<PAGE 1>

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

                                   Form 10-K

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

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

       For the fiscal year ended December 31, 1997

                                      OR

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

       For the transition period from _______________ to _______________

                         Commission file number 2-7909

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

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

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

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

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

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

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

                                Title of Class
                                     None

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

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

                                               Outstanding at
           Class of Common Stock               March 16, 1998
        Common Stock, $25 par value            346,600 shares

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

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

              List of Exhibits begins on page 40 of this report.



<PAGE>
<PAGE 2>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1997
                               TABLE OF CONTENTS

                                    PART I
                                                                  PAGE

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

            General............................................    3
            Electric Power Supply..............................    3
            ISO - New England..................................    5
            Energy Mix.........................................    5
            Rates, Regulation and Legislation..................    5
               (a) Wholesale Rate Proceedings..................    6
               (b) Restructuring Legislation...................    6
               (c) Cost Recovery...............................    7
                     Rate Schedule.............................    7
                     Unbundled Rates...........................    7
                     Purchased Power...........................    7
                     Conservation and Load Management Programs.    8
                     Customer Transition Charge................    8
            Competition........................................    9
            Construction and Financing.........................    9
            Employees..........................................   10

Item  2. Properties............................................   10

Item  3. Legal Proceedings.....................................   10

                                    PART II

Item  5. Market for the Registrant's Common Stock and Related
         Stockholder Matters...................................   11

Item  7. Management's Discussion and Analysis of Results of
         Operations............................................   12

Item  8. Financial Statements and Supplementary Data...........   18

Item  9. Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure...................   18

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
         on Form 8-K...........................................   40


Signatures.....................................................   53

<PAGE>
<PAGE 3>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                    PART I.

Item 1. Business

    General

    Cambridge Electric Light Company (the Company) is engaged in the genera-
tion, transmission and distribution and sale of electricity at retail to
approximately 44,900 customers in the city of Cambridge, Massachusetts.  The
service territory encompasses a seven square mile area with a population of
approximately 96,000.  In addition, the Company sells power for resale to the
Independent System Operator (ISO) - New England (formerly the New England
Power Pool that operates a centralized facility to ensure reliability of
service and dispatch of economically available generating units throughout New
England), the Town of Belmont, Massachusetts (Belmont), and sells steam from
its electric generating stations at wholesale to an affiliated company for
distribution to customers for space heating and other purposes.  In early
1997, the Company received approval to participate as a broker in the purchase
and sale of electricity.

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

    By virtue of its charter, which is unlimited in time, the Company purchas-
es, distributes and sells electricity without direct competition in kind from
any privately or municipally-owned utility.  Alternate sources of energy are
available to customers within the service territory, but competition from
these sources has not been significant.  However, on November 25, 1997, the
Governor of Massachusetts signed into law the Electric Industry Restructuring
Act that subjects the generation element of traditional electric utility
operations to competition, effective March 1, 1998.  For further details,
refer to the "Industry Restructuring" section of Management's Discussion and
Analysis of Results of Operations in Item 7 of this report.  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 1997 retail electric unit sales (83% of total sales), 13%
was sold to residential customers, 82% to commercial customers, 5% to indus-
trial and 1% to streetlighting and similar types of 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.

<PAGE>
<PAGE 4>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The Company's non-nuclear generating assets together with capacity
entitlements associated with power contracts that are further discussed later
in this section are part of an ongoing auction process initiated during 1997
in response to electric industry restructuring legislation enacted in Massa-
chusetts in November 1997.  The auction process is expected to be completed in
1998.  For further information, refer to the "Industry Restructuring" section
of Management's Discussion and Analysis of Results of Operations in Item 7 of
this report.

    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 Electric),
another wholly-owned subsidiary of the System.  Canal Electric is a wholesale
electric generating company located in Sandwich, Massachusetts and is an
important source of purchased power for the Company.  These generating
facilities are also part of the aforementioned auction.  Under long-term con-
tracts, system entitlements include one-quarter (141.5 MW) of the capacity and
energy of Canal Electric Unit 1 and one-half (275.7 MW) of the capacity and
energy of Canal Unit 2.  The Company's entitlements in these units are 28.2 MW
and 55.0 MW, respectively.  The Company also has an equity ownership interest
of 2 1/2% in an operating nuclear unit located in New England with a power
entitlement of 11.3 MW.

    Pursuant to a Capacity Acquisition and Disposition Agreement (CADA), Canal
Electric seeks to secure bulk electric power on a single system basis to
provide cost savings for the customers of the Company and Commonwealth
Electric.  The CADA has been accepted for filing as an amendment to Canal'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 agreements are in place with these utilities whereby,
in certain circumstances, it is possible to exchange capacity so that the mix
of power improves the pricing for dispatch for both the seller and the
purchaser.  Power contracts are in place whereby Canal bills or credits the
Company and Commonwealth Electric for the costs or revenues associated with
these facilities.  The Company and Commonwealth Electric, in turn, have billed
or are billing these charges (net of revenues from sales) to their customers
through rates subject to DTE approval.

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

Equity Ownership (%)                           4.50       4.00       2.00
Equity Ownership Balance                     $5,007     $3,121       $405
Year of Shutdown                               1996       1997       1992

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

<PAGE>
<PAGE 5>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    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.

    ISO - New England

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

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

    The Company and the 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
criteria and standards for reliability and serves as a vehicle for coordina-
tion in the planning and operation of these systems.

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

    Energy Mix

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

                                     1997       1996      1995

        Oil                           55%        21%       23%
        Nuclear                       11         39        36
        Natural gas                   30         33        40
        Hydro                          4          7         1
          Total                      100%       100%      100%

    The Company' energy mix in 1997 reflects the greater availability of the
oil-fired Canal Units 1 and 2 as compared to 1996 and 1995 when significant
scheduled and unscheduled maintenance resulted in reduced output.  The
significantly reduced nuclear fuel component in 1997 reflects the permanent
shutdown of the Maine and Connecticut Yankee plants.  The increase in hydro
during 1996 represents an increase in power from Hydro-Quebec.

Rates, Regulation and Legislation

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

<PAGE>
<PAGE 6>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    (a) Restructuring Legislation

    As more fully discussed in the "Industry Restructuring" section of
Management's Discussion and Analysis of Results of Operations in Item 7 of
this report, the Company began to implement the provisions of the Electric
Industry Restructuring Act on March 1, 1998 as signed into law on November 25,
1997 following the Company's filing of its proposed restructuring plan with
the DTE on November 19, 1997.  A modified plan was approved by the DTE on
February 27, 1998 prior to implementation on March 1, 1998.

    (b) Wholesale Rate Proceedings

    The Company currently provides power supply and transmission services to
its FERC-jurisdictional wholesale customer, the Municipal Light Department of
the Town of Belmont, Massachusetts (Belmont).  Belmont has been a "partial
requirements" customer since 1986 receiving fully bundled service for most of
its capacity and energy requirements from the Company, while the remainder of
their power supply requirements is provided by the New York Power Authority
(NYPA).  The NYPA power supply is wheeled by the Company over its borders in
accordance with the provisions set forth in its Firm Transmission Tariff.
Since April 1993, Belmont has taken power supply service pursuant to a FERC
approved Net Requirements Power Supply Agreement.

