<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 [FEE REQUIRED]

       For the fiscal year ended December 31, 1996

                                      OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

       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 15, 1997
        Common Stock, $25 par value            346,600 shares

The Company meets the conditions set forth in General Instruction J(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 40 of this report.


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                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1996
                               TABLE OF CONTENTS

                                    PART I
                                                                  PAGE

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

            General............................................    3
            Electric Power Supply..............................    3
            New England Power Pool.............................    5
            Energy Mix.........................................    5
            Regulation.........................................    6
               (a) Wholesale Rate Proceedings..................    6
               (b) Cost Recovery...............................    7
                     Rate Schedule.............................    7
                     Purchased Power...........................    7
                     Customer Transition Charge...............     7
               (c) Electric Industry Restructuring.............    8
            Competition........................................   10
            Construction and Financing.........................   10
            Employees..........................................   11

Item  2. Properties............................................   11

Item  3. Legal Proceedings.....................................   11

                                    PART II

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

Item  7. Management's Discussion and Analysis of Results of
         Operations............................................   13

Item  8. Financial Statements and Supplementary Data...........   17

Item  9. Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure...................   17

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
         on Form 8-K...........................................   39


Signatures.....................................................   52

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                    PART I.

Item 1. Business

    General

    Cambridge Electric Light Company (the Company) is engaged in the
production, distribution and sale of electricity at retail to approximately
44,400 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
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.

    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 Public Utilities (DPU),
which regulates retail rates, accounting, issuance of securities and other
matters.  The Company also files its wholesale rates with the Federal Energy
Regulatory Commission (FERC).  The Company is a wholly-owned subsidiary of
Commonwealth Energy System (System), which, together with its subsidiaries, is
referred to as "the system."

    By virtue of its charter, which is unlimited in time, the Company
distributes 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.  In early 1995, the Massachusetts
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 which
follows.

    Of the Company's 1996 retail electric unit sales, 12.5% was sold to
residential customers, 81.4% to commercial customers, 5.5% to industrial
customers and 0.6% to municipal and other customers.

    Electric Power Supply

    The Company owns generating facilities with a total capacity of 112.5 MW,
of which 49.5 MW is used for peaking purposes.  The Company relies primarily
on purchased power to meet its energy requirements.

    Power purchases for the Company and Commonwealth Electric Company (Common-
wealth Electric), the other wholly-owned electric distribution subsidiary of
the System, are arranged in accordance with their requirements.  These
arrangements include purchases from Canal Electric Company (Canal), another
wholly-owned subsidiary of the System.  Canal is a wholesale electric
generating company located in Sandwich, Massachusetts and is an important
source of purchased power for the Company.  Under long-term contracts, system
entitlements include one-quarter (141.5 MW) of the capacity and energy of
Canal Unit 1 and one-half (290 MW) of the capacity and energy of Canal Unit 2.


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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

The Company's entitlements in these units are 28.2 MW and 57.8 MW,
respectively.

    Pursuant to a Capacity Acquisition and Disposition Agreement (CADA), Canal
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's FERC rate schedule and
allows Canal to act on behalf of the Company and Commonwealth Electric in the
procurement of additional capacity for one or both companies.  The CADA is in
effect for Seabrook 1 and Phases I and II of Hydro-Quebec.  Exchange agree-
ments 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 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 DPU
approval.

    The Company also has equity ownership interests (2 1/2% to 4%) in two
operating nuclear units located in New England with power entitlements
totaling 42.4 MW.  One of the operating nuclear units, located in Wiscasset,
Maine and operated by Maine Yankee Atomic Power Company (Maine Yankee),
experienced two outages due to design and regulatory issues during 1996.  On
July 20, 1996 the unit was taken off-line to address a design issue on the
primary component cooling system.  The unit remained off-line until September
2, 1996, to also address issues related to compliance with the Nuclear
Regulatory Commission's (NRC) General Letter 96-01 that addresses surveillance
testing of safety system components.

    The second outage at Maine Yankee began on December 5, 1996 to correct
technical issues associated with a Confirmatory Action Letter issued by the
NRC.  Maine Yankee also used this outage as an opportunity to breach the
reactor and identify specific fuel assemblies which were detected as leaking
earlier in the operating cycle.  They identified eight assemblies with a total
of seventy-five fuel rods leaking, and found the most recent load of fuel
unacceptable for continued operation of the plant.  Additional cable
separation issues were also identified and the NRC has expanded the
requirements of the Confirmatory Action Letter that Maine Yankee must meet
prior to restart.  The restart date of the unit has not yet been determined.

    In July 1996, Connecticut Yankee Atomic Power Company (Connecticut
Yankee), which operates the Connecticut Yankee nuclear power plant, took the
unit out of service in connection with certain safety related issues and
refueling.  On December 4, 1996, following an economic evaluation of
continuing operation of the plant over the remaining ten years of its license
life compared to ceasing operation and incurring replacement power costs for
the same period, Connecticut Yankee's Board of Directors voted to permanently
shut down the plant.

    Additionally, in February 1992, Yankee Atomic Electric Company's Board of
Directors decided to permanently cease power operation at a nuclear unit
located in Rowe, Massachusetts and, in time, decommission the facility.  The
Company has a 2% interest in this facility.  For further information, refer to

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Note 3(e) of 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's equity ownership in Hydro-Quebec Phase II and joint-ownership in the
Seabrook nuclear unit, respectively.

    The Company expects to provide for future peak load plus reserve require-
ments through existing system generation, including purchasing excess capacity
from neighboring utilities.  These and other bulk electric power purchases are
necessary in order to fulfill the system's NEPOOL obligation and for Canal to
acquire and deliver electric generating capacity to meet the Company's and
Commonwealth Electric's requirements.

    New England Power Pool

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

    NEPOOL 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 requirements.  This concept is
accomplished through the use of computers to monitor and forecast load
requirements.

    The Company and the System'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 cri-
teria and standards for reliability and serves as a vehicle for coordination
in the planning and operation of these systems.

    The reserve requirements used by NEPOOL participants in planning future
additions are determined by NEPOOL to meet the reliability criteria recom-
mended by the NPCC.  The system estimates that, during the next ten years,
reserve requirements so determined will be approximately 20% of peak load.

    Energy Mix

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

                                     1996       1995      1994

        Oil                           21%        23%       31%
        Nuclear                       39         36        43
        Natural gas                   33         40        25
        Hydro                          7          1         1
          Total                      100%       100%      100%

    The increase in hydro during 1996 represents an increase in power from
Hydro-Quebec, while the decrease in oil represents a five-month maintenance
outage at Canal Unit 2.  The lower oil component in 1995 reflects Canal Unit 1
being off-line for the first seven months of the year and an additional outage
period of nearly one month during the fourth quarter.  In addition to power
purchases, the Company is actively pursuing sales of certain available

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

capacity to utilities in and outside the New England region.

    Regulation

    (a) Wholesale Rate Proceedings

    The Company provides power supply and transmission services to its FERC-
jurisdictional wholesale customers.  The Company requires FERC approval to
change its wholesale rates, including those to the Municipal Light Department
of the Town of Belmont, Massachusetts (Belmont), a "partial requirements"
customer since 1986.  Since February 1993, Belmont has taken power supply
service under a FERC approved Net Requirements Power Supply Agreement.

    In 1993, the Company and Belmont began negotiations for a new transmission
service agreement.  The negotiations were not successful.  On June 29, 1994
the Company filed for FERC approval of a new transmission service agreement
with Belmont.  The FERC accepted the rates effective January 25, 1995, subject
to refund.  At the same time, an investigation was opened by the FERC to
determine the reasonableness of both the existing transmission tariff rates to
Belmont and the proposed transmission service agreement with Belmont.  Both
Belmont and FERC staff intervened in the investigation.  The Company filed its
case with the FERC on October 25, 1994 and evidentiary hearings were held in
March 1995.

    An Initial Decision (ID) of the Presiding Administrative Law Judge was
issued on September 14, 1995.  In the ID the Administrative Law Judge found
that the Company's existing transmission tariff rates were just and
reasonable.  The Administrative Law Judge identified a number of revisions to
the filed transmission service agreement which effectively reduced the rates
to Belmont.  In October 1995, the parties filed briefs on exceptions to the
Administrative Law Judge's ID.  The Company awaits final FERC action on this
investigation.

