Accounts payable -
      Affiliated companies                             2,818          4,144
      Other                                            8,328          8,076
    Accrued local property and other taxes             1,468          1,706
    Accrued income taxes                              20,514            -  
    Accrued interest                                     463            460
    Other                                              4,704          3,830
                                                      38,395         18,316
                                                      48,395         48,606
DEFERRED CREDITS
  Regulatory liabilities                              69,502          2,984
  Accumulated deferred income taxes                      -           15,135
  Connecticut Yankee purchased power contract         25,185         28,566
  Maine Yankee purchased power contract               30,646         34,908
  Yankee Atomic purchased power contract               1,634          2,749
  Unamortized investment tax credits and other         6,139          8,546
                                                     133,106         92,888
COMMITMENTS AND CONTINGENCIES

                                                    $241,602       $207,121





  The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 28>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                             STATEMENTS OF INCOME
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


                                             1998        1997        1996
                                                (Dollars in thousands)

ELECTRIC OPERATING REVENUES                $118,707    $131,327    $119,105

OPERATING EXPENSES
  Fuel used in electric production            2,602       4,322       3,427
  Electricity purchased for resale           59,387      77,879      68,673
  Transmission                                6,072       5,121       6,177
  Other operation                            22,342      23,599      20,757
  Maintenance                                 3,439       2,749       3,064
  Depreciation                                7,871       4,335       4,254
  Taxes -
    Income                                    3,423       2,591       2,424
    Local property                            2,828       3,060       3,041
    Payroll and other                           775         885         822
                                            108,739     124,541     112,639

OPERATING INCOME                              9,968       6,786       6,466

OTHER INCOME                                  2,236       1,774       1,983

INCOME BEFORE INTEREST CHARGES               12,204       8,560       8,449

INTEREST CHARGES
  Long-term debt                              1,442       1,560       2,238
  Other interest charges                      1,997       1,815       1,157
  Allowance for borrowed funds used
    during construction                         (56)        (31)        (66)
                                              3,383       3,344       3,329

NET INCOME                                 $  8,821    $  5,216    $  5,120



















  The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 29>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                        STATEMENTS OF RETAINED EARNINGS
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996




                                             1998        1997        1996
                                                (Dollars in thousands)

Balance at beginning of year                $11,607     $ 9,233     $ 7,561

Add (Deduct):
  Net income                                  8,821       5,216       5,120
  Cash dividends on common stock             (4,246)     (2,842)     (3,448)

Balance at end of year                      $16,182     $11,607     $ 9,233







































  The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 30>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                           STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                                             1998        1997        1996
                                                (Dollars in thousands)

OPERATING ACTIVITIES
  Net income                                $ 8,821     $ 5,216     $ 5,120
  Effects of noncash items -
    Depreciation and amortization             8,502       4,335       4,254
    Deferred income taxes                   (19,391)       (448)       (628)
    Investment tax credits                     (484)        (91)        (93)
    Earnings from corporate joint ventures   (1,041)     (1,119)     (1,006)
  Dividends from corporate joint ventures       984         673         827
  Change in working capital, exclusive
    of cash and interim financing -
      Accounts receivable and unbilled
        revenues                              2,281      (2,785)        178
      Income taxes                           21,706        (224)     (1,698)
      Accounts payable and other                753        (294)        829
  Transition costs deferral                  (7,244)        -           -  
  All other operating items                  (3,680)        722       2,131
Net cash provided by operating activities    11,207       5,985       9,914

INVESTING ACTIVITIES
  Proceeds from sale of generating assets    58,992         -           -  
  Additions to property, plant and
    equipment (exclusive of AFUDC)           (7,799)     (4,873)     (5,024)
  Allowance for borrowed funds used
    during construction                         (56)        (31)        (66)
Net cash from (used for)
  investing activities                       51,137      (4,904)     (5,090)

FINANCING ACTIVITIES
  Payment of dividends                       (4,246)     (2,842)     (3,448)
  Proceeds from (payments of)
    short-term borrowings, net              (19,000)        275      16,050
  Proceeds from (payments to)
    affiliates                              (11,290)      6,225       2,640
  Long-term debt issues refunded                -        (4,260)    (20,000)
  Retirement of long-term debt through
    sinking funds                              (101)       (101)       (162)
Net cash used for financing activities      (34,637)       (703)     (4,920)
Change in cash                               27,707         378         (96)
Cash at beginning of period                     521         143         239
Cash at end of period                       $28,228     $   521     $   143

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest (net of capitalized amounts)   $ 3,080     $ 3,371     $ 3,796
    Income taxes                            $ 3,871     $ 2,319     $ 4,015



  The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE 31>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                         NOTES TO FINANCIAL STATEMENTS

(1) General Information

    Cambridge Electric Light Company (the Company) is a wholly-owned subsid-
iary of Commonwealth Energy System (the Parent).  The Parent, together with
its subsidiaries, is collectively referred to as "COM/Energy."  The Parent is
an exempt public utility holding company under the provisions of the Public
Utility Holding Company Act of 1935 with investments in four operating public
utility companies located in central, eastern and southeastern Massachusetts
and several non-regulated companies.

    The Company's operations are involved in the production, distribution and
sale of electricity to approximately 44,500 customers in the city of Cam-
bridge, Massachusetts.  The service territory encompasses a seven square-mile
area with a population of approximately 96,000.  In addition, the Company
sells power for resale to the New England Power Pool (NEPOOL) and the Town of
Belmont, Massachusetts (Belmont), and sells steam from its electric generating
stations at wholesale to an affiliated company for distribution to customers
for space heating and other purposes.

    In December 1998, the Parent signed an Agreement and Plan of Merger with
BEC Energy, the parent company of Boston Edison Company, that will create an
energy delivery company, that includes the 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.

    On December 30, 1998, in response to the significant changes that have
taken place in the utility industry, COM/Energy sold substantially all of its
non-nuclear generating assets including the Company's Kendall Station facility
(67 MW) and the adjacent Kendall Jets (46 MW), to affiliates of The Southern
Company of Atlanta, Georgia.

    The Company has 103 regular employees, 77 (75%) of whom are represented by
a single collective bargaining unit with a contract that expires on March 1,
2001.  Employee relations have generally been satisfactory.

(2) Significant Accounting Policies

    (a) Principles of Accounting

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure 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 those estimates.

    Certain prior year amounts are reclassified from time to time to conform
with the presentation used in the current year's financial statements.

    (b) Regulatory Assets and Liabilities

    The Company is regulated as to rates, accounting and other matters by
various authorities including the Federal Energy Regulatory Commission (FERC)
<PAGE>
<PAGE 32>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

and the Massachusetts Department of Telecommunications and Energy (DTE).

    Based on the current regulatory framework, the Company accounts for the
economic effects of regulation in accordance with the provisions of Statement
of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects
of Certain Types of Regulation."  The Company has established various regula-
tory assets in cases where the DTE and/or the FERC have permitted or are
expected to permit recovery of specific costs over time.  Similarly, the
regulatory liabilities established by the Company are required to be refunded
to customers over time. In the event the criteria for applying SFAS No. 71 are
no longer met, the accounting impact would be an extraordinary, non-cash
charge to operations of an amount that could be material.  Criteria that give
rise to the discontinuance of SFAS No. 71 include: 1) increasing competition
that restricts the Company's ability to establish prices to recover specific
costs, and 2) a significant change in the current manner in which rates are
set by regulators from cost based regulation to another form of regulation. 
These criteria are reviewed on a regular basis to ensure the continuing
application of SFAS No. 71 is appropriate.  Based on the current evaluation of
the various factors and conditions that are expected to impact future cost
recovery, the Company believes that its regulatory assets including those
related to generation, are probable of future recovery.

    As a result of electric industry restructuring, the Company discontinued
application of accounting principles applied to its investment in electric
generation facilities effective March 1, 1998.  The Company will not be
required to write-off any of its generation-related assets including regula-
tory assets.  These assets will be retained on the Company's Balance Sheets
because the legislation and DTE's plan for a restructured electric industry
specifically provide for their recovery through a non-bypassable transition
charge.