    In 1993, the Company and Belmont began negotiations for a new transmission
service agreement.  The nogotiations 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 reason-
able.  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 electric consum-
ers.  On March 29, 1996, the Company filed Transmission Tariffs that imple-
mented the FERC's requirements for non-discriminatory open access transmission
for both point-to-point and network service.  The tariffs were accepted on May
17, 1996 to be effective on May 28, 1996, but the rates are subject to an
investigation initiated by the FERC itself.  A settlement with the FERC
regarding this investigation was filed on February 6, 1997.

<PAGE>
<PAGE 7>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    On April 24, 1996, the FERC issued Order No. 888, a set of three interre-
lated 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.  On March
4, 1997, the FERC issued Order No. 888-A which required revisions to the
tariffs filed in compliance with Order No. 888.  The Company and Commonwealth
Electric both filed their revised tariffs on July 14, 1997.  On November 25,
1997, the FERC issued Order No. 888-B requiring minor changes that did not
require an additional filing.

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

    (c) Cost Recovery

    Rate Schedule  Prior to March 1, 1998, the Company had Fuel Charge rate
schedules that generally allowed for current recovery, from retail customers,
of fuel used in electric production, purchased power and transmission costs.
These schedules required a quarterly computation and DTE approval of a Fuel
Charge decimal based upon forecasts of fuel, purchased power, transmission
costs and billed unit sales for each period.  To the extent that collections
under the rate schedules did not match actual costs for that period, an
appropriate adjustment was reflected in the calculation of the next subsequent
calendar quarter decimal.  The FC was eliminated on March 1, 1998.

    Unbundled Rates  The Company has restructured its operations to provide
customers with unbundled rates that include a ten percent rate reduction as of
March 1, 1998 and the opportunity to purchase generation supply on the
competitive market pursuant to the electric industry restructuring enacted in
November 1997.  Delivery rates are composed of distribution charges,
transition charges (to collect transition costs) and transmission charges.
Electricity supply services include optional standard offer service and
default service.  Distribution charges consist of customer demand and energy
charges as appropriate to recover distribution costs, including costs formerly
recovered under its CC, and is based on the separation of distribution and
transmission facilities.  Transmission charges are itemized separately and are
subject to the Company's Transmission Cost Adjustment.  Transition charges are
designed to recover on a reconciling basis all of the Company's stranded
costs.

    Purchased Power  The Company has long-term contracts for the purchase of
electricity from various sources.  Generally, these contracts are for fixed
periods and required that the Company pay a demand charge for its capacity
entitlement and an energy charge to cover the cost of fuel.  The Company
collected a portion of the capacity-related purchased power costs associated

<PAGE>
<PAGE 8>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

with certain long-term power and transmission agreements through base rates as
approved by the DTE.

    Prior to March 1, 1998, revenues collected through base rates were
generally designed to reimburse the Company for all costs of operation other
than fuel, the energy portion of purchased power, transmission and C&LM costs
while providing a fair return on capital invested in the business.  However,
as a result of a DTE-mandated recovery mechanism for these costs described
above, the Company experienced a revenue excess or shortfall when unit sales
and/or the costs recoverable in base rates varied from test-period levels.
The issue, which had a significant impact on the Company's net income, was
addressed in a settlement agreement approved by the DTE in May 1995 that
permitted deferral of up to $2 million annually for these capacity-related
purchased power costs.  There were no deferrals prior to March 1, 1998.

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

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

    Through the CTC, the Company recovered 75% of net stranded costs as
calculated in its proposal.  The Company's other rates include a Supplemental
Service Rate, a Standby Service Rate and a Maintenance Service Rate each of
which were approved with only minor changes.  By its terms, the CTC will
terminate as of March 1, 1998, which is the retail access date established by
the Massachusetts Legislature in its Electric Industry Restructuring Act.

    The Massachusetts Institute of Technology (MIT) appealed the DTE's ruling
approving the CTC to the Massachusetts Supreme Judicial Court (the SJC),
contending, in part, that the DTE lacked authority to approve the CTC, the
DTE's ruling was not supported by subsidiary findings, imposition of the CTC
on MIT constitutes inequitable retroactive ratemaking, and the CTC violates
the Public Utility Regulatory Policies Act (PURPA).  On September 18, 1997,
the SJC announced its decision remanding the matter to the DTE for further

<PAGE>
<PAGE 9>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

consideration.  The SJC did find that recovery of prudent and verifiable
stranded costs by utility companies is in the public interest and consistent
with PURPA.  However, the SJC stated that the insufficiencies of the DTE's
subsidiary findings precluded the SJC from undertaking a meaningful review of
the DTE's calculations that formed the basis of the customer transition
charge.  Among the issues that the SJC directed the DTE to consider further
are: the methodology for calculation of stranded costs, why 75% of stranded
costs were allocated to MIT rather than 100%, the prudence of the stranded
costs incurred by the Company, and whether the Company took the necessary
mitigation efforts to reduce stranded costs.  The DTE is in the process of
determining whether to take additional evidence in the remand or to rely on
the record and pleadings already filed.  At this time, management is unable to
predict the outcome of this proceeding.

    In an earlier legal proceeding involving the CTC, 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 DTE
and dismissed the complaint filed by MIT.  In its complaint, MIT had alleged
that the CTC approved by the DTE and implemented by the Company violated
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.

    Competition

    Prior to March 1, 1998, the Company developed and implemented strategies
that dealt with the increasingly competitive environment then facing the
electric business.  The inherently high cost of providing energy services in
the Northeast had placed the region at a competitive disadvantage as more
customers began to explore alternative energy supply options.  Pursuant to
preliminary electric industry restructuring rules issued in late 1996, the DTE
proposed to implement programs under which utility and non-utility generators
could sell electricity to customers of other utilities without regard to
previously closed franchise service areas.  The DTE initially began an inquiry
into incentive ratemaking in 1994.  The Company had developed innovative
pricing mechanisms designed to retain existing customers, add new retail and
wholesale customers and expand beyond current markets.

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

    Construction and Financing

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

<PAGE>
<PAGE 10>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    Employees

    The Company has 142 regular employees, 104 employees (73%) are represented
by the Utility Workers' Union of America, A.F.L.-C.I.O.  Upon the expiration
of the existing collective bargaining agreement on September 1, 1998, a new
agreement, which has already been ratified, will become effective through
March 1, 2001.  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, 1997, the Company's electric transmission and distribution
system consisted of 93 pole miles of overhead lines, 714 cable miles of
underground line, 233 substations and 45,420 active customer meters.

Item 3. Legal Proceedings

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

<PAGE>
<PAGE 11>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                   PART II.