    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 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 a Section 206
investigation issued 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
that conform to the FERC pro-forma tariff contained in Order No. 888.  On July
9, 1996, the Company and Commonwealth Electric filed tariffs that conform to
the FERC's pro-forma 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.

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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

    (b) Cost Recovery

        Rate Schedule

    The Company files a fuel charge (FC) rate schedule, subject to DPU
regulation, under which the Company is allowed current recovery from retail
customers of costs of fuel used in electric generation and a substantial
portion of purchased power, demand and transmission costs.  This schedule
requires the quarterly computation and DPU approval of a FC decimal based on
forecasts of fuel, electricity purchased for resale and transmission costs and
billed unit sales for each period.  To the extent that collections under the
rate schedule do not match actual costs for a given calendar quarter, an
appropriate adjustment is reflected in the calculation of the Company's
decimal for the next calendar quarter.

        Purchased Power

    The Company has long-term contracts for the purchase of electricity from
various sources.  Generally, these contracts are for fixed periods and require
that the Company pay a demand charge for its capacity entitlement and an
energy charge to cover the cost of fuel.  The Company collects a portion of
the capacity-related purchased power costs associated with certain long-term
power and transmission agreements through base rates as approved by the DPU.

    Revenues collected through base rates are 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 DPU-mandated
recovery mechanism for the capacity-related costs described above, the Company
has experienced a revenue excess or shortfall when unit sales and/or the costs
recoverable in base rates vary from test-period levels.  This issue, which has
had a significant impact on the Company's net income, was addressed in a
settlement agreement approved by the DPU in May 1995 that permits deferral of
up to $2 million annually for these capacity-related purchased power costs.
There have been no deferrals to date.

        Customer Transition Charge

        In September 1995, the DPU 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 will protect remaining customers from
paying certain costs, often referred to as stranded investment costs, that
were incurred in the event that the Company's largest customers discontinue
full service, yet still remain connected for back-up and other services.
These costs include 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

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

approved nationally and follows the DPU restructuring order which endorsed, in
principle, the recovery of stranded investment costs.

    Through the CTC, the Company will initially recover 75% of net stranded
investment costs as calculated in its proposal.  The Company's other rates in-
clude a Supplemental Service Rate, a Standby Service Rate and a Maintenance
Service Rate each of which were approved with only minor changes.  The Company
is encouraged by the DPU's position on recovery of stranded investment costs
and expects to address recovery of the remaining 25% in its restructuring
filing.

    The Massachusetts Institute of Technology (MIT) appealed the DPU's deci-
sion to the Massachusetts Supreme Judicial Court (the SJC).  The Company is an
intervenor in this proceeding.  While no schedule is set for a decision from
the SJC, the Company anticipates a decision sometime in the second quarter of
1997.  At this time, the Company is unable to predict the outcome of this
proceeding.  In addition, on February 29, 1996, the FERC denied a petition
filed in January 1996 by MIT, which sought relief from paying the CTC, on the
premise that stranded costs are to be resolved at the state level.  The
Company believes that the FERC's action will be an important factor that the
SJC will consider in the appeal process.

    In a previous legal proceeding, on August 27, 1996, the United States
District Court for the District of Massachusetts (District Court) granted the
motions for summary judgement of the Company and the DPU and dismissed the May
1996 complaint filed by MIT.  In its complaint, MIT had alleged that the CTC
approved by the DPU and implemented by the Company violated the Public Utility
Regulatory Policies Act of 1978 (PURPA).  In dismissing MIT's complaint, the
District Court found that MIT's complaint involved an allegation relating to
the DPU's application of PURPA, which is not within the District Court's
jurisdiction.

    (c) Electric Industry Restructuring

    In August 1995, the DPU issued an order calling for the restructuring of
the electric utility industry in Massachusetts.  On May 1, 1996, the DPU
issued a second order containing proposed rules for implementing electric
industry restructuring that were the subject of public comment and hearings
during June and July 1996.  Subsequently, on December 30, 1996, the DPU issued
another order announcing its "Model Rules and Legislative Proposal" as a guide
in the creation of a competitive market for electric generation in
Massachusetts that would provide customers with the opportunity to achieve
lower electric bills beginning January 1, 1998.  The order also required
electric utilities to file by March 3, 1997, revenue-neutral, unbundled rates
and model bills showing a breakdown of the bill into generation, transmission,
distribution and access charge categories.

    In its "Model Rules," the DPU has proposed that the minimum structural
reorganization needed to create a competitive market is the functional
separation of generation, transmission and distribution within one integrated
company, and the establishment of a separate marketing affiliate if a company
retains generation assets.  The Massachusetts Legislature, which will render
the final passage of any restructuring law, is now considering the DPU's
proposed legislation.  In addition, on March 20, 1997, the Legislature's own
Joint Committee on Electric Utility Restructuring (the Committee) issued a

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

comprehensive policy report which outlines options for the Legislature's
consideration as debate on this issue continues.  In addition to the report,
the Committee formulated its own recommendations and corresponding legislative
package designed to address each of the major areas of the law which must
develop if electric utility restructuring is to be successfully implemented in
Massachusetts.

    Other elements of the DPU's Model Rules provide that electric customers
will be able to buy their power on the open market; distribution services will
remain a monopoly service offered exclusively by the existing local distribu-
tion companies in clearly defined service territories; and customers will have
three types of electric generation choices.  First, customers may enter into
unregulated agreements with a competitive supplier for the provision of gener-
ation.  Second, customers may continue to buy power directly from their elec-
tric distribution company at a price regulated by the DPU.  Third, customers
who have received generation from a competitive supplier but who, for any
reason, have stopped receiving such generation will be able to receive default
generation service, provided by distribution companies at spot market price.

    Changes in the electric industry reflected in the DPU's proposal could
reduce the opportunity that currently exists for electric companies to recover
their investment in generating plant and other expenditures previously
approved by the DPU and included in current rates.  The potential losses,
which may result from subjecting electric company generation to the pressures
of a competitive market, are typically referred to as "stranded costs."  The
single largest component of stranded costs which are significant to the system
relates to above market purchased power contracts that the Company and
Commonwealth Electric have with non-utility generators.  However, the DPU has
concluded that it is in the public interest to provide electric companies a
reasonable opportunity to collect net, non-mitigable stranded costs.  The DPU
has proposed that stranded costs associated with owned generation facilities,
regulatory assets, and minimum purchased power obligations be collected over
the expected economic life of the generating facility, the current amortiza-
tion schedule of the regulatory asset, or the contractual term of the
purchased power obligation, respectively.  The DPU's proposal requires that
any stranded cost recovery for an electric utility be subject to mitigation
efforts to reduce embedded costs over time.  The Model Rules specify that
mitigation should include such measures as sales of capacity and energy from
owned generation, renegotiation or buy-out of purchased power contracts, and
sales and voluntary writedowns of assets.  Further, the DPU will conduct
stranded cost charge reconciliations at years two, five and ten following the
date of retail access.

    During the last several months, three Massachusetts electric utilities
have announced negotiated settlement agreements with the Massachusetts
Attorney General's Office (Attorney General) that include divestiture of
generating assets, provision for a ten percent reduction in customers' charges
and recovery of stranded costs through a non-bypassable access charge.  One
settlement agreement has already been approved by the DPU.  Implementation of
any restructuring settlement may be affected by actions of the Massachusetts
Legislature.

    The Company and Commonwealth Electric are engaged in preliminary settle-
ment discussions with the Attorney General, and expect to reach a comprehen-
sive settlement during the first half of 1997.  In the unlikely event that

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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

the parties are unable to complete a settlement, the companies would file a
full restructuring plan with the DPU.

    As described in Note 2(b) to the Notes to Financial Statements, the
Company complies with 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 determined that it no longer met 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.  Criteria 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 periodically
reviews 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 regulatory assets, including those related to generation,
are probable of future recovery.

    Competition

    The Company continues to develop and implement strategies that deal with
the increasingly competitive environment facing the electric business.  The
inherently high cost of providing energy services in the Northeast has placed
the region at a competitive disadvantage as more customers begin to explore
alternative energy supply options.  Pursuant to its aforementioned Model
Rules, the DPU is proposing to implement programs under which utility and non-
utility generators can sell electricity to customers of other utilities
without regard to previously closed franchise service areas.  In 1994, the DPU
began an inquiry into incentive ratemaking.