    The principal regulatory assets included in deferred charges were as
follows:

                                                       1998         1997
                                                    (Dollars in thousands)

    Yankee Atomic unrecovered plant
      and decommissioning costs                      $ 1,634     $ 2,749
    Connecticut Yankee unrecovered plant
      and decommissioning costs                       25,185      28,566
    Maine Yankee unrecovered plant
      and decommissioning costs                       30,646      34,908
    Transition costs                                   9,149         -
    Postretirement benefits costs                      3,120       3,596
    Other                                                638         647
                                                     $70,372     $70,466
<PAGE>
<PAGE 33>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The regulatory liabilities, reflected in the accompanying Balance Sheets
were as follows:
                                                       1998         1997
                                                    (Dollars in thousands)

    Regulatory liability related to
      sale of generating assets                      $65,418     $   -  
    Deferred income taxes                              2,402       2,984
    Demand-side management deferral                    1,682         -  
                                                     $69,502     $ 2,984

    The regulatory liability of $65.4 million was established pursuant to the
Company's divestiture filing that was approved by the DTE in which the Company
agreed to use its share of the net proceeds from affiliate Canal Electric
Company's (Canal Electric) sale of generating assets and the sale of its own
generating assets to reduce transition costs that are billed to its retail
electric customers over the next several years as a result of electric
industry restructuring.  The Company's share of the net proceeds from the sale
of Canal Electric's generating assets has been classified as a long-term
receivable - affiliate on the accompanying Balance Sheets.

    As of December 31, 1998, the Company's regulatory assets, including the
costs associated with existing power contracts with three Yankee nuclear power
plants that have shut down permanently, and all of its regulatory liabilities
are reflected in rates charged to customers.  Regulatory assets are to be
recovered over the next 11 years pursuant to the legislation discussed below.

    In November 1997, the Commonwealth of Massachusetts enacted a comprehen-
sive electric utility industry restructuring bill.  On November 19, 1997, the
Company, together with Commonwealth Electric Company (Commonwealth Electric)
and Canal Electric, filed a restructuring plan with the DTE.  The plan,
approved by the DTE on February 27, 1998, provides that the Company and
Commonwealth Electric, beginning March 1, 1998, initiate a ten percent rate
reduction for all customer classes and allow customers to choose their energy
supplier.  As part of the plan, the DTE authorized the recovery  of certain
strandable costs and provides that certain future costs may be deferred to
achieve or maintain the rate reduction that the restructuring bill mandates. 
The legislation gives the DTE the authority to determine the amount of
strandable costs that will be eligible for recovery.  Costs that will qualify
as strandable costs and be eligible for recovery include, but are not limited
to, certain above market costs associated with generating facilities, costs
associated with long-term commitments to purchase power at above market prices
from independent power producers and regulatory assets and associated
liabilities related to the generation portion of the electric business.

    (c)  Divestiture of Generation Assets

    The cost of transitioning to competition will be mitigated, in part, by
the sale of COM/Energy's non-nuclear generating assets.  On May 27, 1998,
COM/Energy agreed to sell substantially all of its non-nuclear generating
assets (984 MW) to affiliates of The Southern Company of Atlanta, Georgia. 
The sale was conducted through an auction process that was outlined in a
restructuring plan filed with the DTE in November 1997 in conjunction with the
<PAGE>
<PAGE 34>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

state's industry restructuring legislation enacted in 1997.  The sale was
approved by the DTE on October 30, 1998 and by the FERC on November 12, 1998. 
Proceeds from the sale of the Company's Kendall Station generating assets,
after construction-related adjustments at the closing that occurred on
December 30, 1998, amounted to approximately $58.2 million or 8.2 times their
book value of approximately $7.1 million.  The proceeds from the sale, net of
book value and transaction costs amounted to $49.3 million and will be used to
reduce transition costs related to electric industry restructuring that
otherwise would have been collected through a non-bypassable transition
charge.  No gain was recorded on the sale of these generating assets because
the Company is obligated to reduce its transition costs by the net proceeds of
the sale.

    COM/Energy established Energy Investment Services, Inc. as the vehicle to
invest the net proceeds from the sale of Canal Electric's generating assets. 
These proceeds will be invested in a conservative portfolio of securities that
is designed to maintain principal and earn a reasonable return.  Both the
principal amount and income earned will be used to reduce the transition costs
that would otherwise be billed to customers of the Company and Commonwealth
Electric.

    (d) Transactions with Affiliates

    Transactions between the Company and other COM/Energy companies include
purchases and sales of electricity, including purchases from Canal Electric,
an affiliate wholesale electric generating company.  Other Canal transactions
include costs relating to the abandonment of Seabrook 2 and the recovery of a
portion of Seabrook 1 pre-commercial operation costs.  In addition, payments
for management, accounting, data processing and other services are made to an
affiliate, COM/Energy Services Company.  Transactions with other COM/Energy
companies are subject to review by the DTE.

    The Company's operating expenses include the following major intercompany
transactions for the periods indicated:

                                                         Purchased Power
                                     Purchased Power     and Transmission
    Period Ended   Purchased Power   and Transmission       From Canal
    December 31,     Canal Units        Seabrook 1           as Agent    
                                   (Dollars in thousands)

       1998            $14,014           $ 7,323              $ 1,062
       1997             15,772             7,825                2,358
       1996             11,302             7,932                2,786

    The costs for the Canal Electric and Seabrook 1 units are included in the
long-term obligation table listed in Note 3(b).  In addition, the Company
purchased natural gas from an affiliate, Commonwealth Gas Company, totaling
$133,000, $245,000 and $621,000 in 1998, 1997 and 1996, respectively.

    (e) Operating Revenues

    Customers are billed for their use of electricity on a cycle basis
throughout the month.  To reflect revenues in the proper period, the estimated
amount of unbilled sales revenue is recorded each month.
<PAGE>
<PAGE 35>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The Company is generally permitted to bill customers currently for costs
associated with purchased power and transmission, fuel used in electric
production, conservation and load management (C&LM) and environmental costs. 
The amount of such costs incurred by the Company but not yet reflected in
customers' bills is recorded as unbilled revenues.  

    (f) Depreciation

    Depreciation is provided using the straight-line method at rates intended
to amortize the original cost and the estimated cost of removal less salvage
of properties over their estimated economic lives.  The average composite
depreciation rate was 2.88% in 1998, 2.68% in 1997 and 2.69% in 1996.

    (g) Maintenance

    Expenditures for repairs of property and replacement and renewal of items
determined to be less than units of property are charged to maintenance
expense.  Additions, replacements and renewals of property considered to be
units of property are charged to the appropriate plant accounts.  Upon
retirement, accumulated depreciation is charged with the original cost of
property units and the cost of removal less salvage.

    (h) Allowance for Funds Used During Construction

    Under applicable rate-making practices, the Company is permitted to
include an allowance for funds used during construction (AFUDC) as an element
of its depreciable property costs.  This allowance is based on the amount of
construction work in progress that is not included in the rate base on which
the Company earns a return.  An amount equal to the AFUDC capitalized in the
current period is reflected in the accompanying Statements of Income.

    While AFUDC does not provide funds currently, these amounts are recover-
able in revenues over the service life of the constructed property.  The
amount of AFUDC recorded was at a weighted average rate of 5.75% in 1998, 6%
in 1997 and 6.25% in 1996.

(3) Commitments and Contingencies

    (a) Financing and Construction Programs

    The Company is engaged in a continuous construction program presently
estimated at $59.2 million for the five-year period 1999 through 2003.  Of
that amount, $7.8 million is estimated for 1998.  The program is subject to
periodic review and revision because of factors such as changes in business
conditions, rates of customer growth, effects of inflation, maintenance of
reliable and safe service, equipment delivery schedules, licensing delays,
availability and cost of capital and environmental factors.  The Company
expects to finance these expenditures on an interim basis with internally
generated funds and short-term borrowings which are ultimately expected to be
repaid with the proceeds from sales of long-term debt and equity securities.