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

      (a) Principal Market

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

      (b) Number of Stockholders at December 31, 1997

          One

      (c) Frequency and Amount of Dividends Declared in 1997 and 1996

                      1997                            1996
                            Per Share                       Per Share
          Declaration Date    Amount      Declaration Date    Amount

          April 25, 1997       $ 1.70     January 24, 1996      $4.00
          October 27, 1997       2.50     April 29, 1996         0.75
          December 22, 1997      4.00     November 04, 1996      5.20
                               $ 8.20                           $9.95

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

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

<PAGE>
<PAGE 12>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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

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

    A summary of the period to period changes in the principal items included
in the accompanying Statements of Income for the years ended December 31, 1997
and 1996 and unit sales for these periods is shown below:

                                        Years Ended          Years Ended
                                        December 31,         December 31,
                                       1997 and 1996        1996 and 1995
                                             Increase (Decrease)
                                           (Dollars in thousands)

Electric Operating Revenues          $12 222    10.3%     $(3 198)   (2.6)%

Operating Expenses:
 Fuel used in electric production        895    26.1          532    18.4
 Electricity purchased for resale      9 206    13.4         (742)   (1.1)
 Transmission                         (1 056)  (17.1)        (684)  (10.0)
 Other operation and maintenance       2 527    10.6         (200)   (0.8)
 Depreciation                             81     1.9          127     3.1
 Taxes -
   Federal and state income              (92)   (3.4)         (42)   (1.5)
   Local property and other               82     2.1           11     0.3
                                      11 643    10.3         (998)   (0.9)

Operating Income                         579     9.3       (2 200)  (26.2)

Other Income                            (468)  (20.9)         933    71.3

Income Before Interest Charges           111     1.3       (1 267)  (13.0)

Interest Charges                          15     0.5         (949)  (22.2)

Net Income                           $    96     1.9      $  (318)   (5.8)


Unit Sales (MWH)
 Retail                               21 983     1.7      (68 197)   (5.1)
 Wholesale                            43 628    20.5       69 101    48.1
   Total unit sales                   65 611     4.4          901     0.1

<PAGE>
<PAGE 13>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Unit Sales

    The following is a summary of unit sales and customers for the periods
indicated:
                                         Years Ended December 31,
                                1997               1996               1995
                                          %                  %
                                        Change             Change
 Unit Sales (MWH):
   Residential                 161 054    2.1     157 803    0.3     157 355
   Commercial                1 051 170    2.2   1 028 896   (5.5)  1 089 187
   Industrial                   65 948   (5.4)     69 680  (10.7)     78 063
   Municipal and other           8 233    2.4       8 043    0.4       8 014
     Total retail            1 286 405    1.7   1 264 422   (5.1)  1 332 619
   Wholesale                   256 294   20.5     212 666   48.1     143 565
     Total                   1 542 699    4.4   1 477 088    0.1   1 476 184

 Customers:
   Residential                  37 914    1.1      37 503   (0.5)     37 686
   Commercial                    6 636    1.7       6 523    1.0       6 458
   Industrial                       45  (13.5)         52   (8.7)         57
   Municipal and other             315    3.6         304    0.7         302
     Total                      44 910    1.2      44 382   (0.3)     44 503


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

    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 signifi-
cant 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 ISO - New England due to changes in the
Company's capacity needs.

Operating Revenues

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

    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.


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

<PAGE>
<PAGE 14>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

contracts, the Company experienced a revenue excess or shortfall when unit
sales and/or the costs recoverable in base rates varied from test-period
levels.  This issue, which 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 1997, 1996 and 1995, the Company over-recovered approximately $1.7
million, $290,000 and $900,000, respectively, resulting in an increase to net
income of approximately $1 million, $177,000 and $545,000, respectively.

    The following is an analysis of revenue components for the years 1997,
1996 and 1995:
                                            Years Ended December 31,
                                     1997            1996            1995
                                            (Dollars in thousands)
                                              %               %
                                            Change          Change
 Electric revenues:
    Costs recovered in Fuel
      or Conservation Charge       $ 56 304  17.4  $ 47 956   0.1  $ 47 907
    Certain power costs
      recovered in base rates        31 185   1.8    30 639  (3.4)   31 727
    Other revenue recoveries (*)     43 838   8.2    40 510  (5.1)   42 669
  Total revenues                   $131 327  10.3  $119 105  (2.6) $122 303

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

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

    During 1996, electricity purchased for resale, transmission and fuel costs
decreased approximately $900,000 (1.1%) due primarily to a decline in
purchases from ISO - New England, lower costs for nuclear power and from
affiliate Canal's 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.

<PAGE>
<PAGE 15>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Other Operation and Maintenance

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

    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 reflecting
a decline in repairs at the Company's Kendall generating unit.

Depreciation

    Depreciation expense increased 1.9% and 3.1% in 1997 and 1996, respective-
ly, due to higher levels of depreciable property, plant and equipment.

Other Income and Interest Charges

    The decrease in other income during 1997 was due primarily to the absence
of a gain recognized in 1996 relating to the sale of a parcel of land
($664,000).  The significant increase in other income during 1996 was due
primarily to the aforementioned gain relating to the sale of land ($664,000)
and a higher rate of return relative to steam production for an affiliate
steam company ($346,000).

    Total interest charges for 1997 were virtually unchanged as long-term
interest decreased ($678,000) reflecting the repayment of a $20 million
(9.97%) debt issue during the second quarter of 1996 and the retirement of a
$6 million (6.25%) debt issue during the second quarter of 1997.  The impact
of these maturing debt issues was offset by an increase in short-term interest
($659,000) reflecting a higher level of short-term borrowings.  Interest
charges decreased 22.2% during 1996 due primarily to the repayment of the $20
million (9.97%) debt issue during the second quarter, the effect of which was
partially offset by a higher level of short-term borrowings.  The weighted
average short-term interest rate was 5.8 during 1997 as compared to 5.6%
during 1996.

Forward-Looking Statements

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

<PAGE>
<PAGE 16>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Industry Restructuring

    On November 25, 1997, the Governor of Massachusetts signed into law the
Electric Industry Restructuring Act (the Act).  Provisions of this legislation
include, among other things, a 10 percent discount on standard offer service
and retail choice of energy supplier effective March 1, 1998, with a subse-
quent increase in the discount on standard offer service of up to 15 percent
upon completion of divestiture of non-nuclear generating assets and securiti-
zation of net non-mitigable stranded costs (which, for the Company, are
primarily the result of above-market purchased power contracts with non-
utility generators); and, recovery of stranded costs subject to review and an
audit process.

    The Company, together with Commonwealth Electric Company and Canal
Electric, filed a comprehensive electric restructuring plan with the DTE on
November 19, 1997 that was thoroughly reviewed in five separate hearings that
solicited public comment, and seven days of evidentiary hearings that were
completed in February 1998.