    Company actions in response to the new competitive challenges have been
well received by regulators, business groups and customers.  The Company has
developed and will continue to develop 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, the System announced the consolidation of
management personnel of Commonwealth Electric, Commonwealth Gas, COM/Energy
Services Company and the Company effective on that date.  COM/Electric and
COM/Gas will continue to operate under their existing company names.  The
consolidation process for these companies will involve the merging of similar
functions and activities to eliminate duplication in order to create the most
efficient and cost-effective operation possible and will ultimately result in
the elimination of approximately 300 (15% of system) positions system-wide.

    In March 1994, the Company was successful in negotiating a seven-year
service agreement with Harvard University, whose sales in 1996, 1995 and 1994
accounted for approximately 9.8%, 9.4% and 8.5%, respectively, of the
Company's total unit sales for those years.

    Construction and Financing

    Information concerning the Company's construction and financing programs
 
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

is contained in Note 3(a) of the Notes to Financial Statements filed under
Item 8 of this report.

    Employees

    The Company has 151 regular employees, 112 employees (74%) are represented
by the Utility Workers' Union of America, A.F.L.-C.I.O.  The existing
collective bargaining agreement expires September 1, 1998.  Employee relations
have generally been satisfactory.


Item 2. Properties

    The Company owns and operates two steam generating plants and two gas
turbine units located in Cambridge with a total capability of 112.5 MW
together with an integrated system of distribution lines and substations.

    At December 31, 1996, the Company's electric transmission and distribution
system consisted of 93 pole miles of overhead lines, 704 cable miles of
underground line, 217 substations and 44,947 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 DPU approving a
customer transition charge that allows the Company to recover certain stranded
investment costs.  For additional information refer to "Cost Recovery" section
in Item 1 of this report.

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                       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
          Commonwealth Energy System.

      (b) Number of Stockholders at December 31, 1996

          One

      (c) Frequency and Amount of Dividends Declared in 1996 and 1995

                      1996                            1995
                            Per Share                       Per Share
          Declaration Date    Amount      Declaration Date    Amount

          January 24, 1996     $ 4.00     January 25, 1995     $ 2.90
          April 29, 1996         0.75     April 28, 1995         1.15
          November 04, 1996      5.20     July 24, 1995          3.00
                               $ 9.95     November 14, 1995      7.50
                                                               $14.55

          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.

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                       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
facilitate 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, 1996
and 1995 and unit sales for these periods is shown below:

                                        Years Ended          Years Ended
                                        December 31,         December 31,
                                       1996 and 1995        1995 and 1994
                                             Increase (Decrease)
                                           (Dollars in Thousands)

Electric Operating Revenues          $(3 198)   (2.6)%    $(4 873)    (3.8)%

Operating Expenses:
 Fuel used in electric production        532    18.4         (125)   (4.1)
 Electricity purchased for resale       (742)   (1.1)      (3 223)   (4.4)
 Transmission                           (684)  (10.0)        (345)   (4.8)
 Other operation and maintenance        (200)   (0.8)        (282)   (1.2)
 Depreciation                            127     3.1           97     2.4
 Taxes -
   Federal and state income              (42)   (1.5)        (537)  (16.5)
   Local property and other               11     0.3          114     3.0
                                        (998)   (0.9)      (4 301)   (3.6)

Operating Income                      (2 200)  (26.2)        (572)   (6.4)

Other Income                             933    71.3          (29)   (2.2)

Income Before Interest Charges        (1 267)  (13.0)        (601)   (5.8)

Interest Charges                        (949)  (22.2)         203     5.0

Net Income                           $  (318)   (5.8)     $  (804)  (12.9)


Unit Sales (MWH)
 Retail                              (68 197)   (5.1)       9 320     0.7
 Sales for resale                     69 101    48.1     (160 059)  (52.7)
   Total unit sales                      904     0.1     (150 739)   (9.3)

<PAGE>
<PAGE 14>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Unit Sales

    The following is a summary of unit sales and customers for the periods
indicated:
                                         Years Ended December 31,
                                1996               1995               1994
                                          %                  %
                                        Change             Change
 Unit Sales (MWH):
   Residential                 157 803    0.3     157 355    0.9     155 986
   Commercial                1 028 896   (5.5)  1 089 187    1.3   1 074 726
   Industrial                   69 680  (10.7)     78 063   (7.6)     84 471
   Municipal and other           8 043    0.4       8 014   (1.3)      8 116
     Total retail            1 264 422   (5.1)  1 332 619    0.7   1 323 299
   Wholesale                   212 666   48.1     143 565   (52.7)   303 624
     Total                   1 477 088    0.1   1 476 184   (9.3)  1 626 923

 Customers:
   Residential                  37 503   (0.5)     37 686   (0.2)     37 758
   Commercial                    6 523    1.0       6 458    1.0       6 393
   Industrial                       52   (8.7)         57   (1.7)         58
   Municipal and other             304    0.7         302    1.7         297
     Total                      44 382   (0.3)     44 503     -       44 506

    During 1996, a decrease in retail unit sales was virtually offset by an
increase in wholesale sales, resulting in a 0.1% increase in total sales.  The
lower retail unit sales reflects a decrease in industrial sales and a
significant decline in sales to Massachusetts Institute of Technology, a large
commercial customer that constructed its own cogeneration facility and has
elected to receive standby service only.  The increase in wholesale sales
reflects an increase in sales to NEPOOL due to changes in the Company's
capacity needs.

    For 1995, the Company's total unit sales decreased 9.3% and reflected a
significant decrease in wholesale sales to NEPOOL.  Retail unit sales
increased slightly and reflected moderate increases in the commercial and
residential sectors.

Operating Revenues

    Operating revenues decreased approximately $3.2 million or 2.6% during
1996 due to a lower level of retail unit sales ($1.3 million), lower costs for
electricity purchased for resale ($742,000), transmission charges ($684,000)
and C&LM charges ($145,000), offset, in part by an increase in fuel costs.

    Operating revenues for 1995 declined $4.9 million (3.8%) due primarily to
decreases in wholesale unit sales, electricity purchased for resale ($3.2
million), C&LM charges ($764,000), transmission charges ($345,000), and fuel
costs ($125,000) offset, in part, by a small increase in retail unit sales.
Also impacting the change was the implementation of a $1.5 million rate refund
pursuant to a May 1995 settlement agreement, approximately $1.3 million of
which was included in the decrease in electricity purchased for resale.

    As a result of a DPU-mandated recovery mechanism implemented in 1993 for
capacity-related costs associated with certain long-term purchased power

<PAGE>
<PAGE 15>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

contracts, the Company has experienced a revenue excess or shortfall when unit
sales and/or the costs recoverable in base rates vary from test-period levels.
This issue, which has had a significant impact on net income, was addressed in
a settlement agreement approved by the DPU in May 1995 (refer to the "Cost
Recovery" section in Item 1 of this report for additional details).  During
1996, 1995 and 1994, the Company overrecovered approximately $290,000,
$900,000 and $3.2 million, respectively, resulting in an increase to net
income of approximately $177,000, $545,000 and $2 million, respectively.

    The following is an analysis of revenue components for the years 1996,
1995 and 1994:
                                            Years Ended December 31,
                                     1996            1995            1994
                                            (Dollars in Thousands)
                                              %               %
                                            Change          Change
 Electric revenues:
    Costs recovered in Fuel
      or Conservation Charge       $ 47 956   0.1  $ 47 907  (8.9) $ 52 610
    Certain power costs
      recovered in base rates        30 639  (3.4)   31 727   0.8    31 481
    Other revenue recoveries (*)     40 510  (5.1)   42 669  (1.0)   43 085
  Total revenues                   $119 105  (2.6) $122 303  (3.9) $127 176

    (*) Includes sales for resale and other base rate revenue.

Electricity Purchased For Resale, Transmission and Fuel

    To satisfy demand requirements and provide required reserve capacity, the
Company purchases 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 DPU.  The Company supplements these
sources with its own generating capacity.

    Electricity purchased for resale, transmission and fuel costs decreased
approximately $900,000 (1.1%) in 1996 due primarily to a decline in purchases
from NEPOOL, lower costs for nuclear power and from affiliate Canal Electric
Company's (Canal) Unit 2 which was out of service for approximately five
months for scheduled maintenance and was returned to service in mid-August
1996.  The scheduled outage of Unit 2 also included the completion of a
fueling conversion enabling the Unit to burn natural gas and oil.  These
reductions were offset, in part, by an increase in power purchased from Canal
Unit 1 which was out of service from January until August 1995 due to a
combination of scheduled and unscheduled maintenance.