    (b) Power Contracts

    The Company has long-term contracts for the purchase of electricity from
various sources.  Generally, these contracts are for fixed periods and require
<PAGE>
<PAGE 36>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

payment of a demand charge for the capacity entitlement and an energy charge
to cover the cost of fuel.  Information relative to these contracts is as
follows:
                 Range of
                 Contract
                Expiration    Entitlement                 Cost     
                  Dates          %      MW      1998      1997     1996  
                                    (Dollars in thousands)
 Type of Unit
 Cogenerating       2011       17.2     24.5   $15,134  $15,804  $14,589
 Oil                2002        (a)     85.6    14,018   15,794   11,301
 Nuclear         2012-2026      (b)      8.1    11,665   11,670   12,089
    Total                              118.2   $40,817  $43,268  $37,979

    (a) Includes entitlements in Canal Unit 1 (5%) and Canal Unit 2 (10%).
        On May 27, 1998, COM/Energy selected affiliates of Southern Energy New
        England, L.L.C., an affiliate of The Southern Company of Atlanta,
        Georgia, to buy substantially all of its non-nuclear electric
        generating assets, including Canal Units 1 and 2.  Under long-term
        contracts, the Company's entitlement in Unit 1 was 28.2 MW.  However,
        the Company and Commonwealth Electric continue to purchase energy and
        capacity under a series of long-term contracts and these entitlements
        include one-quarter of the capacity and energy of Canal Unit 1, which
        is now purchased from the new plant owner, Southern Energy Canal,
        L.L.C. (Southern).  The Company's cost of service agreement with Canal
        Electric for its share of the capacity and energy purchased from Canal
        Unit 2 was terminated as part of the generating asset sale on December
        30, 1998.  The former Unit 2 agreement was replaced by a new agreement
        under which Southern sells energy and capacity to the Company to
        support its customer load obligation, at fixed rates that are equiva-
        lent to the Company's standard offer (wholesale) rates.
    (b) Includes entitlements in Seabrook 1 (0.7%) and  Vermont Yankee (2.5%)
        nuclear power plants.  The estimated cost to decommission Vermont
        Yankee is $406.7 million in current dollars.  The Company's share of
        this liability (approximately $9.2 million), less its share of the
        market value of assets held in a decommissioning trust (approximately
        $5.1 million), is approximately $4 million at December 31, 1998.

    Pertinent information with respect to life-of-the-unit contracts with
nuclear units no longer operating in which the Company has an equity ownership
is as follows:
                                               Connecticut   Maine      Yankee
                                                  Yankee     Yankee     Atomic
                                                   (Dollars in thousands)

    Equity Ownership (%)                            4.50       4.00       4.50
    Plant Entitlement (%)                           4.50       3.59       2.50
    Contract Expiration Date                        2007       2008       2000
    Year of Shutdown                                1996       1997       1992
    1996 Actual Cost ($)                           9,259      6,511      2,260
    1997 Actual Cost ($)                           5,760      8,928      2,238
    1998 Actual Cost ($)                           3,553      4,705      2,184
    Decommissioning cost estimate (100%) ($)     465,693    403,418     81,699
    Company's decommissioning cost ($)            20,956     14,483      3,676
    Market value of assets (100%) ($)            260,641    212,664    148,464
    Company's market value of assets ($)          11,729      7,635      6,681
<PAGE>
<PAGE 37>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Based upon regulatory precedent, the operators of the Yankee units believe
they will be permitted to continue to collect from power purchasers (including
the Company) decommissioning costs, unrecovered plant investment and other
costs associated with the permanent closure of these plants over the remaining
period of each plant's operating license.  The Company does not believe that
the ultimate outcome of the early closing of these plants will have a material
adverse effect on its operations and believes that recovery of these FERC-
approved costs would continue to be allowed in its rates at the retail level.

    Costs pursuant to these contracts are included in electricity purchased
for resale in the accompanying Statements of Income and are recoverable in
revenue.  The Company pays its share of decommissioning expense to each of the
operators of the nuclear facilities as a cost of electricity purchased for
resale.

    The estimated aggregate obligations under the life-of-the-unit contracts
for capacity from the operating Yankee Nuclear Unit and other long-term
purchased power obligations, including and Seabrook 1, in effect for the five
years subsequent to 1998 are as follows:

                                           Long-Term
                          Equity-Owned     Purchased
                          Nuclear Unit       Power          Total   
                                     (Dollars in thousands)

            1999              $5,704         $45,171        $50,875
            2000               5,318          45,423         50,741
            2001               5,710          41,689         47,399
            2002               5,876          39,634         45,510
            2003               5,621          34,690         40,311

    Due to changing conditions within the nuclear industry, it is possible
that the remaining operating nuclear plant in which the Company has an equity
ownership interest could be shut down prior to the expiration of that unit's
operating license. 

    In addition, the Company incurred costs for purchases from ISO - New
England of $13,491,000, $15,143,000 and $10,973,000 in 1998, 1997 and 1996,
respectively.

    The costs associated with these power contract obligations are a signifi-
cant component of the Company's stranded costs that are being recovered
through a transition charge pursuant to DTE approval.

    (c) Price-Anderson Act

    Under the Price-Anderson Act (the Act), owners of nuclear power plants
have the benefit of approximately $9.7 billion of public liability coverage
which would compensate the public for valid bodily injury and property loss on
a no fault basis in the event of an accident at a commercial nuclear power
plant.  Under the provisions of the Act, each nuclear reactor with an operat-
ing license can be assessed up to $88.1 million per nuclear incident with a
maximum assessment of $10 million per incident within one calendar year. 
Nuclear plant owners have initiated insurance programs designed to help cover
liability claims relating to property damage, decontamination, replacement
power and business interruption costs for participating utilities arising from
a nuclear incident.
<PAGE>
<PAGE 38>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The Company has an equity ownership interest in four nuclear generating
facilities.  The operators of these units maintain nuclear insurance coverage
(on behalf of the owners of the facilities) with Nuclear Electric Insurance
Limited (NEIL II) and the American Nuclear Insurers (ANI).  NEIL II provides
$2.25 billion of property, boiler, machinery and decontamination insurance
coverage, including accidental premature decommissioning insurance in the
amount of the shortfall in the Decommissioning Trust Fund, in excess of the
underlying $500 million policy.  All companies insured with NEIL II are
subject to retroactive assessments if losses exceed the accumulated funds
available.  ANI provides $500 million of "all risk" property damage, boiler,
machinery and decontamination insurance.  An additional $200 million of
primary financial protection coverage is provided for off-site bodily injury
or property damage caused by a nuclear incident.  ANI also provides secondary
financial protection liability insurance which currently provides $9.5 billion
of retrospective insurance premium benefits in accordance with the provisions
of the Act.  Three of the four units in which the Company has an equity
ownership interest have been permanently shut down.  The Nuclear Regulatory
Commission has approved each of the units' requests to withdraw from
participation in the secondary insurance program.  Additional coverage ($200
million) provided by ANI includes tort liability protection arising out of
radiation injury claims by nuclear workers and injury or property damage
caused by the transportation or shipment of nuclear materials or waste.

    Based on its various ownership interests in the four nuclear generating
facilities, the Company's retrospective premium could be $250,000 annually or
a cumulative total of $2.2 million, exclusive of the effect of inflation
indexing (at five-year intervals) and a 5% surcharge ($4 million) in the event
that total public liability claims from a nuclear incident exceed the funds
available to pay such claims.

    (d) Environmental Matters

    The Company is subject to laws and regulations administered by federal,
state and local authorities relating to the quality of the environment.  These
laws and regulations affect, among other things, the siting and operation of
electric generating and transmission facilities and can require the installa-
tion of expensive air and water pollution control equipment.  These regula-
tions have had an impact on the Company's operations in the past and will
continue to have an impact on future operations, capital costs and
construction schedules of major facilities with the exception of electric
generating facilities since substantially all of the Company's non-nuclear
generating assets were sold in 1998.

(4) Income Taxes

    For financial reporting purposes, the Company provides federal and state
income taxes on a separate-return basis.  However, for federal income tax
purposes, the Company's taxable income and deductions are included in the
consolidated income tax return of the Parent and it makes tax payments or
receives refunds on the basis of its tax attributes in the tax return in
accordance with applicable regulations.
<PAGE>
<PAGE 39>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The following is a summary of the Company's provisions for income taxes
for the years ended December 31, 1998, 1997 and 1996:

                                            1998       1997       1996
                                              (Dollars in thousands)
    Federal
      Current                             $ 20,117   $ 2,574    $ 2,861
      Deferred                             (16,050)     (287)      (582)
      Investment tax credits                  (484)      (91)       (93)
                                             3,583     2,196      2,186
    State
      Current                                4,013       556        543
      Deferred                              (3,155)      (48)       (21)
                                               858       508        522
                                             4,441     2,704      2,708
    Amortization of regulatory liability
      relating to deferred income taxes       (186)     (113)       (25)
                                          $  4,255   $ 2,591    $ 2,683

    Federal and state income taxes
      charged to:
        Operating expense                 $  3,423   $   -      $ 2,424
        Other income                           832       -          259
                                          $  4,255   $   -      $ 2,683

    The significant increase in the current provision for income taxes in 1998
reflects the current tax related to the sale of the generating assets.