    Consistent with the Act, the Company's plan provides, as of March 1, 1998,
a rate reduction of 10 percent for customers choosing the standard service
transition rate from the average of undiscounted rates in effect during August
1997, divestiture of non-nuclear generating assets and a restructured electric
generation market that is able to offer retail access to all customers.  The
Company's plan also includes the following provisions:  1) an estimate and
detailed accounting of total transition costs eligible for recovery through a
non-bypassable access or transition charge; 2) a description of the Company's
strategies to mitigate transition costs; 3) unbundled rates for generation,
distribution, transmission and other services; 4) proposed charges for the
recovery of transition costs through the non-bypassable transition charge; 5)
proposed programs to provide universal service to all customers; 6) proposed
programs and mandatory charges to promote energy conservation and demand-side
management; 7) procedures for ensuring direct retail access to all electric
generation suppliers; 8) discussions of the impact of the plan on the
Company's employees and the communities served by the Company; and (9) a
mandatory charge per kwh for all consumers to support the development and
promotion of renewable energy projects.

    On February 27, 1998, the DTE approved the Company's restructuring plan
stating that the plan complies with the Act.  While the Company is encouraged
with the treatment afforded stranded or transition cost recovery by the
legislation and the DTE, the mandated customer discount could have a signifi-
cant impact on future cash flows.

    Auction Process  On March 31, 1997, the Company, together with Canal and
Commonwealth Electric (the Companies) submitted a report to the DTE that de-
tailed the proposed auction process for selling their electric generation
assets and entitlements.  The process included a standard, sealed-bid auction
for generation assets and purchased power contracts.  The auction process
provides a market-based approach to maximizing stranded cost mitigation and
minimizing the transition charges that ratepayers will have to pay for
stranded cost recovery.  A request for bids from interested parties was issued
during August, and an Offering Memorandum was issued in October.  Potential

<PAGE>
<PAGE 17>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

bidders examined all pertinent information related to the Companies generating
facilities and purchased power agreements in order to prepare and submit their
first round of bids in mid-December.  In January 1998, the Companies selected
a short list of potential bidders, each of whom are expected to submit a final
binding bid in the second quarter of 1998.  The entire process, including
regulatory approvals, is expected to be completed in 1998.

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

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

Environmental Matters

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

    On January 1, 1997, the Company adopted the provisions of Statement of
Position (SOP) 96-1, "Environmental Remediation Liabilities."  SOP 96-1
provides authoritative guidance for recognition, measurement, display and
disclosure of environmental remediation liabilities in financial statements.
The Company has recorded environmental remediation liabilities net of amounts
paid of $300,000 at December 31, 1997.  The adoption of SOP 96-1 did not have
a material adverse effect on the Company's results of operations or financial
position.


<PAGE>
<PAGE 18>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Year 2000

    The Company has been involved in the Year 2000 compliancy since 1996.  A
complete inventory and review of software, information processing and delivery
systems has been completed, and work continues on computer systems wherever
necessary.  While some computer systems have already been updated, tested and
placed in production, the Company expects to complete the balance of the
modifications by early 1999.

    Expenditures incurred by the system through 1997 to review existing
computer systems and to modify existing software and applications amounted to
nearly $900,000, and it is estimated that approximately $2.6 million will be
incurred in 1998 and 1999.

    Management believes that with appropriate modifications, the Company will
be fully compliant regarding all Year 2000 issues and will continue to provide
its products and services uninterrupted through the millennium change.
Failure to become fully compliant could have a significant impact on the
Company's operations.


Item 8. Financial Statements and Supplementary Data

    The Company's financial statements required by this item are filed
herewith on pages 19 through 39 of this report.

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

    None.

<PAGE>
<PAGE 19>

                       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, 1997 and 1996, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1997.  These financial statements and
schedules referred to below are the responsibility of the Company's manage-
ment.  Our responsibility is to express an opinion on these financial state-
ments and schedules based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cambridge Electric Light
Company as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting princi-
ples.

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



                                                ARTHUR ANDERSEN LLP


Boston, Massachusetts
February 19, 1998 (except with respect to certain matters discussed in Note 2,
as to which the date is March 2, 1998).

<PAGE>
<PAGE 20>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

                                   PART II.


FINANCIAL STATEMENTS

      Balance Sheets at December 31, 1997 and 1996

      Statements of Income for the Years Ended December 31, 1997,
      1996 and 1995

      Statements of Retained Earnings for the Years Ended December 31, 1997,
      1996 and 1995

      Statements of Cash Flows for the Years Ended December 31, 1997,
      1996 and 1995

      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, 1997, 1996
            and 1995

      II    Valuation and Qualifying Accounts for the Years Ended December 31,
            1997, 1996 and 1995

SCHEDULES OMITTED

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

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

<PAGE>
<PAGE 21>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1997 AND 1996
                                    ASSETS



                                                     1997           1996
                                                    (Dollars in thousands)

PROPERTY, PLANT AND EQUIPMENT, at original cost     $163 914       $161 331
  Less - Accumulated depreciation                     63 706         61 499
                                                     100 208         99 832
  Add - Construction work in progress                    757            546
                                                     100 965        100 378

INVESTMENTS
  Equity in nuclear electric power companies           9 849          9 403
  Other                                                    5              5
                                                       9 854          9 408

CURRENT ASSETS
  Cash                                                   521            143
  Accounts receivable -
    Affiliated companies                               2 743          1 452
    Customers, less reserves of $297 in 1997
      and $482 in 1996                                12 483         11 285
  Unbilled revenues                                    3 047          2 751
  Inventories, at average cost -
    Materials and supplies                               540            468
    Electric production fuel oil                         936          1 101
  Prepaid taxes -
    Income                                             1 192            968
    Property                                           1 697          1 704
  Other                                                  501            454
                                                      23 660         20 326

DEFERRED CHARGES
  Regulatory assets                                   70 466         42 781
  Other                                                2 176          2 258
                                                      72 642         45 039

                                                    $207 121       $175 151












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

<PAGE>
<PAGE 22>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                                BALANCE SHEETS
                          DECEMBER 31, 1997 AND 1996
                        CAPITALIZATION AND LIABILITIES



                                                     1997           1996
                                                    (Dollars in thousands)
CAPITALIZATION
  Common Equity -
    Common stock, $25 par value -
      Authorized and outstanding -
        346,600 shares in 1997 and 1996,
        wholly-owned by Commonwealth
        Energy System (Parent)                      $  8 665       $  8 665
    Amounts paid in excess of par value               27 953         27 953
    Retained earnings                                 11 607          9 233
                                                      48 225         45 851
  Long-term debt, including premiums, less
    current sinking fund requirements and
    maturing debt                                     17 402         17 503
                                                      65 627         63 354
CURRENT LIABILITIES
  Interim Financing -
    Notes payable to banks                            19 000         18 725
    Advances from affiliates                          11 290          5 065
    Maturing long-term debt                              -            4 260
                                                      30 290         28 050
  Other Current Liabilities -
    Current sinking fund requirements                    100            100
    Accounts payable -
      Affiliated companies                             4 144          4 429
      Other                                            8 076          8 216
    Accrued local property and other taxes             1 706          1 705
    Accrued interest                                     460            475
    Other                                              3 830          3 738
                                                      18 316         18 663
                                                      48 606         46 713
DEFERRED CREDITS
  Accumulated deferred income taxes                   15 135         14 355
  Yankee Atomic purchased power contract               2 749          3 466
  Connecticut Yankee purchased power contract         28 566         35 879
  Maine Yankee purchased power contract               34 908            -
  Unamortized investment tax credits and other        11 530         11 384
                                                      92 888         65 084
COMMITMENTS AND CONTINGENCIES