    During 1995, electricity purchased for resale, transmission and fuel costs
decreased $3.7 million or 4.5% due primarily to a $3.2 million reduction in
purchased power costs which reflects the decreased availability of Canal Unit
1 during 1995, as discussed above.  In addition, a nuclear unit remained out
of service for most of 1995 while undergoing extensive generator repairs.

<PAGE>
<PAGE 16>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Other Operation and Maintenance

    Other operation expense increased only 0.6% during 1996 as increases in
liability insurance ($793,000) and postretirement benefits costs ($304,000)
were offset, in part, by lower pension expense ($106,000), the absence of
legal fees ($293,000) associated with the cancellation of a power contract in
1995, lower fees for industry-related research and development ($186,000) and
lower C&LM costs ($145,000).  Maintenance costs decreased $340,000 due
primarily to a lower level of repairs at the Company's Kendall generating
unit.

    During 1995, other operation decreased $887,000 (4.1%) due primarily to a
decline in liability insurance ($856,000) due to adjustments to insurance
accruals that reflected better than anticipated experience, lower C&LM costs
($764,000) and a decline in the provision for bad debts reflecting improved
collection experience ($234,000).  This was offset, in part, by higher costs
for labor ($669,000) and postretirement benefits ($366,000).  Maintenance
costs increased $605,000 due primarily to repairs to the Company's Kendall and
Blackstone generating units.

Depreciation and Taxes

    Depreciation expense increased 3.1% and 2.4% in 1996 and 1995,
respectively, due to higher levels of depreciable property, plant and
equipment.  Federal and state income taxes decreased during 1995 by
approximately 17% due to a lower level of pretax income.

Other Income and Interest Charges

    The significant increase in other income during 1996 was due primarily to
the recognition of a gain relating to the sale of a parcel of land ($664,000)
and a higher rate of return relative to steam production for an affiliate
steam company ($346,000).  Interest charges decreased 22.2% during 1996 due
primarily to the repayment of a $20 million (9.97%) long-term debt issue
during the second quarter, the effect of which was partially offset by a
higher level of short-term bank borrowings.  The weighted average short-term
interest rate was 5.6% during 1996 as compared to 6.1% during 1995.

    Interest charges during 1995 increased 5% due to a higher level of short-
term borrowings and higher short-term interest rates (6.1% in 1995 versus 4.3%
in 1994) offset, somewhat, by an increase in the debt component of allowance
for funds used during construction (AFUDC) ($82,000).

Forward-Looking Statements

    This report contains statements which, to the extent they are not recita-
tions of historical fact, constitute "forward-looking statements" and are
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, and

<PAGE>
<PAGE 17>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

uncertainty as to regulatory approval of the full recovery of regulatory
assets and other stranded costs.

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.

    Effective January 1, 1997, the Company will adopt the provisions of
Statement of Position (SOP) 96-1, "Environmental Remediation Liabilities."
This Statement provides authoritative guidance for recognition, measurement,
display and disclosure of environmental remediation liabilities in financial
statements.  Management does not believe that SOP 96-1 will have a material
adverse effect on the Company's results of operations or financial position.

Item 8. Financial Statements and Supplementary Data

    The Company's financial statements required by this item are filed
herewith on pages 18 through 38 of this report.

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

    None.

<PAGE>
<PAGE 18>

                       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, 1996 and 1995, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1996.  These financial statements and
schedules referred to below are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements 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, 1996 and 1995, and the results of its operations
and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting
principles.

    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 19, 1997.

<PAGE>
<PAGE 19>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

                                   PART II.


FINANCIAL STATEMENTS

      Balance Sheets at December 31, 1996 and 1995

      Statements of Income for the Years Ended December 31, 1996,
      1995 and 1994

      Statements of Retained Earnings for the Years Ended December 31, 1996,
      1995 and 1994

      Statements of Cash Flows for the Years Ended December 31, 1996,
      1995 and 1994

      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, 1996, 1995
            and 1994

      II    Valuation and Qualifying Accounts for the Years Ended December 31,
            1996, 1995 and 1994

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
      individually, constitute a significant subsidiary.

<PAGE>
<PAGE 20>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1996 AND 1995
                                    ASSETS



                                                     1996           1995
                                                    (Dollars in Thousands)

PROPERTY, PLANT AND EQUIPMENT, at original cost     $161 331       $156 925
  Less - Accumulated depreciation                     61 499         58 839
                                                      99 832         98 086
  Add - Construction work in progress                    546          1 225
                                                     100 378         99 311

INVESTMENTS
  Equity in nuclear electric power companies           9 403          9 224
  Other                                                    5              5
                                                       9 408          9 229

CURRENT ASSETS
  Cash                                                   143            239
  Accounts receivable -
    Affiliated companies                               1 452          2 140
    Customers, less reserves of $482,000 in 1996
      and $490,000 in 1995                            11 285         10 534
  Unbilled revenues                                    2 751          2 992
  Inventories, at average cost -
    Materials and supplies                               468            511
    Electric production fuel oil                       1 101            796
  Prepaid taxes -
    Income                                               968             -
    Property                                           1 704          1 690
  Other                                                  454            872
                                                      20 326         19 774

DEFERRED CHARGES
  Regulatory assets                                   42 781          7 809
  Other                                                2 258          2 142
                                                      45 039          9 951

                                                    $175 151       $138 265












  The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE 21>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1996 AND 1995
                        CAPITALIZATION AND LIABILITIES



                                                     1996           1995
                                                    (Dollars in Thousands)
CAPITALIZATION
  Common Equity -
    Common stock, $25 par value -
      Authorized and outstanding -
        346,600 shares in 1996 and 1995,
        wholly-owned by Commonwealth
        Energy System (Parent)                      $  8 665       $  8 665
    Amounts paid in excess of par value               27 953         27 953
    Retained earnings                                  9 233          7 561
                                                      45 851         44 179
  Long-term debt, including premiums, less
    current sinking fund requirements and
    maturing debt                                     17 503         21 865
                                                      63 354         66 044
CURRENT LIABILITIES
  Interim Financing -
    Notes payable to banks                            18 725          2 675
    Advances from affiliates                           5 065          2 425
    Maturing long-term debt                            4 260         20 000
                                                      28 050         25 100
  Other Current Liabilities -
    Current sinking fund requirements                    100            160
    Accounts payable -
      Affiliated companies                             4 429          3 787
      Other                                            8 216          8 522
    Accrued taxes -
      Local property and other                         1 705          1 690
      Income                                             -              731
    Accrued interest                                     475            973
    Other                                              3 738          2 843
                                                      18 663         18 706
                                                      46 713         43 806
DEFERRED CREDITS
  Accumulated deferred income taxes                   14 355         13 882
  Yankee Atomic purchased power contract               3 466          4 504
  Connecticut Yankee purchased power contract         35 879            -
  Unamortized investment tax credits and other        11 384         10 029
                                                      65 084         28 415
COMMITMENTS AND CONTINGENCIES

                                                    $175 151       $138 265





  The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE 22>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                             STATEMENTS OF INCOME
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


                                             1996        1995        1994
                                                (Dollars in Thousands)

ELECTRIC OPERATING REVENUES                $119 105    $122 303    $127 176

OPERATING EXPENSES
  Fuel used in electric production            3 427       2 895       3 020
  Electricity purchased for resale           68 673      69 415      72 638
  Transmission                                6 177       6 861       7 206
  Other operation                            20 757      20 617      21 504
  Maintenance                                 3 064       3 404       2 799
  Depreciation                                4 254       4 127       4 030
  Taxes -
    Income                                    2 683       2 725       3 262
    Local property                            3 041       3 017       2 968
    Payroll and other                           822         835         770
                                            112 898     113 896     118 197

OPERATING INCOME                              6 207       8 407       8 979

OTHER INCOME                                  2 242       1 309       1 338

INCOME BEFORE INTEREST CHARGES                8 449       9 716      10 317

INTEREST CHARGES
  Long-term debt                              2 238       3 776       3 788
  Other interest charges                      1 157         638         341
  Allowance for borrowed funds used
    during construction                         (66)       (136)        (54)
                                              3 329       4 278       4 075