    Deferred tax liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the year in which the differences are expected
to reverse.

    Accumulated deferred income taxes consisted of the following:

                                             1998          1997
                                           (Dollars in thousands)
    Liabilities
      Property-related                     $ 15,099      $17,309
      Transition charges                      3,189          -
      All other                               1,453        1,710
                                             19,741       19,019
    Assets
      Sale of generation assets              25,572          -
      Investment tax credits                    764        1,134
      Pension plan                              733          810
      Regulatory liability                      784        1,039
      All other                               2,575        2,339
                                             30,428        5,322
    Accumulated deferred income taxes 
      (deferred tax asset), net            $(10,687)     $13,697

    The net year-end deferred tax asset included a current deferred tax asset
of $18,847,000 in 1998 which is included in accrued income taxes in the
accompanying Balance Sheets. The net year-end deferred income tax liability
<PAGE>
<PAGE 40>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

above includes a current deferred tax liability of $1,438,000 in 1997 which is
included in accrued income taxes in the accompanying Balance Sheets.

    The total income tax provision set forth previously represents 33% in
1998, 33% in 1997 and 34% in 1996 of income before such taxes.  The following
table reconciles the statutory federal income tax rate to these percentages:

                                                     1998     1997     1996
                                                      (Dollars in thousands)
    Federal statutory rate                              35%      35%      35%

    Federal income tax expense at statutory levels  $4,576   $2,732   $2,731
    Increase (Decrease) from statutory levels:
      State tax net of federal tax benefit             558      331      339
      Tax versus book depreciation                      69       66       83
      Amortization of excess deferred reserves        (113)    (113)     (25)
      Amortization of investment tax credits          (484)     (91)     (93)
      Reversals of capitalized expenses                (15)     (13)     (13)
      Dividend received deduction                     (255)    (274)    (246)
      Other                                            (81)     (47)     (93)
                                                    $4,255   $2,591  $ 2,683

      Effective federal income tax rate                 33%      33%      34%

(5) Employee Benefit Plans

    (a) Pension

    The Company has a noncontributory pension plan covering substantially all
regular employees who have attained the age of 21 and have completed one year
of service.  Pension benefits are based on an employee's years of service and
compensation.  The company makes monthly contributions to the plan consistent
with the funding requirements of the Employee Retirement Income Security Act
of 1974.

    The following tables set forth the change in the pension benefit
obligation and plan assets as well as the plan's funded status reconciled to
the amount included in the financial statements:

                                                 1998          1997
                                               (Dollars in thousands)
      Change in benefit obligation
        Obligation at beginning of year        $  31,860     $  26,690
        Service cost                                 566           534
        Interest cost                              2,199         1,871
        Actuarial loss                             2,684         4,570
        Benefits paid                             (2,094)       (1,805)
        Obligation at end of year              $  35,215     $  31,860
<PAGE>
<PAGE 41>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                                 1998          1997
                                               (Dollars in thousands)
      Change in plan assets
        Fair value of plan assets at
          beginning of year                    $  32,325     $  29,027
        Actual return on plan assets               2,494         5,103
        Employer contributions                       300           -
        Benefits paid                             (2,094)       (1,805)
        Fair value of plan assets at
          end of year                          $  33,025     $  32,325


                                                 1998          1997
                                               (Dollars in thousands)

      Funded status                            $  (2,190)    $     465
      Unrecognized transition obligation             414           551
      Unrecognized prior service cost                834           954
      Unrecognized net actuarial (gain) loss      (1,631)       (4,289)
      Prepaid(accrued) benefit cost            $  (2,573)    $  (2,319)

      Weighted-average assumptions as of December 31 were as follows:

                                                 1998          1997

      Discount rate                              6.50%         7.00%
      Expected return on plan assets             9.00          8.75
      Rate of increase in future compensation    3.75          3.75

      Plan assets consist primarily of fixed-income and equity securities.
Fluctuations in the fair market value of plan assets will affect pension
expense in future years.

      Components of net periodic pension cost were as follows:

                                            1998        1997        1996
                                               (Dollars in thousands)

      Service cost                        $    566    $    534    $    538
      Interest cost                          2,199       1,871       1,921
      Expected return on plan assets        (2,468)     (2,215)     (2,076)
      Amortization of transition
        obligation                             137         137         137
      Amortization of prior service cost       120         120         120
        Total                                  554         447         640
      Transfers from affiliates, net           390         503         441
      Less: Amounts capitalized
            and deferred                        37         723         299
        Net periodic pension cost         $    907    $    227    $    782

      The net periodic pension cost reflects the use of the projected unit
credit method which is also the actuarial cost method used in determining
future funding of the plan.  The Company, in accordance with current
ratemaking, are deferring the difference between the pension contribution
which is reflected in base rates, and pension expense.
<PAGE>
<PAGE 42>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

      (b) Other Postretirement Benefits

      Certain employees are eligible for postretirement benefits if they meet
specific requirements.  These benefits could include health and life insurance
coverage and reimbursement of Medicare Part B premiums.  Under certain
circumstances, eligible employees are required to make contributions for
postretirement benefits.

      To fund its postretirement benefits, the Company makes contributions to
various voluntary employees' beneficiary association (VEBA) trusts that were
established pursuant to section 501(c)(9) of the Internal Revenue Code (the
Code).  The Company also makes contributions to a subaccount of its pension
plan pursuant to section 401(h) of the Code to fund a portion of its
postretirement benefit obligation.

      The following tables set forth the change in the postretirement benefit
obligation and plan assets as well as the plan's funded status reconciled to
the amount included in the financial statements:

                                                 1998          1997
                                               (Dollars in thousands)
      Change in benefit obligation
        Obligation at beginning of year        $  12,875     $  10,839
        Service cost                                 217           189
        Interest cost                                889           777
        Actuarial loss                               352         1,806
        Participant contributions                     10             4
        Benefits paid                               (836)         (740)
        Obligation at end of year              $  13,507     $  12,875

                                                 1998          1997
                                               (Dollars in thousands)
      Change in plan assets
        Fair value of plan assets at
          beginning of year                    $   5,195     $   4,076
        Actual return on plan assets                 319           768
        Employer contributions                     1,121         1,087
        Participant contributions                     10             4
        Benefits paid                               (836)         (740)
        Fair value of plan assets at
         end of year                           $   5,809     $   5,195

      Funded status                            $  (7,698)    $  (7,680)
      Unrecognized transition obligation           6,965         7,463
      Unrecognized net actuarial loss                733           217
      Prepaid (accrued) benefit cost           $     -       $     -  

      Weighted-average assumptions as of December 31 were as follows:

                                                  1998          1997

      Discount rate                               6.50%         7.00%
      Expected return on plan assets              9.00          8.75
      Rate of increase in future compensation     3.75          3.75
<PAGE>
<PAGE 43>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

      For measurement purposes, a 6.50% annual rate of increase in the per
capita cost of covered medical claims was assumed for 1999.  The rates were
assumed to decrease gradually to 4.5% for 2007 and remain at that level
thereafter.  Dental claims and Medicare Part B premiums are expected to
increase at 4.5% and 3.1%, respectively.

      Plan assets consist primarily of fixed-income and equity securities.
Fluctuations in the fair market value of plan assets will affect the periodic
postretirement benefit cost in future years.