                                                    $207 121       $175 151






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

<PAGE>
<PAGE 23>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                             STATEMENTS OF INCOME
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


                                             1997        1996        1995
                                                (Dollars in thousands)

ELECTRIC OPERATING REVENUES                $131 327    $119 105    $122 303

OPERATING EXPENSES
  Fuel used in electric production            4 322       3 427       2 895
  Electricity purchased for resale           77 879      68 673      69 415
  Transmission                                5 121       6 177       6 861
  Other operation                            23 599      20 757      20 617
  Maintenance                                 2 749       3 064       3 404
  Depreciation                                4 335       4 254       4 127
  Taxes -
    Income                                    2 591       2 683       2 725
    Local property                            3 060       3 041       3 017
    Payroll and other                           885         822         835
                                            124 541     112 898     113 896

OPERATING INCOME                              6 786       6 207       8 407

OTHER INCOME                                  1 774       2 242       1 309

INCOME BEFORE INTEREST CHARGES                8 560       8 449       9 716

INTEREST CHARGES
  Long-term debt                              1 560       2 238       3 776
  Other interest charges                      1 815       1 157         638
  Allowance for borrowed funds used
    during construction                         (31)        (66)       (136)
                                              3 344       3 329       4 278

NET INCOME                                 $  5 216    $  5 120    $  5 438


















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

<PAGE>
<PAGE 24>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                        STATEMENTS OF RETAINED EARNINGS
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995




                                             1997        1996        1995
                                                (Dollars in thousands)

Balance at beginning of year                $ 9 233     $ 7 561     $ 7 166
Add (Deduct):
  Net income                                  5 216       5 120       5 438
  Cash dividends on common stock             (2 842)     (3 448)     (5 043)
Balance at end of year                      $11 607     $ 9 233     $ 7 561









































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

<PAGE>
<PAGE 25>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                           STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                             1997        1996        1995
                                                (Dollars in thousands)

OPERATING ACTIVITIES
  Net income                                $ 5 216     $ 5 120     $ 5 438
  Effects of noncash items -
    Depreciation and amortization             4 335       4 254       4 258
    Deferred income taxes                      (448)       (628)      1 067
    Investment tax credits                      (92)        (93)        (94)
    Earnings from corporate joint ventures   (1 119)     (1 006)     (1 111)
  Dividends from corporate joint ventures       673         827       1 051
  Change in working capital, exclusive
    of cash and interim financing -
      Accounts receivable and unbilled
        revenues                             (2 785)        178      (1 543)
      Income taxes                             (224)     (1 698)         55
      Accounts payable and other               (294)        829         331
  Deferred postretirement benefits and
    pension costs                              (676)       (225)       (503)
  All other operating items                   1 399       2 356         109
Net cash provided by operating activities     5 985       9 914       9 058

INVESTING ACTIVITIES
  Additions to property, plant and
    equipment (exclusive of AFUDC)           (4 873)     (5 024)     (6 229)
  Allowance for borrowed funds used
    during construction                         (31)        (66)       (136)
Net cash used for investing activities       (4 904)     (5 090)     (6 365)

FINANCING ACTIVITIES
  Payment of dividends                       (2 842)     (3 448)     (5 043)
  Proceeds from short-term borrowings, net      275      16 050         500
  Proceeds from affiliate borrowings          6 225       2 640       1 875
  Long-term debt issue refunded              (4 260)    (20 000)        -
  Retirement of long-term debt through
    sinking funds                              (101)       (162)       (162)
Net cash used for financing activities         (703)     (4 920)     (2 830)
Change in cash                                  378         (96)       (137)
Cash at beginning of period                     143         239         376
Cash at end of period                       $   521     $   143     $   239

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Interest paid (net of capitalized
    amounts)                                $ 3 371     $ 3 796     $ 3 934
  Income taxes paid                         $ 2 319     $ 4 015     $ 2 061




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

<PAGE>
<PAGE 26>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                         NOTES TO FINANCIAL STATEMENTS

(1) General Information

    Cambridge Electric Light Company (the Company) is a wholly-owned subsid-
iary of Commonwealth Energy System (the 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 invest-
ments in four operating public utility companies located in central, eastern
and southeastern Massachusetts and several non-regulated companies.

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

    The Company has 142 regular employees, 104 (73%) of whom are represented
by a single collective bargaining unit with a contract that expires on
September 1, 1998.  Upon expiration of that contract, a new contract, which
has already been ratified, will take effect through March 1, 2001.  Employee
relations have generally been satisfactory.

(2) Significant Accounting Policies

    (a) Principles of Accounting

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

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

    (b) Regulatory Assets and Liabilities

    The Company is regulated as to rates, accounting and other matters by
various authorities including the Federal Energy Regulatory Commission (FERC)
and the Massachusetts Department of Telecommunications and Energy (DTE),
formerly 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 regula-
tory assets in cases where the DTE and/or the FERC have permitted or are
expected to permit recovery of specific costs over time.  Similarly, the
regulatory liabilities established by the Company are required to be refunded
to customers over time. In the event the criteria for applying SFAS No. 71 are

<PAGE>
<PAGE 27>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

no longer met, the accounting impact would be an extraordinary, non-cash
charge to operations of an amount that could be material.  Criteria that give
rise to the discontinuance of SFAS No. 71 include: 1) increasing competition
that restricts the Company's ability to establish prices to recover specific
costs, and 2) a significant change in the current manner in which rates are
set by regulators from cost based regulation to another form of regulation.
These criteria are reviewed on a regular basis to ensure the continuing
application of SFAS No. 71 is appropriate.  Based on the current evaluation of
the various factors and conditions that are expected to impact future cost
recovery, the Company believes that its regulatory assets including those
related to generation, are probable of future recovery.

    As a result of electric industry restructuring, the Company discontinued
application of accounting principles applied to rate-regulated enterprises for
its investment in electric generation facilities effective March 1, 1998.  The
Company will not be required to write-off any of its generation-related assets
including regulatory assets.  These assets will be retained on the balance
sheet because the legislation and DTE's plan for electric industry restructur-
ing specifically provide for their recovery through a non-bypassable transi-
tion charge.

    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 at each balance
sheet date.  SFAS No. 121 did not have an impact on the Company's financial
position upon adoption.

    The principal regulatory assets included in deferred charges at
December 31, 1997 and 1996 were as follows:

                                                       1997         1996
                                                    (Dollars in thousands)

    Yankee Atomic unrecovered plant
      and decommissioning costs                      $ 2 749     $ 3 466
    Connecticut Yankee unrecovered plant
      and decommissioning costs                       28 566      35 879
    Maine Yankee unrecovered plant
      and decommissioning costs                       34 908         -
    Postretirement benefits costs
      including pensions                               3 596       2 988
    Other                                                647         448
                                                     $70 466     $42 781

    The regulatory liabilities, reflected in the accompanying Balance Sheets
and related to deferred income taxes, were $3 million and $3.2 million at
December 31, 1997 and 1996, respectively.