NET INCOME                                 $  5 120    $  5 438    $  6 242


















  The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE 23>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                        STATEMENTS OF RETAINED EARNINGS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994




                                             1996        1995        1994
                                                (Dollars in Thousands)

Balance at beginning of year                $ 7 561     $ 7 166     $ 7 056
Add (Deduct):
  Net income                                  5 120       5 438       6 242
  Cash dividends on common stock             (3 448)     (5 043)     (6 132)
Balance at end of year                      $ 9 233     $ 7 561     $ 7 166









































  The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE 24>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                           STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                             1996        1995        1994
                                                (Dollars in Thousands)

OPERATING ACTIVITIES
  Net income                                $ 5 120     $ 5 438     $ 6 242
  Effects of noncash items -
    Depreciation and amortization             4 254       4 258       4 323
    Deferred income taxes                      (628)      1 067         917
    Investment tax credits                      (93)        (94)        (95)
    Earnings from corporate joint ventures   (1 006)     (1 111)     (1 189)
  Dividends from corporate joint ventures       827       1 051       1 084
  Change in working capital, exclusive
    of cash and interim financing -
      Accounts receivable and unbilled
        revenues                                178      (1 543)      2 261
      Income taxes                           (1 698)         55         991
      Accounts payable and other                829         331         631
  Deferred postretirement benefits and
    pension costs                              (225)       (503)     (1 019)
  All other operating items                   2 356         109      (1 967)
Net cash provided by operating activities     9 914       9 058      12 179

INVESTING ACTIVITIES
  Additions to property, plant and
    equipment (exclusive of AFUDC)           (5 024)     (6 229)     (6 499)
  Allowance for borrowed funds used
    during construction                         (66)       (136)        (54)
Net cash used for investing activities       (5 090)     (6 365)     (6 553)

FINANCING ACTIVITIES
  Payment of dividends                       (3 448)     (5 043)     (6 132)
  Proceeds from short-term borrowings, net   16 050         500         175
  Proceeds from (payment of)
    affiliate borrowings                      2 640       1 875        (755)
  Long-term debt issue refunded             (20 000)        -           -
  Retirement of long-term debt through
    sinking funds                              (162)       (162)       (162)
Net cash used for financing activities       (4 920)     (2 830)     (6 874)
Change in cash                                  (96)       (137)     (1 248)
Cash at beginning of period                     239         376       1 624
Cash at end of period                       $   143     $   239     $   376

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Interest paid (net of capitalized
    amounts)                                $ 3 796     $ 3 934     $ 3 743
  Income taxes paid                         $ 4 015     $ 2 061     $ 2 102



  The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE 25>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                         NOTES TO FINANCIAL STATEMENTS

(1) General Information

    Cambridge Electric Light Company (the Company) is a wholly-owned
subsidiary of Commonwealth Energy System (the System).  The System is the
parent company and, together with its subsidiaries, is collectively referred
to as "the system."  The System 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 and sale of elec-
tricity to approximately 44,500 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 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.

    The Company has 151 regular employees, 112 (74%) of whom are represented
by a single collective bargaining unit with a contract that expires in 1998.
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)
and the Massachusetts Department of Public Utilities (DPU).

    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
regulatory assets in cases where the DPU 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.  Effective January 1, 1996, the Company adopted SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of."  SFAS No. 121 imposes stricter criteria for
regulatory assets by requiring that such assets be probable of future recovery

<PAGE>
<PAGE 26>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

at each balance sheet date.  SFAS No. 121 did not have an impact on the
Company's financial position upon adoption.  This result may change as
modifications are made to the current regulatory framework due to ongoing
electric industry restructuring efforts in Massachusetts.  If all or a
separable portion of the Company's operations becomes no longer subject to the
provisions of SFAS No. 71, a write-off of related regulatory assets and
liabilities would be required, unless some form of transition cost recovery
continues through rates established and collected for the Company's remaining
regulated operations.  In addition, the Company would be required to determine
any impairment to the carrying costs of deregulated plant and inventory
assets.  However, on December 30, 1996, the DPU issued an order containing
"Model Rules" for industry restructuring that management believes would
essentially allow full recovery of stranded costs.  For additional information
relating to industry restructuring, see the "Electric Industry Restructuring"
section under Management's Discussion and Analysis of Results of Operations.

    The principal regulatory assets included in deferred charges at
December 31, 1996 and 1995 were as follows:

                                                       1996         1995
                                                    (Dollars in Thousands)

    Yankee Atomic unrecovered plant
      and decommissioning costs                      $ 3 466     $ 4 504
    Connecticut Yankee unrecovered plant
      and decommissioning costs                       35 879         -
    Postretirement benefits costs
      including pensions                               2 988       2 807
    Other                                                448         498
                                                     $42 781     $ 7 809

    The regulatory liabilities, reflected in the accompanying Balance Sheets
and related to deferred income taxes, were $3.2 million at December 31, 1996
and 1995.

    As of December 31, 1996, $40.7 million of the Company's regulatory assets
and all of its regulatory liabilities are reflected in rates charged to
customers over a weighted average period of approximately 11 years.

    (c) Transactions with Affiliates

    Transactions between the Company and other system companies include
purchases and sales of electricity, including purchases from Canal Electric
Company (Canal), 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 system companies are subject to review by the DPU.

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

<PAGE>
<PAGE 27>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                                         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)

       1996            $11 302           $ 7 932              $ 2 786
       1995             10 148             6 973                1 465
       1994             11 650             8 622                9 780

    The costs for the Canal 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 $621,000,
$1,969,000 and $2,158,000 in 1996, 1995 and 1994, respectively.

    (d) 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.

    The Company is generally permitted to bill customers currently for costs
associated with purchased power and transmission, fuel used in electric
production and conservation and load management (C&LM) costs through adjust-
ment clauses.  Amounts recoverable under the adjustment clauses are subject to
review and adjustment by the DPU.  The amount of such costs incurred by the
Company but not yet reflected in customers' bills is recorded as unbilled
revenues.

    (e) 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 2.69% in 1996, 2.72% in 1995 and 2.76% in 1994.

    (f) 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.

    (g) 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.

<PAGE>
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    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 6.25% in 1996,
7.75% in 1995 and 6.5% in 1994.

(3) Commitments and Contingencies

    (a) Financing and Construction Programs

    The Company is engaged in a continuous construction program presently
estimated at $27 million for the five-year period 1997 through 2001.  Of that
amount, $5.9 million is estimated for 1997.  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
payment of a demand charge for the capacity entitlement and an energy charge
to cover the cost of fuel.  Pertinent information with respect to life-of-the-
unit contracts for power from nuclear units in which the Company has an equity
ownership (Yankee Nuclear Units) is as follows:

                                               Connecticut   Maine     Vermont
                                                  Yankee*    Yankee     Yankee
                                                   (Dollars in Thousands)

    Equity Ownership (%)                            4.50       4.00       2.50
    Plant Entitlement (%)                           4.50       3.59       2.25
    Plant Capability (MW)                          560.0      870.0      496.0
    Company Entitlement (MW)                        25.2       31.2       11.2
    Contract Expiration Date                        2007       2008       2012
    1994 Actual Cost ($)                           8 902      6 250      3 660
    1995 Actual Cost ($)                           9 498      7 376      4 003
    1996 Actual Cost ($)                           9 259      6 511      4 208
    Decommissioning cost estimate (100%) ($)     410 582    380 718    366 142
    Company's decommissioning cost ($)            18 476     13 668      8 238
    Market value of assets (100%) ($)            209 448    163 536    159 613
    Company's market value of assets ($)           9 425      5 871      3 591

    * Refer to section (e) for further information on Connecticut Yankee.

    The Company pays its share of decommissioning expense to each of the
operators of these nuclear facilities as a cost of electricity purchased for
resale.

    The Company also has long-term contracts to purchase capacity from other
generating facilities.  Information relative to these contracts is as follows:

<PAGE>
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                     Range of
                     Contract
                    Expiration  Entitlement    1996      1995      1994
                      Dates       %     MW     Cost      Cost      Cost
                                    (Dollars in Thousands)
    Type of Unit
    Cogenerating        2011     17.2  24.5   $14 589   $14 680   $14 808
    Oil              2002-2009    *    85.6    11 301    10 148    11 650
    Nuclear             2026      0.7   8.1     7 881     6 919     8 622
        Total                         118.2   $33 771   $31 747   $35 080

    (*) Includes contracts to purchase power from two oil-fired units with
        capacity entitlements of 4.99% and 9.97%.