      Components of net periodic postretirement benefit cost were as follows:

                                                  1998      1997     1996
                                                  (Dollars in thousands)

      Service cost                              $   217   $   189  $   205
      Interest cost                                 889       777      809
      Expected return on plan assets               (483)     (376)    (279)
      Amortization of transition obligation         498       497      498
         Total                                    1,121     1,087    1,233
      Transfers from affiliates, net                401       591      555
      Add: Net amortization of deferrals          1,248       131      116
      Less: Amounts capitalized and deferred        151       133      184
         Net periodic postretirement
         benefit cost                           $ 2,619   $ 1,676  $ 1,720

      Assumed healthcare cost trend rates have a significant effect on the
amounts reported for health care plans.  A one-percentage point change in
assumed healthcare cost trend rates would have the following effects: 

                                                 One-Percentage-Point 
                                                Increase      Decrease
                                                (Dollars in thousands)

      Effect on total of service and
         interest cost components               $   146       $  (117)
      Effect on postretirement
         benefit obligation                     $ 1,571       $(1,481)


      Effective with its June 1, 1993 rate order from the DPU, the Company was
allowed to recover its SFAS No. 106 expense in base rates over a four-year
phase-in period with carrying costs on the deferred balance.  At December 31,
1998 and 1997, the Company's deferral amounted to approximately $1.6 million
and $2 million, respectively.

      (c) Savings Plan

      The Company has an Employees Savings Plan that provides for Company
contributions equal to contributions by eligible employees of up to four
percent of each employee's compensation rate and up to five percent for those
employees no longer eligible for postretirement health benefits.  The Com-
pany's contribution was $294,000 in 1998, $302,000 in 1997 and $310,000 in
1996.
<PAGE>
<PAGE 44>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

(6) Interim Financing and Long-Term Debt

    (a) Notes Payable to Banks

    The Company and other COM/Energy companies maintain both committed and
uncommitted lines of credit for the short-term financing of their construction
programs and other corporate purposes.  As of December 31, 1998, COM/Energy
companies had $122 million of committed lines of credit that will expire at
varying intervals in 1999.  These lines are normally renewed upon expiration
and require annual fees of up to .1875% of the individual line.  At December
31, 1998, COM/Energy's uncommitted lines of credit totaled $10 million. 
Interest rates on the Company's outstanding borrowings generally are at an
adjusted money market rate and averaged 5.7% and 5.8% in 1998 and 1997,
respectively.  The Company had no notes payable to banks at December 31, 1998
while notes payable to banks totaled $19,000,000 at December 31, 1997.

    (b) Advances from Affiliates

     The Company had no notes payable to the Parent at December 31, 1998 and
$7,500,000 at December 31, 1997.  These notes are written for a term of up to
11 months and 29 days.  Interest is at the prime rate and is adjusted for
changes in that rate during the term of the notes.  The rate averaged 8.3% and
8.5% in 1998 and 1997, respectively.

    The Company is a member of the COM/Energy Money Pool (the Pool), an
arrangement among the subsidiaries of the Parent, whereby short-term cash
surpluses are used to help meet the short-term borrowing needs of the utility
subsidiaries.  In general, lenders to the Pool receive a higher rate of return
than they otherwise would on such investments, while borrowers pay a lower
interest rate than those available from banks.  Interest rates on the out-
standing borrowings are based on the monthly average rate the Company would
otherwise have to pay banks, less one-half the difference between that rate
and the monthly average U.S. Treasury Bill weekly auction rate.  The borrow-
ings are for a period of less than one year and are payable upon demand.
Rates on these borrowings averaged 5.3% and 5.4% in 1998 and 1997,
respectively.  The Company had no borrowings from the Pool at December 31,
1998, and borrowings totaled $3,790,000 at December 31, 1997.

    (c) Long-Term Debt Maturities and Retirements

    Long-term debt outstanding, exclusive of current maturities, current
sinking fund requirements and related premiums, is as follows:

                                              Original  Balance December 31,
                                               Issue      1998       1997
                                                  (Dollars in thousands)

    7-Year Notes - 8.04%, due 1999             $10 000   $   -      $10,000
    15-Year Notes - 8.7%, due 2007               5 000     5,000      5,000
    30-Year Notes - 7 3/4%, due 2002             5 000     2,300      2,400
                                                         $ 7,300    $17,400

    Under the terms of its Indenture of Trust, the Company is required to make
periodic sinking fund payments for retirement of outstanding long-term debt.
<PAGE>
<PAGE 45>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

The payments and balances of maturing debt issues for the five years subse-
quent to December 31, 1998 are as follows:

                      Sinking Fund       Maturing
            Year        Payments       Debt Issues       Total
                                 (Dollars in thousands)

            1999          $100           $10,000        $10,100
            2000           100               -              100
            2001           100               -              100
            2002           100             2,000          2,100
            2003            -                -              -  

    (d) Disclosures About Fair Value of Financial Instruments

    The fair value of certain financial instruments included in the accompany-
ing Balance Sheets as of December 31, 1998 and 1997 is as follows:

                                1998                        1997        
                                     (Dollars in thousands)

                       Carrying        Fair       Carrying        Fair  
                         Value         Value        Value         Value 

    Long-Term Debt      $17,401       $18,362      $17,502       $18,498

    The carrying amount of cash, notes payable to banks and advances to/from
affiliates approximates the fair value because of the short maturity of these
financial instruments.

    The estimated fair value of long-term debt is based on quoted market
prices of the same or similar issues or on the current rates offered for debt
with the same remaining maturity.  The fair values shown above do not purport
to represent the amounts at which those obligations would be settled.

(7) Dividend Restriction

    At December 31, 1998, none of retained earnings was restricted against the
payment of cash dividends by terms of term loans and note agreements securing
long-term debt.  As of the same date, retained earnings also included approxi-
mately $4,909,000 representing the Company's equity in undistributed earnings
of the nuclear companies.

(8) Lease Obligations

    The Company leases equipment and office space under arrangements that are
classified as operating leases.  These lease agreements are for terms of one
year or longer.  Leases currently in effect contain no provisions that
prohibit the Company from entering into future lease agreements or obliga-
tions.
<PAGE>
<PAGE 46>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Future minimum lease payments, by period and in the aggregate, of noncanc-
elable operating leases consisted of the following at December 31, 1998:

                                                    Operating Leases
                                                  (Dollars in thousands)

                  1999                                   $ 1,420
                  2000                                     1,166
                  2001                                       998
                  2002                                       998
                  2003                                       998
                  Beyond 2003                              3,013
                  Total future minimum lease payments    $ 8,593

    Total rent expense for all operating leases, except those with terms of a
month or less, amounted to $1,307,000 in 1998, $1,683,000 in 1997 and
$1,348,000 in 1996. There were no contingent rentals and no sublease rentals
for the years 1998, 1997 and 1996.
<PAGE>
<PAGE 47>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                    PART V.

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

(a) 1.  Index to Financial Statements

        Financial statements and notes thereto of the Company together with
        the Report of Independent Public Accountants, are filed under Item 8
        of this report and listed on the Index to Financial Statements and
        Schedules (page 25).

(a) 2.  Index to Financial Statement Schedules

        Filed herewith at page(s) indicated -

        Schedule I  - Investments in, Equity in Earnings of, and Dividends
        Received From Related Parties - Years Ended December 31, 1998, 1997
        and 1996 (pages 55-57).

        Schedule II - Valuation and Qualifying Accounts - Years Ended December
        31, 1998, 1997 and 1996 (page 58).

(a) 3.  Exhibits:
                              Notes to Exhibits -

    a.  Unless otherwise designated, the exhibits listed below are incorporat-
        ed by reference to the appropriate exhibit numbers and the Securities
        and Exchange Commission file numbers indicated in parentheses.

    b.  The following is a glossary of Commonwealth Energy System and subsid-
        iary companies' acronyms that are used throughout the following
        Exhibit Index:

            CES.....................Commonwealth Energy System
            CE......................Commonwealth Electric Company
            CEL.....................Cambridge Electric Light Company
            CEC.....................Canal Electric Company
            CG......................Commonwealth Gas Company
            NBGEL...................New Bedford Gas and Edison Light Company

                                 Exhibit Index

Exhibit 3.  Articles of incorporation and by-laws.

    3.1  Articles of incorporation of CEL (Exhibit 1 to the CEL Form 10-K for
         1990, File No.2-7909).

    3.2  By-laws of CEL, as amended (Exhibit 2 to the CEL Form 10-K for 1990,
         File No.2-7909).

Exhibit 4.  Instruments defining the rights of security holders; including
            indentures.

Indenture of Trust or Supplemental Indenture of Trust.