    As of December 31, 1997, $66.6 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 10 years.

    In November 1997, the Commonwealth of Massachusetts enacted a comprehen-
sive electric utility industry restructuring bill.  On November 19, 1997 the

<PAGE>
<PAGE 28>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

System filed a restructuring plan with the DTE.  The plan, approved by the DTE
on February 27, 1998, describes the process by which Commonwealth Electric and
Cambridge Electric will, beginning March 1, 1998, initiate a ten percent rate
reduction for all customer classes and allow customers to choose their energy
supplier.  As part of the plan, the DTE authorized the recovery  of certain
strandable costs.  The legislation gives the DTE the authority to determine
the amount of strandable costs that will be eligible for recovery.  Costs that
will qualify as strandable costs and be eligible for recovery include, but are
not limited to, certain above market costs associated with generating
facilities, costs associated with long-term commitments to purchase power at
above market prices from independent power producers and regulatory assets and
associated liabilities related to the generation portion of the electric
business.

    The cost of transitioning to competition will be mitigated, in part,
through the divestiture of the system's non-nuclear generating assets in an
auction process that is expected to be completed in 1998.  Any net proceeds in
excess of book value received from the divestiture of these assets will be
used to mitigate stranded costs.

    The system's ability to recover its stranded costs will depend on several
factors, including the aggregate amount of stranded costs the system will be
allowed to recover and the market price of electricity.  Management believes
that the system will recover its stranded costs.  A change in any of the above
listed factors or in the current legislation could affect the recovery of
stranded costs and may result in a loss to the system.  For additional
information relating to industry restructuring, see the "Electric Industry
Restructuring" section under Management's Discussion and Analysis of Results
of Operations.


    (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 DTE.

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

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

       1997            $15 772           $ 7 825              $ 2 358
       1996             11 302             7 932                2 786
       1995             10 148             6 973                1 465

<PAGE>
<PAGE 29>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    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 $245,000,
$621,000 and $1,969,000 in 1997, 1996 and 1995, 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 DTE.  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 2.68% in 1997, 2.69% in 1996 and 2.72% in 1995.

    (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.

    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% in 1997, 6.25%
in 1996 and 7.75% in 1995.

(3) Commitments and Contingencies

    (a) Financing and Construction Programs

    The Company is engaged in a continuous construction program presently
estimated at $24.8 million for the five-year period 1998 through 2002.  Of

<PAGE>
<PAGE 30>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

that amount, $7 million is estimated for 1998.  The program is subject to
periodic review and revision because of factors such as changes in business
conditions, rates of customer growth, effects of inflation, maintenance of
reliable and safe service, equipment delivery schedules, licensing delays,
availability and cost of capital and environmental factors.  The Company
expects to finance these expenditures on an interim basis with internally
generated funds and short-term borrowings which are ultimately expected to be
repaid with the proceeds from sales of long-term debt and equity securities.

    (b) Power Contracts

    The Company has long-term contracts for the purchase of electricity from
various sources.  Generally, these contracts are for fixed periods and require
payment of a demand charge for the capacity entitlement and an energy charge
to cover the cost of fuel.  Information relative to these contracts is as
follows:
                 Range of
                 Contract
                Expiration    Entitlement                 Cost
                  Dates          %      MW      1997      1996     1995
                                    (Dollars in thousands)
 Type of Unit
 Cogenerating       2011       17.2     24.5   $15 804  $14 589  $14 680
 Oil             2002-2009      (a)     85.6    15 794   11 301   10 148
 Nuclear         2012-2026      (b)      8.1    11 670   12 089   10 922
    Total                              118.2   $43 268  $37 979  $35 750

    (a) Includes entitlements in Canal Unit 1 (5%) and Canal Unit 2 (10%).

    (b) Includes entitlements in Seabrook 1 (0.7%) and  Vermont Yankee (2.5%)
        nuclear power plants.  The estimated cost to decommission Vermont
        Yankee is $385.9 million in current dollars.  The Company's share of
        this liability (approximately $8.7 million), less its share of the
        market value of the assets held in a decommissioning trust
        (approximately $4.4 million), is approximately $4.3 million at
        December 31, 1997.

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

    Equity Ownership (%)                            4.50       4.00       4.50
    Plant Entitlement (%)                           4.50       3.59       2.50
    Contract Expiration Date                        2007       2008       2000
    Year of Shutdown                                1996       1997       1992
    1995 Actual Cost ($)                           9 498      7 376      2 023
    1996 Actual Cost ($)                           9 259      6 511      2 260
    1997 Actual Cost ($)                           5 760      8 928      2 238
    Decommissioning cost estimate (100%) ($)     437 270    360 046    137 428
    Company's decommissioning cost ($)            19 677     13 859      6 184
    Market value of assets (100%) ($)            209 448    199 457    134 143
    Company's market value of assets ($)           9 425      7 161      6 036

<PAGE>
<PAGE 31>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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

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

    The estimated aggregate obligations under the life-of-the-unit contracts
for capacity from the operating Yankee Nuclear Unit and other long-term
purchased power obligations, including the Canal and Seabrook 1 units, in
effect for the five years subsequent to 1997 are as follows:

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

            1998              $4 957         $40 726        $45 683
            1999               5 001          39 504         44 505
            2000               4 311          40 339         44 650
            2001               4 806          41 265         46 071
            2002               4 996          43 036         48 032

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

    In addition, the Company incurred costs for purchases from ISO - New
England of $15,143,000, $10,973,000 and $14,185,000 in 1997, 1996 and 1995,
respectively.

    The costs associated with these power contract obligations are a signifi-
cant component of the Company's stranded costs that are included in the
Company's restructuring plan approved by the DTE.

    (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 operat-
ing 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,

<PAGE>
<PAGE 32>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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
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 assess-
ments 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 cover-
age 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 annually 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, 1997, the Company's portion amounted to
$2,680,000.

    (e) 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 could
have an impact on future operations, capital costs and construction schedules
of major facilities; however, the generation facilities are likely to be sold
at auction in 1998 pursuant to the restructuring plan approved by the DTE.