    Costs pursuant to these contracts are included in electricity purchased
for resale in the accompanying Statements of Income and are recoverable in
revenue.

    The estimated aggregate obligations under the life-of-the-unit contracts
for capacity from the operating Yankee Nuclear Units and other long-term
purchased power obligations, including the Canal and Seabrook 1 units, in
effect for the five years subsequent to 1996 are as follows:

                                           Long-Term
                          Equity-Owned     Purchased
                          Nuclear Units      Power          Total
                                     (Dollars in Thousands)

            1997             $11 474         $40 735        $52 209
            1998              11 003          40 318         51 321
            1999              12 768          42 215         54 983
            2000              12 779          43 394         56 173
            2001              11 908          45 261         57 169

    In addition, the Company incurred costs for purchases from the New England
Power Pool of $10,973,000, $14,185,000 and $6,241,000 in 1996, 1995 and 1994,
respectively.

    (c) Price-Anderson Act

    Under the Price-Anderson Act (the Act), owners of nuclear power plants
have the benefit of approximately $8.9 billion of public liability coverage
that 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
operating license can be assessed up to $79.3 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.

    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

<PAGE>
<PAGE 30>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Limited (NEIL II) and the combined American Nuclear Insurers/Mutual Atomic
Energy Liability Underwriters (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 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 $8.7 billion of
retrospective insurance premium benefits in accordance with the provisions of
the Act.  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 as high as $1.3
million yearly or a cumulative total of $12.3 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) Guarantee Agreement

    In connection with its investment in Maine Yankee Atomic Power Company,
the Company has guaranteed its pro-rata portion of that company's nuclear fuel
financing.  At December 31, 1996, the Company's portion amounted to $800,000.

    (e) Yankee Nuclear Power Plants

    On July 22, 1996, Connecticut Yankee Atomic Power Company (Connecticut
Yankee), which operates the Connecticut Yankee nuclear power plant (the
Connecticut plant), took the unit out of service in connection with certain
safety-related issues and refueling.  During the outage, Connecticut Yankee's
owners evaluated the economics of continuing to operate the plant over the
remaining ten years of its current license life, compared to the costs of
closing the plant and incurring replacement power for the same period.  As a
result of this evaluation, on December 4, 1996, Connecticut Yankee's Board of
Directors voted to permanently shut down the plant.

    The Company has an equity ownership interest in Connecticut Yankee of 4.5%
which, at December 31, 1996, amounted to approximately $4.7 million.  The
Company, through its ownership interest, has a corresponding capacity
entitlement and power purchase obligation.

    The preliminary estimate of the sum of future payments for the closing,
decommissioning and recovery of the remaining investment in the plant is
approximately $797 million.  The Company's share of these remaining estimated
costs is approximately $36 million.  Based upon regulatory precedent,
Connecticut Yankee believes that it would continue to collect from its power
purchasers (including the Company) its decommissioning costs, unrecovered
plant investment and other costs associated with the permanent closure of the
plant over the remaining period of the plant's operating license that expires
in 2007.  The Company does not believe the ultimate outcome of the early
closing of this plant will have a material adverse effect on its operations

<PAGE>
<PAGE 31>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

and believes that recovery of these FERC-approved costs will continue to be
allowed in its rates at the retail level.

    This action follows the permanent shutdown of the Yankee Atomic plant in
Rowe, Massachusetts in 1992.  Due to changing conditions within the nuclear
industry, it is possible that the remaining two operating nuclear plants in
which the Company has an equity ownership interest could be shut down sometime
in the future prior to the expiration of each unit's operating license.

    (f) 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
installation of expensive air and water pollution control equipment.  These
regulations have had an impact on the Company's operations in the past and
could have an impact on future operations, capital costs and construction
schedules of major facilities.

(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 System and it makes tax payments or
receives refunds on the basis of its tax attributes in the tax return in
accordance with applicable regulations.

    The following is a summary of the Company's provisions for income taxes
for the years ended December 31, 1996, 1995 and 1994:

                                            1996       1995       1994
                                              (Dollars in Thousands)
    Federal
      Current                             $ 2 861    $ 1 397    $ 1 976
      Deferred                               (582)       991        805
      Investment tax credits                  (93)       (94)       (95)
                                            2 186      2 294      2 686
    State
      Current                                 543        355        464
      Deferred                                (21)       174        157
                                              522        529        621
                                            2 708      2 823      3 307
    Amortization of regulatory liability
      relating to deferred income taxes       (25)       (98)       (45)
                                          $ 2 683    $ 2 725    $ 3 262

    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.


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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Accumulated deferred income taxes consisted of the following in 1996 and
1995:
                                             1996          1995
                                           (Dollars in Thousands)
    Liabilities
      Property-related                     $16 661       $16 263
      All other                              1 947         2 345
                                            18 608        18 608
    Assets
      Investment tax credits                 1 193         1 253
      Pension plan                             789           761
      Regulatory liability                   1 112         1 128
      All other                              1 563           935
                                             4 657         4 077
    Accumulated deferred income taxes, net $13 951       $14 531

    The net year-end deferred income tax liability above is net of a current
deferred tax asset of $404,000 in 1996 which is included in other deferred
charges in the accompanying Balance Sheets and includes a current deferred tax
liability of $649,000 in 1995, included in accrued income taxes in the
accompanying Balance Sheets.

    The total income tax provision set forth previously represents 34% in
1996, 33% in 1995 and 34% in 1994 of income before such taxes.  The following
table reconciles the statutory federal income tax rate to these percentages:

                                                     1996     1995     1994
                                                      (Dollars in Thousands)
    Federal statutory rate                              35%      35%      35%

    Federal income tax expense at statutory levels  $2 731   $2 857   $3 326
    Increase (Decrease) from statutory levels:
      State tax net of federal tax benefit             339      343      404
      Tax versus book depreciation                      83        2       39
      Amortization of excess deferred reserves         (25)     (98)     (14)
      Amortization of investment tax credits           (93)     (94)     (95)
      Reversals of capitalized expenses                (13)     (14)    (100)
      Dividend received deduction                     (246)    (272)    (291)
      Other                                            (93)       1       (7)
                                                    $2 683   $2 725  $ 3 262

      Effective federal income tax rate                 34%      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.

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<PAGE 33>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Components of pension expense and related assumptions to develop pension
expense were as follows:

                                                  1996       1995       1994
                                                    (Dollars in Thousands)

    Service cost                                $   538    $   484    $   560
    Interest cost                                 1 921      1 924      1 732
    Return on plan assets - (gain)/loss          (3 899)    (5 388)       392
    Net amortization and deferral                 2 080      3 672     (1 901)
      Total pension expense                         640        692        783
    Transfers from affiliated companies, net        441        439        404
    Less: Amounts capitalized and deferred          299        243        386
      Net pension expense                       $   782    $   888    $   801

    Discount rate                                7.25%      8.50%      7.25%
    Assumed rate of return                       8.75       9.00       8.50
    Rate of increase in future compensation      4.25       5.00       4.50

    Pension expense 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, is deferring the
difference between pension contribution, which is reflected in base rates, and
pension expense.  The funded status of the Company's pension plan (using a
measurement date of December 31) is as follows:

                                                   1996           1995
                                                  (Dollars in Thousands)
    Accumulated benefit obligation:
        Vested                                  $ (20 583)     $ (19 638)
        Nonvested                                  (2 131)        (2 093)
                                                $ (22 714)     $ (21 731)

    Projected benefit obligation                $ (26 690)     $ (26 053)
    Plan assets at fair market value               29 027         26 361
      Projected benefit obligation
        greater than plan assets                    2 337            308
    Unamortized transition obligation                 688            825
    Unrecognized prior service cost                 1 074          1 194
    Unrecognized gain                              (5 971)        (4 019)
      Accrued pension liability                 $  (1 872)     $  (1 692)

    The following actuarial assumptions were used in determining the plan's
year-end funded status:
                                                   1996           1995

    Discount rate                                  7.50%          7.25%
    Rate of increase in future compensation        4.25           4.25

    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.