    4.1.1   Original Indenture on Form S-1 (April 1949) (Exhibit 7(a), File
            No. 2-7909).
<PAGE>
<PAGE 48>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    4.1.2   Third Supplemental on Form 10-K (1984) (Exhibit 1, File No. 2-
            7909).
    4.1.3   Fourth Supplemental on Form 10-K (1984) (Exhibit 2, File No. 2-
            7909).
    4.1.4   Sixth Supplemental on Form 10-Q (June 1989) (Exhibit 1, File No.
            2-7909).
    4.1.5   Seventh Supplemental on Form 10-Q (June 1992) (Exhibit 1, File No.
            2-7909).

Exhibit 10. Material Contracts.

10.1       Power Contracts.

10.1.1     Power Contract between CEC and CEL dated December 1, 1965 (Exhibit
           13(a)(1) to the CEC Form S-1, File No. 2-30057).

10.1.2     Power Contract, as amended to February 28, 1990, superseding the
           Power Contract dated September 1, 1986 and amendment dated June 1,
           1988, between CEC (seller) and CE and CEL (purchasers) for seller's
           entire share of the Net Unit Capability of Seabrook 1 and related
           energy produced and other provisions (Exhibit 1 to the CEC Form
           10-Q (March 1990), File No. 2-30057).

10.1.3     Agreement for Joint-Ownership, Construction and Operation of the
           New Hampshire Nuclear Units (Seabrook) between CE, Public Service
           Company of New Hampshire (PSNH) and others dated May 1, 1973 and
           filed by CE as Exhibit 13(N) on Form S-1 dated October 1973, File
           No. 2-49013, and as amended below:

10.1.3.1   First through Fifth Amendments to 10.1.3 dated May 24, 1974, June
           21, 1974, September 25, 1975, October 25, 1974 and January 31,
           1975, respectively (Exhibit 13(m) to CE's Form S-1, (November 7,
           1975), File No. 2-54995).

10.1.3.2   Sixth through Eleventh Amendments to 10.1.3 dated April 18, 1979,
           April 18, 1979, April 25, 1979, June 8, 1979, October 11, 1979 and
           December 15, 1979, respectively (Refiled as Exhibit 1 to the CEC
           Form 10-K for 1989, File No. 2-30057).

10.1.3.3   Twelfth through Fourteenth Amendments to 10.1.3 dated May 16, 1980,
           December 31, 1980 and June 1, 1982, respectively (Refiled as
           Exhibits 1, 2 and 3 to the CE 1992 Form 10-K), File No. 2-7749).

10.1.3.4   Fifteenth and Sixteenth Amendment to 10.1.3 dated April 27, 1984
           and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q
           (June 1984), File No. 2-30057).

10.1.3.5   Seventeenth Amendment to 10.1.3 dated March 8, 1985 (Exhibit 1 to
           the CEC Form 10-Q (March 1985), File No. 2-30057).

10.1.3.6   Eighteenth Amendment to 10.1.3 dated March 14, 1986 (Exhibit 1 to
           the CEC Form 10-Q (March 1986), File No. 2-30057).

10.1.3.7   Nineteenth Amendment to 10.1.3 dated May 1, 1986 (Exhibit 1 to the
           CEC Form 10-Q (June 1986), File No. 2-30057).

10.1.3.8   Twentieth Amendment to 10.1.3 dated September 19, 1986 (Exhibit 1
           to the CEC Form 10-K for 1986, File No. 2-30057).
<PAGE>
<PAGE 49>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.3.9   Twenty-First Amendment to 10.1.3 dated November 12, 1987 (Exhibit 1
           to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.3.10  Twenty-Second Amendment and Settlement Agreement to 10.1.3 both
           dated January 13, 1989, (Exhibit 4 to the CEC Form 10-K for 1988,
           File No. 2-30057).

10.1.4     Capacity Acquisition Agreement between CEC, CEL and CE dated
           September 25, 1980 (Exhibit 1 to the 1991 CEC Form 10-K, File
           No. 2-30057).

10.1.4.1   Amendment to 10.1.4 as amended and restated June 1, 1993, hence-
           forth referred to as the Capacity Acquisition and Disposition
           Agreement, whereby CEC, as agent, in addition to acquiring power
           may also sell bulk electric power which the Company and/or CE owns
           or otherwise has the right to sell (Exhibit 1 to CE's Form 10-Q
           (September 1993), File No. 2-30057).

10.1.5     Power Contract between Yankee Atomic Electric Company and CEL,
           dated June 30, 1959, as amended April 1, 1975 (Exhibit 1 to the CEL
           Form 10-K, File No. 2-7909).

10.1.5.1   Second, Third and Fourth Amendments to 10.1.5 as amended October 1,
           1980, April 1, 1985 and May 6, 1988, respectively (Exhibit 2 to the
           CEL Form 10-Q (June 1988), File No. 2-7909).

10.1.5.2   Fifth and Sixth Amendments to 10.1.5 as amended June 26, 1989 and
           July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q (Septem-
           ber 1989), File No. 2-7909).

10.1.6     Power Contract between Connecticut Yankee Atomic Power Company and
           CEL dated July 1, 1964 (Exhibit 13-K1 to the CES Form S-1, (April
           1967) File No. 2-25597).

10.1.6.1   Additional Power Contract to 10.1.6 providing for extension on the
           contract term dated April 30, 1984 (Exhibit 5 to the CEL Form 10-Q
           (June 1984), File No. 2-7909).

10.1.6.2   Second Supplementary Power Contract to 10.1.6 providing for decom-
           missioning financing dated April 30, 1984 (Exhibit 6 to the CEL
           Form 10-Q (June 1984), File No. 2-7909).

10.1.7     Power Contract between CEL and Vermont Yankee Nuclear Power Corpo-
           ration dated February 1, 1968 (Exhibit 3 to the CEL 1984 Form 10-K,
           File No. 2-7909).

10.1.7.1   First Amendment (Section 7) and Second Amendment (decommissioning
           financing) to 10.1.7 as amended June 1, 1972 and April 15, 1983,
           respectively (Exhibits 1 and 2, respectively, to the CEL Form 10-Q
           (June 1984), File No. 2-7909).

10.1.7.2   Third and Fourth Amendments to 10.1.7 as amended April 1, 1985 and
           June 1, 1985, respectively (Exhibit 1 and 2 to the CEL Form 10-Q
           (June 1986) File No. 2-7909).

10.1.7.3   Fifth and Sixth Amendments to 10.1.7 both as amended May 6, 1988
           (Exhibit 1 to the CEL Form 10-Q (June 1988), File No. 2-7909).
<PAGE>
<PAGE 50>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.7.4   Seventh Amendment to 10.1.7 as amended June 15, 1989 (Exhibit 2 to
           the CEL Form 10-Q (September 1989), File No. 2-7909).

10.1.7.5   Additional Power Contract between CEL and Vermont Yankee Nuclear
           Power Corporation providing for decommissioning financing and
           contract extension dated February 1, 1984 (Refiled as Exhibit 1 to
           the 1993 CEL Form 10-K, File No. 2-7909).

10.1.8     Power Contract between Maine Yankee Atomic Power Company and CEL
           dated May 20, 1968 (Exhibit 5 to the CES Form S-7, File No. 2-
           38372).

10.1.8.1   First Amendment (decommissioning financing) and Second Amendment
           (supplementary payments) to 10.1.9 as amended March 1, 1984 and
           January 1, 1984, respectively (Exhibits 3 and 4 to the CEL Form
           10-Q (June 1984), File No. 2-7909).

10.1.8.2   Third Amendment to 10.1.8 as amended October 1, 1984 (Exhibit 1 to
           the CEL Form 10-Q (September 1984), File No. 2-7909).

10.1.9     Participation Agreement between Maine Electric Power Company and
           CEL and/or NBGEL for the construction of a 345 KV transmission line
           between Wiscasset, Maine and Mactaquac, New Brunswick, Canada and
           for the purchase of base and peaking capacity from the New Bruns-
           wick Electric Power Commission, dated June 20, 1969 (Exhibit 13 to
           the CES Form 10-K for 1984, File No. 1-7316).

10.1.9.1   Supplement Amending 10.1.9, as amended June 24, 1970 (Exhibit 8 to
           the CES Form S-7, Amendment No. 1, File No. 2-38372).

10.1.10    Service Agreement for Non-Firm Transmission Service between Boston
           Edison Company and CEL dated July 5, 1984 (Exhibit 4 to the CEL
           1984 Form 10-K, File No. 2-7909).