(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

<PAGE>
<PAGE 33>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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, 1997, 1996 and 1995:

                                            1997       1996       1995
                                              (Dollars in thousands)
    Federal
      Current                             $ 2 574    $ 2 861    $ 1 397
      Deferred                               (287)      (582)       991
      Investment tax credits                  (91)       (93)       (94)
                                            2 196      2 186      2 294
    State
      Current                                 556        543        355
      Deferred                                (48)       (21)       174
                                              508        522        529
                                            2 704      2 708      2 823
    Amortization of regulatory liability
      relating to deferred income taxes      (113)       (25)       (98)
                                          $ 2 591    $ 2 683    $ 2 725

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

    Accumulated deferred income taxes consisted of the following in 1997 and
1996:
                                             1997          1996
                                           (Dollars in thousands)
    Liabilities
      Property-related                     $17 309       $16 661
      All other                              1 710         1 947
                                            19 019        18 608
    Assets
      Investment tax credits                 1 134         1 193
      Pension plan                             810           789
      Regulatory liability                   1 039         1 112
      All other                              2 339         1 563
                                             5 322         4 657
    Accumulated deferred income taxes, net $13 697       $13 951

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

    The total income tax provision set forth previously represents 33% in
1997, 34% in 1996 and 33% in 1995 of income before such taxes.  The following

<PAGE>
<PAGE 34>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

table reconciles the statutory federal income tax rate to these percentages:

                                                     1997     1996     1995
                                                      (Dollars in thousands)
    Federal statutory rate                              35%      35%      35%

    Federal income tax expense at statutory levels  $2 732   $2 731   $2 857
    Increase (Decrease) from statutory levels:
      State tax net of federal tax benefit             331      339      343
      Tax versus book depreciation                      66       83        2
      Amortization of excess deferred reserves        (113)     (25)     (98)
      Amortization of investment tax credits           (91)     (93)     (94)
      Reversals of capitalized expenses                (13)     (13)     (14)
      Dividend received deduction                     (274)    (246)    (272)
      Other                                            (47)     (93)       1
                                                    $2 591   $2 683  $ 2 725

      Effective federal income tax rate                 33%      34%      33%

(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.

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

                                                  1997       1996       1995
                                                    (Dollars in thousands)

    Service cost                                $   534    $   538    $   484
    Interest cost                                 1 871      1 921      1 924
    Return on plan assets - (gain)/loss          (5 103)    (3 899)    (5 388)
    Net amortization and deferral                 3 145      2 080      3 672
      Total pension expense                         447        640        692
    Transfers from affiliated companies, net        503        441        439
    Less: Amounts capitalized and deferred          723        299        243
      Net pension expense                       $   227    $   782    $   888

    Discount rate                                7.50%      7.25%      8.50%
    Assumed rate of return                       8.75       8.75       9.00
    Rate of increase in future compensation      4.25       4.25       5.00

    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

<PAGE>
<PAGE 35>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

pension expense.  The funded status of the Company's pension plan (using a
measurement date of December 31) is as follows:

                                                   1997           1996
                                                  (Dollars in thousands)
    Accumulated benefit obligation:
        Vested                                  $ (26 002)     $ (20 583)
        Nonvested                                  (3 326)        (2 131)
                                                $ (29 328)     $ (22 714)

    Projected benefit obligation                $ (31 860)     $ (26 690)
    Plan assets at fair market value               32 325         29 027
      Projected benefit obligation
        greater than plan assets                      465          2 337
    Unamortized transition obligation                 551            688
    Unrecognized prior service cost                   954          1 074
    Unrecognized gain                              (4 289)        (5 971)
      Accrued pension liability                 $  (2 319)     $  (1 872)

    The following actuarial assumptions were used in determining the plan's
year-end funded status:
                                                   1997           1996

    Discount rate                                  7.00%          7.50%
    Rate of increase in future compensation        3.75           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.

    (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 postre-
tirement benefit obligation.  The Company contributed approximately $1.1
million, $1.2 million and $1.3 million to these trusts during 1997, 1996 and
1995, respectively.

<PAGE>
<PAGE 36>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

    The net periodic postretirement benefit cost for the years ended
December 31, 1997, 1996 and 1995 include the following components and related
assumptions:

                                               1997      1996      1995
                                                (Dollars in thousands)

    Service cost                              $  189    $  205    $  164
    Interest cost                                777       809       817
    Return on plan assets                       (764)     (460)     (521)
    Amortization of transition obligation
       over 20 years                             497       498       498
    Net amortization and deferral                388       181       337
       Total postretirement benefit cost       1 087     1 233     1 295
    Transfers from affiliated companies, net     590       555       579
    Less: Amounts capitalized and deferred         1        68       458
       Net postretirement benefit cost        $1 676    $1 720    $1 416

    Discount rate                               7.50%     7.25%     8.50%
    Assumed rate of return                      8.75      8.75      9.00
    Rate of increase in future compensation     4.25      4.25      5.00

    The funded status of the Company's postretirement benefit plan using a
measurement date of December 31, 1997 and 1996 is as follows:

                                                      1997        1996
                                                   (Dollars in thousands)

    Accumulated postretirement benefit obligation:
      Retirees                                      $ (8 520)   $ (6 052)
      Fully eligible active plan participants         (1 685)     (1 422)
      Other active plan participants                  (2 670)     (3 365)
                                                     (12 875)    (10 839)
    Plan assets at fair market value                   5 195       4 076
    Accumulated postretirement benefit obligation
       greater than plan assets                       (7 680)     (6 763)
    Unamortized transition obligation                  7 463       7 960
    Unrecognized gain                                    217      (1 197)
                                                    $    -      $    -

    The following actuarial assumptions were used in determining the plan's
estimated accumulated postretirement benefit obligation (APBO) and funded
status for 1997 and 1996:
                                                      1997        1996

    Discount rate                                     7.00%       7.50%
    Rate of increase in future compensation           3.75        4.25
    Medicare Part B premiums                          3.10        9.50
    Medical care                                      6.75        7.00
    Dental care                                       4.50        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 4.5%, respec-
tively, by 2007 and remain at that level thereafter.  A one percent change in
the medical trend rate would have a $136,000 impact on the Company's

<PAGE>
<PAGE 37>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

annual expense and would change the APBO by approximately $1.5 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,
1997 and 1996, the Company's deferral amounted to approximately $2 million and
$2.1 million, respectively.

    (c) Savings Plan

    The Company has an Employees Savings Plan that provides for Company
contributions equal to contributions by eligible employees of up to four
percent of each employee's compensation rate and up to five percent for those
employees no longer eligible for postretirement health benefits.  The Com-
pany's contribution was $302,000 in 1997, $310,000 in 1996 and $317,000 in
1995.

(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, 1997, system
companies had $145 million of committed lines of credit that will expire at
varying intervals in 1998.  These lines are normally renewed upon expiration
and require annual fees of up to .1875% of the individual line.  At December
31, 1997, the system's uncommitted lines of credit totaled $10 million.
Interest rates on the Company's outstanding borrowings generally are at an
adjusted money market rate and averaged 5.8% and 5.6% in 1997 and 1996,
respectively.  Notes payable to banks totaled $19,000,000 and $18,725,000 at
December 31, 1997 and 1996, respectively.

    (b) Advances from Affiliates

     Notes payable to the System totaled $7,500,000 and $4,665,000 at December
31, 1997 and 1996, 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 8.5% and
8.3% in 1997 and 1996, 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.

<PAGE>
<PAGE 38>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Rates on these borrowings averaged 5.4% and 5.3% in 1997 and 1996, respective-
ly.  Borrowings from the Pool totaled $3,790,00 and $400,000 at December 31,
1997 and 1996, respectively.