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<PAGE 34>

                       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 Company contributed approximately $1.2
million, $1.3 million and $1.4 million to these trusts during 1996, 1995 and
1994, respectively.

    The net periodic postretirement benefit cost for the years ended
December 31, 1996, 1995 and 1994 include the following components and related
assumptions:

                                               1996      1995      1994
                                                (Dollars in Thousands)

    Service cost                              $  205    $  164    $  198
    Interest cost                                809       817       784
    Return on plan assets                       (460)     (521)      (14)
    Amortization of transition obligation
       over 20 years                             498       498       497
    Net amortization and deferral                181       337       (94)
       Total postretirement benefit cost       1 233     1 295     1 371
    Transfers from affiliated companies, net     555       579       603
    Less: Amounts capitalized and deferred        68       458       863
       Net postretirement benefit cost        $1 720    $1 416    $1 111

    Discount rate                               7.25%     8.50%     7.25%
    Assumed rate of return                      8.75      9.00      8.50
    Rate of increase in future compensation     4.25      5.00      4.50

    The funded status of the Company's postretirement benefit plan using a

<PAGE>
<PAGE 35>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

measurement date of December 31, 1996 and 1995 is as follows:

                                                      1996        1995
                                                   (Dollars in Thousands)

    Accumulated postretirement benefit obligation:
      Retirees                                      $ (6 052)   $ (6 219)
      Fully eligible active plan participants         (1 422)     (1 720)
      Other active plan participants                  (3 365)     (3 463)
                                                     (10 839)    (11 402)
    Plan assets at fair market value                   4 076       2 973
    Accumulated postretirement benefit obligation
       greater than plan assets                       (6 763)     (8 429)
    Unamortized transition obligation                  7 960       8 458
    Unrecognized gain                                 (1 197)        (29)
                                                    $    -      $    -

    The following actuarial assumptions were used in determining the plan's
estimated accumulated postretirement benefit obligation (APBO) and funded
status for 1996 and 1995:
                                                      1996        1995

    Discount rate                                     7.50%       7.25%
    Rate of increase in future compensation           4.25        4.25
    Medicare Part B premiums                          9.50       12.20
    Medical care                                      7.00        8.00
    Dental care                                       5.00        5.00

    The above dental rate remains constant through the year 2007.  Rates for
Medicare Part B premiums and medical care decrease to 3.1% and 5%,
respectively, by 2007 and remain at that level thereafter.  A one percent
change in the medical trend rate would have a $150,000 impact on the Company's
annual expense and would change the APBO by approximately $1.4 million.

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

    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,
1996 and 1995, the Company's deferral amounted to approximately $2.1 million
and $2.2 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
Company's contribution was $310,000 in 1996, $317,000 in 1995 and $325,000 in
1994.

<PAGE>
<PAGE 36>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

(6) Interim Financing and Long-Term Debt

    (a) Notes Payable to Banks

    The Company and other system 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, 1996, system
companies had $135 million of committed lines of credit that will expire at
varying intervals in 1997.  These lines are normally renewed upon expiration
and require annual fees of up to .1875% of the individual line.  At December
31, 1996, the system's uncommitted lines of credit totaled $20 million.
Interest rates on the Company's outstanding borrowings generally are at an
adjusted money market rate and averaged 5.6% and 6.1% in 1996 and 1995,
respectively.  Notes payable to banks totaled $18,725,000 and $2,675,000 at
December 31, 1996 and 1995, respectively.

    (b) Advances from Affiliates

     Notes payable to the System totaled $4,665,000 and $2,425,000 at December
31, 1996 and 1995, respectively.  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
8.8% in 1996 and 1995, respectively.

    The Company is a member of the COM/Energy Money Pool (the Pool), an
arrangement among the subsidiaries of the System, 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 5.8% in 1996 and 1995, respective-
ly.  Notes payable to the Pool totaled $400,000 at December 31, 1996.  The
Company had no notes payable to the Pool at December 31, 1995.

    (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      1996       1995
                                                  (Dollars in Thousands)

    7-Year Notes - 8.04%, due 1999             $10 000   $10 000    $10 000
    15-Year Notes - 8.7%, due 2007               5 000     5 000      5 000
    30-Year Notes -
        Series C, 6 1/4%, due 1997               6 000       -        4 260
        Series D, 7 3/4%, due 2002               5 000     2 500      2 600
                                                         $17 500    $21 860

    Under the terms of its Indenture of Trust, the Company is required to make

<PAGE>
<PAGE 37>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

periodic sinking fund payments for retirement of outstanding long-term debt.
The payments and balances of maturing debt issues for the five years
subsequent to December 31, 1996 are as follows:

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

            1997          $100           $ 4 260        $ 4 360
            1998           100               -              100
            1999           100            10 000         10 100
            2000           100               -              100
            2001           100               -              100

    (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, 1996 and 1995 is as follows:

                                1996                        1995
                                     (Dollars in Thousands)

                       Carrying        Fair       Carrying        Fair
                         Value         Value        Value         Value

    Long-Term Debt      $21 863       $22 787      $42 025       $43 656

    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, 1996 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
approximately $4,406,000 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 38>

                       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, 1996:

                                                    Operating Leases
                                                  (Dollars in Thousands)

                  1997                                   $ 1 774
                  1998                                     1 729
                  1999                                     1 681
                  2000                                     1 507
                  2001                                     1 333
                  Beyond 2001                              4 862
                  Total future minimum lease payments    $12 886

    Total rent expense for all operating leases, except those with terms of a
month or less, amounted to $1,348,000 in 1996, $1,374,000 in 1995 and
$1,484,000 in 1994. There were no contingent rentals and no sublease rentals
for the years 1996, 1995 and 1994.

<PAGE>
<PAGE 39>

                       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 19).

(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, 1996, 1995
        and 1994 (pages 48-50).

        Schedule II - Valuation and Qualifying Accounts - Years Ended December
        31, 1996, 1995 and 1994 (page 51).

(a) 3.  Exhibits:
                              Notes to Exhibits -

    a.  Unless otherwise designated, the exhibits listed below are
        incorporated 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
        subsidiary 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

<PAGE>
<PAGE 40>

                       CAMBRIDGE ELECTRIC 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).
    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     Contract between CEC and NBGEL and CEL, affiliated companies, for
           the sale for specified amounts of electricity from CEC Unit 2 dated
           January 12, 1976 (Exhibit 7 to the CES Form 10-K for 1985, File No.
           1-7316).

10.1.3     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).

10.1.4     Termination Supplement between CEC, CE and CEL RE: Seabrook Unit 2
           dated December 8, 1986 (Exhibit 3 to the CEC Form 10-K for 1986,
           File No. 2-30057).

10.1.5     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:

<PAGE>
<PAGE 41>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.5.1   First through Fifth Amendments to 10.1.5 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).

10.1.5.2   Sixth through Eleventh Amendments to 10.1.5 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).

10.1.5.3   Twelfth through Fourteenth Amendments to 10.1.5 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).

10.1.5.4   Fifteenth and Sixteenth Amendment to 10.1.5 dated April 27, 1984
           and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q
           (June 1984), File No. 2-30057).

10.1.5.5   Seventeenth Amendment to 10.1.5 dated March 8, 1985 (Exhibit 1 to
           the CEC Form 10-Q (March 1985), File No. 2-30057).

10.1.5.6   Eighteenth Amendment to 10.1.5 dated March 14, 1986 (Exhibit 1 to
           the CEC Form 10-Q (March 1986), File No. 2-30057).

10.1.5.7   Nineteenth Amendment to 10.1.5 dated May 1, 1986 (Exhibit 1 to the
           CEC Form 10-Q (June 1986), File No. 2-30057).

10.1.5.8   Twentieth Amendment to 10.1.5 dated September 19, 1986 (Exhibit 1
           to the CEC Form 10-K for 1986, File No. 2-30057).

10.1.5.9   Twenty-First Amendment to 10.1.5 dated November 12, 1987 (Exhibit 1
           to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.5.10  Twenty-Second Amendment and Settlement Agreement to 10.1.5 both
           dated January 13, 1989, (Exhibit 4 to the CEC Form 10-K for 1988,
           File No. 2-30057).

10.1.6     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).