10.1.11    Agreement, dated September 1, 1985, With Respect To Amendment of
           Agreement With Respect To Use Of Quebec Interconnection, dated
           December 1, 1981, among certain New England Power Pool (NEPOOL)
           utilities to include Phase II facilities in the definition of
           "Project" (Exhibit 1 to the CEC Form 10-Q (September 1985), File
           No. 2-30057).

10.1.11.1  Amendatory Agreement No. 3 to 10.1.11, as amended June 1, 1990
           (Exhibit 1 to the CEC Form 10-Q (September 1990), File No. 2-
           30057).

10.1.12    Preliminary Quebec Interconnection Support Agreement - Phase II
           among certain NEPOOL utilities, dated June 1,1984 (Exhibit 6 to the
           CE Form 10-Q (June 1984), File No. 2-7749).

10.1.12.1  First, Second and Third Amendments to 10.1.12 as amended March 1,
           1985, January 1, 1986 and March 1, 1987, respectively (Exhibit 1 to
           the CEC Form 10-Q (March 1987), File No. 2-30057).

10.1.12.2  Fourth and Eighth Amendments to 10.1.12 as amended July 1, 1987 and
           August 1, 1988, respectively (Exhibit 3 to the CEC Form 10-Q
           (September 1988), File No. 2-30057).
<PAGE>
<PAGE 51>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.12.3  Fifth, Sixth and Seventh Amendments to 10.1.12 as amended October
           15, 1987, December 15, 1987 and March 1, 1988, respectively (Exhib-
           it 1 to the CEC Form 10-Q (June 1988), File No. 2-30057).

10.1.12.4  Ninth and Tenth Amendments to 10.1.12 as amended November 1, 1988
           and January 15, 1989, respectively (Exhibit 2 to the CEC Form 10-K
           for 1988, File No. 2-30057).

10.1.12.5  Eleventh Amendment to 10.1.12 as amended November 1, 1989 (Exhibit
           4 to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.12.6  Twelfth Amendment to 10.1.12 as amended April 1, 1990 (Exhibit 1 to
           the CEC Form 10-Q (June 1990), File No. 2-30057).

10.1.13    Agreement to Preliminary Quebec Interconnection Support Agreement -
           Phase II among PSNH, New England Power Company, Boston Edison
           Company and CEC whereby PSNH assigns a portion of its interests
           under the original Agreement to the other three parties, dated
           October 1, 1987 (Exhibit 2 to the CEC 1987 Form 10-K, File No.
           2-30057).

10.1.14    Phase II Equity Funding Agreement for New England Hydro-Transmis-
           sion Electric Company, Inc. (New England Hydro (Massachusetts)
           between New England Hydro and certain NEPOOL utilities, dated June
           1, 1985 (Exhibit 2 to the CEC Form 10-Q (September 1985), File No.
           2-30057).

10.1.15    Phase II Equity Funding Agreement for New England Hydro-Transmis-
           sion Corporation (New Hampshire Hydro) between New Hampshire Hydro
           and certain NEPOOL utilities, dated June 1, 1985 (Exhibit 3 to the
           CEC Form 10-Q (September 1985), File No.
           2-30057).

10.1.15.1  Amendment No. 1 to 10.1.15 as amended May 1, 1986 (Exhibit 6 to the
           CEC Form 10-Q (March 1987), File No. 2-30057).

10.1.15.2  Amendment No. 2 to 10.1.15 as amended September 1, 1987 (Exhibit 3
           to the CEC Form 10-Q (September 1987), File No. 2-30057).

10.1.16    Phase II Massachusetts Transmission Facilities Support Agreement
           dated June 1, 1985, refiled as a single agreement incorporating
           Amendments 1 through 7 dated May 1, 1986 through January 1, 1989,
           respectively, between New England Hydro-Transmission Electric
           Company, Inc. (New England Hydro) and certain NEPOOL utilities
           (Exhibit 2 the CEC Form 10-Q (September 1990), File No. 2-30057).

10.1.17    Phase II New Hampshire Transmission Facilities Support Agreement
           dated June 1, 1985, refiled as a single agreement incorporating
           Amendments 1 through 8 dated May 1, 1986 through January 1, 1990,
           respectively, between New England Hydro-Transmission Corporation
           (New Hampshire Hydro) and certain NEPOOL utilities (Exhibit 3 to
           the CEC Form 10-Q (September 1990), File No. 2-30057).

10.1.18    Phase II New England Power AC Facilities Support Agreement between
           New England Power and certain NEPOOL utilities, dated June 1, 1985
           (Exhibit 6 to the CEC Form 10-Q (September 1985), File No.
           2-30057).
<PAGE>
<PAGE 52>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.18.1  Amendments Nos. 1 and 2 to 10.1.18 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.18.2  Amendments Nos. 3 and 4 to 10.1.18 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

10.1.19    Phase II Boston Edison AC Facilities Support Agreement between
           Boston Edison Company and certain NEPOOL utilities, dated June 1,
           1985 (Exhibit 7 to the CEC Form 10-Q (September 1985), File No.
           2-30057).

10.1.19.1  Amendments Nos. 1 and 2 to 10.1.19 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.19.2  Amendments Nos. 3 and 4 to 10.1.19 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

10.1.20    Agreement Authorizing Execution of Phase II Firm Energy Contract
           among certain NEPOOL utilities in regard to participation in the
           purchase of power from Hydro Quebec, dated September 1, 1985
           (Exhibit 8 to the CEC Form 10-Q (September 1985), File No.
           2-30057).

10.1.21    System Power Sales Agreement by and between Connecticut Light and
           Power (CL&P), Western Massachusetts Electric Company (Northeast
           Utilities companies), as sellers, and CEL, as buyer, of power in
           excess of firm power customer requirements from the electric
           systems of the Northeast Utilities companies, dated June 1, 1984,
           as effective October 25, 1985 (Exhibit 1 to the CEL 1985 Form 10-K,
           File No. 2-7909).

10.1.22    Power Sale Agreement by and between Altresco Pittsfield, L. P. and
           the Company for entitlement to the electric capacity and related
           energy to be produced by a cogeneration facility located in Pitts-
           field, Massachusetts, dated February 20, 1992 (Exhibit 1 to the CEL
           Form 10-Q (September 1993), File No. 2-7909).

10.1.22.1  System Exchange Agreement by and among Altresco Pittsfield, L.P.,
           the Company, CE and New England Power Company, dated July 2, 1993
           (Exhibit 3 to the CE Form 10-Q (September 1993), File No. 2-7749).

10.2       Other Agreements.

10.2.1     Pension Plan for Employees of Commonwealth Energy System and
           Subsidiary Companies as amended and restated January 1, 1993
           (Exhibit 1 to the CES Form 10-Q (September 1993), File No. 1-7316).

10.2.2     Employees Savings Plan of Commonwealth Energy System and Subsidiary
           Companies as amended and restated January 1, 1993 (Exhibit 2 to the
           CES Form 10-Q (September 1993), File No. 1-7316).
<PAGE>
<PAGE 53>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.2.2.1   First Amendment to the Employees Savings Plan of Commonwealth
           Energy System and Subsidiary Companies, as amended and restated as
           of January 1, 1993, effective October 1, 1994. (Exhibit 1 to the
           CES Form S-8 (January 1995), File No. 1-7316).

10.2.2.2   Second Amendment to the Employees Savings Plan of Commonwealth
           Energy System and Subsidiary Companies, as amended and restated as
           of January 1, 1993, effective April 1, 1996. (Exhibit 1 to the CES
           Form 10-K/A Amendment No. 1 (April 30, 1996), File No. 1-7316).

10.2.2.3   Third Amendment to the Employees Savings Plan of Commonwealth
           Energy System and Subsidiary Companies, as amended and restated as
           of January 1, 1993, effective January 1, 1997. (Exhibit 1 to the
           CES Form 10-K/A Amendment No. 1 (April 29, 1997), File No. 1-7316).

10.2.2.4   Fourth Amendment to the Employees Savings Plan of Commonwealth
           Energy System and Subsidiary Companies, as amended and restated as
           of January 1, 1993, effective January 1, 1998. (Exhibit 1 to the
           CES Form 10-K/A Amendment No. 1 (April 29, 1998), File No. 1-7316).

10.2.3     NEPOOL Agreement dated September 1, 1971 as amended through August
           1, 1977 between NEGEA Service Corporation, as agent for CEL, CEC,
           NBGEL and various other electric utilities operating in New Eng-
           land, together with amendments dated August 15, 1978, January 31,
           1979 and February 1, 1980 (Exhibit 5(c)13 to the CES Form S-16
           (April 1980), File No. 2-64731).

10.2.3.1   Thirteenth Amendment to 10.2.3 dated September 1, 1981 (Exhibit 3
           to the CES 1991 Form 10-K, File No. 1-7316).

10.2.3.2   Fourteenth through Twentieth Amendments to 10.2.3 as amended
           December 1, 1981, June 1, 1982, June 15, 1983, October 1, 1983,
           August 1, 1985, August 15, 1985 and September 1, 1985, respectively
           (Exhibit 4 to the CES Form 10-Q (September 1985), File No. 1-7316).

10.2.3.3   Twenty-first Amendment to 10.2.3 as amended to January 1, 1986
           (Exhibit 1 to the CES Form 10-Q (March 1986), File No. 1-7316).

10.2.3.4   Twenty-second Amendment to 10.2.3 as amended to January 1, 1986
           (Exhibit 1 to the CES Form 10-Q (September 1986), File No. 1-7316).

10.2.3.5   Twenty-third Amendment to 10.2.3 as amended April 30, 1987 (Exhibit
           1 to the CES Form 10-Q (June 1987), File No. 1-7316).

10.2.3.6   Twenty-fourth Amendment to 10.2.3 as amended March 1, 1988 (Exhibit
           1 to the CES 1987 Form 10-K, File No. 1-7316).

10.2.3.7   Twenty-fifth Amendment to 10.2.3 as amended May 1, 1988 (Exhibit 1
           to the CES Form 10-Q (March 1988), File No. 1-7316).

10.2.3.8   Twenty-sixth Amendment to 10.2.3 as amended March 15, 1989 (Exhibit
           1 to the CES Form 10-Q (March 1989), File No. 1-7316).

10.2.3.9   Twenty-seventh Amendment to 10.2.3 as amended October 1, 1990
           (Exhibit 3 to the CES 1990 Form 10-K, File No. 1-7316).

10.2.3.10  Twenty-Eighth Amendment to 10.2.3 as amended September 15, 1992
           (Exhibit 1 to the CES Form 10-Q (September 1994), File No. 1-7316).
<PAGE>
<PAGE 54>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.2.3.11  Twenty-Ninth Amendment to 10.2.3 as amended May 1, 1993 (Exhibit 2
           to the CES Form 10-Q (September 1994), File No. 1-7316).

10.2.4     Guarantee Agreement by CEL (as guarantor) and MYA Fuel Company (as
           initial lender) covering the unconditional guarantee of a portion
           of the payment obligations of Maine Yankee Atomic Power Company
           under a loan agreement and note initially between Maine Yankee and
           MYA Fuel Company (Exhibit 3 to the CEL 1985 Form 10-K, File No.
           2-7909).

Exhibit 27.   Financial Data Schedule

    Filed herewith as Exhibit 1 is the Financial Data Schedule for the twelve
    months ended December 31, 1998

(b) Reports on Form 8-K

    No reports on Form 8-K were filed during the three months ended Decem-
    ber 31, 1998.
<PAGE>
<PAGE 55>
<TABLE>
                                                                                               SCHEDULE I

                                      CAMBRIDGE ELECTRIC LIGHT COMPANY
                        INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
                                            FROM RELATED PARTIES                     
                                    FOR THE YEAR ENDED DECEMBER 31, 1998
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1998                 
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1997               in       Dividends       1998    
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>         <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15,750  $5,007       $  381      $  675          $4,713
Maine Yankee Atomic
 Power Company                20,000   3,122          354           -           3,476
Vermont Yankee Nuclear
 Power Corporation             9,801   1,315          176         169           1,322
Yankee Atomic Electric
 Company                       3,068     405          130         140             395
   Total                              $9,849       $1,041      $  984          $9,906

Other Investments
Massachusetts Business
 Development Corporation         500  $    5                                   $    5
   Total                              $    5                                   $    5

<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder; however, no market exists for these securities.

See Note 3(b) of the Notes to Financial Statements included in Item 8 of this report for a information
pertaining to the permanent closing of the nuclear plants owned by Connecticut Yankee Atomic Power Company,
Maine Yankee Atomic Power Company and Yankee Atomic Electric Company.
</TABLE>
<PAGE>
<PAGE 56>
<TABLE>
   SCHEDULE I

                                      CAMBRIDGE ELECTRIC LIGHT COMPANY
                        INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
                                            FROM RELATED PARTIES                     
                                    FOR THE YEAR ENDED DECEMBER 31, 1997
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1997                 
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1996               in       Dividends       1997    
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>         <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15,750  $4,747       $  710      $  450          $5,007
Maine Yankee Atomic
 Power Company                20,000   2,829          293           -           3,122
Vermont Yankee Nuclear
 Power Corporation             9,801   1,324          174         183           1,315
Yankee Atomic Electric
 Company                       3,068     503          (58)         40             405
   Total                              $9,403       $1,119      $  673          $9,849

Other Investments
Massachusetts Business
 Development Corporation         500  $    5                                   $    5
   Total                              $    5                                   $    5

<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder; however, no market exists for these securities.

See Note 3(b) of the Notes to Financial Statements included in Item 8 of this report for a information
pertaining to the permanent closing of the nuclear plants owned by Connecticut Yankee Atomic Power Company,
Maine Yankee Atomic Power Company and Yankee Atomic Electric Company.
</TABLE>
<PAGE>
<PAGE 57>
<TABLE>
                                                                                               SCHEDULE I

                                      CAMBRIDGE ELECTRIC LIGHT COMPANY
                        INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
                                            FROM RELATED PARTIES                     
                                    FOR THE YEAR ENDED DECEMBER 31, 1996
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1996                 
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1995               in       Dividends       1996    
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>         <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15,750  $4,564       $  529      $  346          $4,747
Maine Yankee Atomic
 Power Company                20,000   2,891          266         328           2,829
Vermont Yankee Nuclear
 Power Corporation             9,801   1,305          172         153           1,324
Yankee Atomic Electric
 Company                       3,068     464           39         -               503
   Total                              $9,224       $1,006      $  827          $9,403

Other Investments
Massachusetts Business
 Development Corporation         500  $    5                                   $    5
   Total                              $    5                                   $    5

<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder; however, no market exists for these securities.

See Note 3(b) of the Notes to Financial Statements included in Item 8 of this report for information
pertaining to the permanent closing of the nuclear plants owned by Connecticut Yankee Atomic Power Company
and Yankee Atomic Electric Company.
</TABLE>
<PAGE>
<PAGE 58>


SCHEDULE II

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
                            (Dollars in Thousands)





                                        Additions      
                     Balance at  Provision               Deductions   Balance
                     Beginning   Charged to               Accounts      End
   Description        of Year    Operations  Recoveries  Written Off  of Year


                                 Year Ended December 31, 1998    

Allowance for
  Doubtful Accounts     $297        $560      $ 101          $493      $465


                                 Year Ended December 31, 1997    

Allowance for
  Doubtful Accounts     $482        $343       $ 49          $577      $297


                                 Year Ended December 31, 1996    

Allowance for
  Doubtful Accounts     $490        $279       $ 51          $338      $482
<PAGE>
<PAGE 59>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1998

                                  SIGNATURES


    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.

                                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                                (Registrant)

                                  By:  R. D. WRIGHT                    
                                       Russell D. Wright,
                                       Chairman of the Board and
                                       Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Principal Executive Officers:

R. D. WRIGHT                                             March 31, 1999
Russell D. Wright,
Chairman of the Board and
Chief Executive Officer

DEBORAH A. McLAUGHLIN                                    March 31, 1999
Deborah A. McLaughlin
President and Chief Operating Officer

Principal Financial and Accounting Officer:

JAMES D. RAPPOLI                                         March 31, 1999
James D. Rappoli,
Financial Vice President and Treasurer


A majority of the Board of Directors:


DEBORAH A. McLAUGHLIN                                    March 31, 1999
Deborah A. McLaughlin, Director

JAMES D. RAPPOLI                                         March 31, 1999
James D. Rappoli, Director

R. D. WRIGHT                                             March 31, 1999
Russell D. Wright, Director