10.1.6.1   Supplement to 10.1.6 consisting of three Capacity Acquisition
           Commitments each dated May 7, 1987, concerning Phases I and II of
           the Hydro-Quebec Project and electricity acquired from Connecticut
           Light and Power Company (Exhibit 1 to the CEC Form 10-Q (September
           1987), File No. 2-30057).

10.1.6.2   Supplements to 10.1.6 consisting of two Capacity Acquisition
           Commitments each dated October 31, 1988, concerning electricity
           acquired from Western Massachusetts Electric Company and/or
           Connecticut Light and Power Company for periods ranging from
           November 1, 1988 to October 31, 1994 (Exhibit 2 to the CEC Form
           10-Q (September 1989), File No. 2-30057).

<PAGE>
<PAGE 42>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.6.3   Amendment to 10.1.6 as amended and restated June 1, 1993,
           henceforth 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).

10.1.7     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).

10.1.7.1   Second, Third and Fourth Amendments to 10.1.7 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).

10.1.7.2   Fifth and Sixth Amendments to 10.1.7 as amended June 26, 1989 and
           July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q
           (September 1989), File No. 2-7909).

10.1.8     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).

10.1.8.1   Additional Power Contract to 10.1.8 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).

10.1.8.2   Second Supplementary Power Contract to 10.1.8 providing for
           decommissioning financing dated April 30, 1984 (Exhibit 6 to the
           CEL Form 10-Q (June 1984), File No. 2-7909).

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

10.1.9.1   First Amendment (Section 7) and Second Amendment (decommissioning
           financing) to 10.1.9 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).

10.1.9.2   Third and Fourth Amendments to 10.1.9 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).

10.1.9.3   Fifth and Sixth Amendments to 10.1.9 both as amended May 6, 1988
           (Exhibit 1 to the CEL Form 10-Q (June 1988), File No. 2-7909).

10.1.9.4   Seventh Amendment to 10.1.9 as amended June 15, 1989 (Exhibit 2 to
           the CEL Form 10-Q (September 1989), File No. 2-7909).

10.1.9.5   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).

<PAGE>
<PAGE 43>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.10    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).

10.1.10.1  First Amendment (decommissioning financing) and Second Amendment
           (supplementary payments) to 10.1.10 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).

10.1.10.2  Third Amendment to 10.1.10 as amended October 1, 1984 (Exhibit 1 to
           the CEL Form 10-Q (September 1984), File No. 2-7909).

10.1.11    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
           Brunswick Electric Power Commission, dated June 20, 1969 (Exhibit
           13 to the CES Form 10-K for 1984, File No. 1-7316).

10.1.11.1  Supplement Amending 10.1.11, as amended June 24, 1970 (Exhibit 8 to
           the CES Form S-7, Amendment No. 1, File No. 2-38372).

10.1.12    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).

10.1.13    Power Exchange Agreement by and between Boston Edison Company and
           CEL dated December 1, 1984 (Exhibit 5 to the CEL 1984 Form 10-K,
           File No. 2-7909).

10.1.14    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).

10.1.14.1  Amendatory Agreement No. 3 to 10.1.14, as amended June 1, 1990
           (Exhibit 1 to the CEC Form 10-Q (September 1990), File No. 2-
           30057).

10.1.15    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).

10.1.15.1  First, Second and Third Amendments to 10.1.15 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).

10.1.15.2  Fourth and Eighth Amendments to 10.1.15 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 44>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.15.3  Fifth, Sixth and Seventh Amendments to 10.1.15 as amended October
           15, 1987, December 15, 1987 and March 1, 1988, respectively
           (Exhibit 1 to the CEC Form 10-Q (June 1988), File No. 2-30057).

10.1.15.4  Ninth and Tenth Amendments to 10.1.15 as amended November 1, 1988
           and January 15, 1989, respectively (Exhibit 2 to the CEC Form 10-K
           for 1988, File No. 2-30057).

10.1.15.5  Eleventh Amendment to 10.1.15 as amended November 1, 1989 (Exhibit
           4 to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.15.6  Twelfth Amendment to 10.1.15 as amended April 1, 1990 (Exhibit 1 to
           the CEC Form 10-Q (June 1990), File No. 2-30057).

10.1.16    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).

10.1.17    Phase II Equity Funding Agreement for New England Hydro-
           Transmission 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).

10.1.18    Phase II Equity Funding Agreement for New England Hydro-
           Transmission 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).

10.1.18.1  Amendment No. 1 to 10.1.18 as amended May 1, 1986 (Exhibit 6 to the
           CEC Form 10-Q (March 1987), File No. 2-30057).

10.1.18.2  Amendment No. 2 to 10.1.18 as amended September 1, 1987 (Exhibit 3
           to the CEC Form 10-Q (September 1987), File No. 2-30057).

10.1.19    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).

10.1.20    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).

<PAGE>
<PAGE 45>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.21    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).

10.1.21.1  Amendments Nos. 1 and 2 to 10.1.21 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.21.2  Amendments Nos. 3 and 4 to 10.1.21 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

10.1.22    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).

10.1.22.1  Amendments Nos. 1 and 2 to 10.1.22 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.22.2  Amendments Nos. 3 and 4 to 10.1.22 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

10.1.23    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).

10.1.24    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).

10.1.25    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
           Pittsfield, Massachusetts, dated February 20, 1992 (Exhibit 1 to
           the CEL Form 10-Q (September 1993), File No. 2-7909).

10.1.25.1  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).

<PAGE>
<PAGE 46>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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).

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).

10.2.3     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
           England, 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).

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).



<PAGE>
<PAGE 47>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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, 1996.

    Filed herewith as Exhibit 2 is the restated Financial Data Schedule for
    the twelve months ended December 31, 1995.

    Filed herewith as Exhibit 3 is the restated Financial Data Schedule for
    the twelve months ended December 31, 1994.

(b) Reports on Form 8-K

    No reports on Form 8-K were filed during the three months ended
    December 31, 1996.

<PAGE>
<PAGE 48>

<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(e) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plants owned by Connecticut Yankee Atomic Power Company and Yankee Atomic
Electric Company.
</TABLE>

<PAGE>
<PAGE 49>

<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, 1995
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1995
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1994               in       Dividends       1995
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>             <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15 750  $4 583       $  674      $  693          $4 564
Maine Yankee Atomic
 Power Company                20 000   2 744          285         138           2 891
Vermont Yankee Nuclear
 Power Corporation             9 801   1 318          170         183           1 305
Yankee Atomic Electric
 Company                       3 068     519          (18)         37             464
   Total                              $9 164       $1 111      $1 051          $9 224

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(e) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plant owned by Yankee Atomic Electric Company.
</TABLE>

<PAGE>
<PAGE 50>

<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, 1994
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1994
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1993               in       Dividends       1994
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>             <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15 750  $4 490       $  743      $  650          $4 583
Maine Yankee Atomic
 Power Company                20 000   2 776          245         277           2 744
Vermont Yankee Nuclear
 Power Corporation             9 801   1 317          158         157           1 318
Yankee Atomic Electric
 Company                       3 068     476           43          -              519
   Total                              $9 059       $1 189      $1 084          $9 164

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(e) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plant owned by Yankee Atomic Electric Company.
</TABLE>

<PAGE>
<PAGE 51>


SCHEDULE II

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                            (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, 1996

Allowance for
  Doubtful Accounts     $490        $279       $ 51          $338      $482


                                 Year Ended December 31, 1995

Allowance for
  Doubtful Accounts     $471        $327       $101          $409      $490


                                 Year Ended December 31, 1994

Allowance for
  Doubtful Accounts     $491        $561       $ 92          $673      $471

<PAGE>
<PAGE 52>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1996

                                  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:  WILLIAM G. POIST
                                       William G. Poist,
                                       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:

WILLIAM G. POIST                                         March 27, 1997
William G. Poist,
Chairman of the Board and
Chief Executive Officer

R. D. WRIGHT                                             March 27, 1997
Russell D. Wright,
President and Chief Operating Officer

Principal Financial and Accounting Officer:

JAMES D. RAPPOLI                                         March 27, 1997
James D. Rappoli,
Financial Vice President and Treasurer


A majority of the Board of Directors:

WILLIAM G. POIST                                         March 27, 1997
William G. Poist, Director

R. D. WRIGHT                                             March 27, 1997
Russell D. Wright, Director

JAMES D. RAPPOLI                                         March 27, 1997
James D. Rappoli, Director