    (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      1997       1996
                                                  (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 - 7 3/4%, due 2002             5 000     2 400      2 500
                                                         $17 400    $17 500

    Under the terms of its Indenture of Trust, the Company is required to make
periodic sinking fund payments for retirement of outstanding long-term debt.
The payments and balances of maturing debt issues for the five years subse-
quent to December 31, 1997 are as follows:

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

            1998          $100           $   -          $   100
            1999           100            10 000         10 100
            2000           100               -              100
            2001           100               -              100
            2002           100             2 000          2 100

    (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, 1997 and 1996 is as follows:

                                1997                        1996
                                     (Dollars in thousands)

                       Carrying        Fair       Carrying        Fair
                         Value         Value        Value         Value

    Long-Term Debt      $17 502       $18 498      $21 863       $22 787

    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.

<PAGE>
<PAGE 39>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

(7) Dividend Restriction

    At December 31, 1997 none of retained earnings was restricted against the
payment of cash dividends by terms of term loans and note agreements securing
long-term debt.  As of the same date, retained earnings also included approxi-
mately $4,852,000 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.

    Future minimum lease payments, by period and in the aggregate, of noncanc-
elable operating leases consisted of the following at December 31, 1997:

                                                    Operating Leases
                                                  (Dollars in thousands)

                  1998                                   $ 1 703
                  1999                                     1 639
                  2000                                     1 479
                  2001                                     1 392
                  2002                                     1 392
                  Beyond 2002                              4 381
                  Total future minimum lease payments    $11 986

    Total rent expense for all operating leases, except those with terms of a
month or less, amounted to $1,683,000 in 1997, $1,348,000 in 1996 and
$1,374,000 in 1995. There were no contingent rentals and no sublease rentals
for the years 1997, 1996 and 1995.

<PAGE>
<PAGE 40>

                       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 20).

(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, 1997, 1996
        and 1995 (pages 49-51).

        Schedule II - Valuation and Qualifying Accounts - Years Ended December
        31, 1997, 1996 and 1995 (page 52).

(a) 3.  Exhibits:
                              Notes to Exhibits -

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

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

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

<PAGE>
<PAGE 41>

                       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     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 42>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.4.1   First through Fifth Amendments to 10.1.4 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).

10.1.4.2   Sixth through Eleventh Amendments to 10.1.4 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).

10.1.4.3   Twelfth through Fourteenth Amendments to 10.1.4 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).

10.1.4.4   Fifteenth and Sixteenth Amendment to 10.1.4 dated April 27, 1984
           and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q
           (June 1984), File No. 2-30057).

10.1.4.5   Seventeenth Amendment to 10.1.4 dated March 8, 1985 (Exhibit 1 to
           the CEC Form 10-Q (March 1985), File No. 2-30057).

10.1.4.6   Eighteenth Amendment to 10.1.4 dated March 14, 1986 (Exhibit 1 to
           the CEC Form 10-Q (March 1986), File No. 2-30057).

10.1.4.7   Nineteenth Amendment to 10.1.4 dated May 1, 1986 (Exhibit 1 to the
           CEC Form 10-Q (June 1986), File No. 2-30057).

10.1.4.8   Twentieth Amendment to 10.1.4 dated September 19, 1986 (Exhibit 1
           to the CEC Form 10-K for 1986, File No. 2-30057).

10.1.4.9   Twenty-First Amendment to 10.1.4 dated November 12, 1987 (Exhibit 1
           to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.4.10  Twenty-Second Amendment and Settlement Agreement to 10.1.4 both
           dated January 13, 1989, (Exhibit 4 to the CEC Form 10-K for 1988,
           File No. 2-30057).

10.1.5     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).

10.1.5.1   Amendment to 10.1.5 as amended and restated June 1, 1993, hence-
           forth referred to as the Capacity Acquisition and Disposition
           Agreement, whereby CEC, as agent, in addition to acquiring power
           may also sell bulk electric power which the Company and/or CE owns
           or otherwise has the right to sell (Exhibit 1 to CE's Form 10-Q
           (September 1993), File No. 2-30057).

10.1.6     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).

<PAGE>
<PAGE 43>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.6.1   Second, Third and Fourth Amendments to 10.1.6 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).

10.1.6.2   Fifth and Sixth Amendments to 10.1.6 as amended June 26, 1989 and
           July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q (Septem-
           ber 1989), File No. 2-7909).

10.1.7     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).

10.1.7.1   Additional Power Contract to 10.1.7 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).

10.1.7.2   Second Supplementary Power Contract to 10.1.7 providing for decom-
           missioning financing dated April 30, 1984 (Exhibit 6 to the CEL
           Form 10-Q (June 1984), File No. 2-7909).

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

10.1.8.1   First Amendment (Section 7) and Second Amendment (decommissioning
           financing) to 10.1.8 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).

10.1.8.2   Third and Fourth Amendments to 10.1.8 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).

10.1.8.3   Fifth and Sixth Amendments to 10.1.8 both as amended May 6, 1988
           (Exhibit 1 to the CEL Form 10-Q (June 1988), File No. 2-7909).

10.1.8.4   Seventh Amendment to 10.1.8 as amended June 15, 1989 (Exhibit 2 to
           the CEL Form 10-Q (September 1989), File No. 2-7909).

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

10.1.9     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).

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

<PAGE>
<PAGE 44>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.9.2   Third Amendment to 10.1.9 as amended October 1, 1984 (Exhibit 1 to
           the CEL Form 10-Q (September 1984), File No. 2-7909).

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

10.1.10.1  Supplement Amending 10.1.10, as amended June 24, 1970 (Exhibit 8 to
           the CES Form S-7, Amendment No. 1, File No. 2-38372).

10.1.11    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).

10.1.12    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).

10.1.12.1  Amendatory Agreement No. 3 to 10.1.12, as amended June 1, 1990
           (Exhibit 1 to the CEC Form 10-Q (September 1990), File No. 2-
           30057).

10.1.13    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).

10.1.13.1  First, Second and Third Amendments to 10.1.13 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).

10.1.13.2  Fourth and Eighth Amendments to 10.1.13 as amended July 1, 1987 and
           August 1, 1988, respectively (Exhibit 3 to the CEC Form 10-Q
           (September 1988), File No. 2-30057).

10.1.13.3  Fifth, Sixth and Seventh Amendments to 10.1.13 as amended October
           15, 1987, December 15, 1987 and March 1, 1988, respectively (Exhib-
           it 1 to the CEC Form 10-Q (June 1988), File No. 2-30057).

10.1.13.4  Ninth and Tenth Amendments to 10.1.13 as amended November 1, 1988
           and January 15, 1989, respectively (Exhibit 2 to the CEC Form 10-K
           for 1988, File No. 2-30057).

10.1.13.5  Eleventh Amendment to 10.1.13 as amended November 1, 1989 (Exhibit
           4 to the CEC Form 10-K for 1989, File No. 2-30057).

10.1.13.6  Twelfth Amendment to 10.1.13 as amended April 1, 1990 (Exhibit 1 to
           the CEC Form 10-Q (June 1990), File No. 2-30057).

<PAGE>
<PAGE 45>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.14    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).

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

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

10.1.16.1  Amendment No. 1 to 10.1.16 as amended May 1, 1986 (Exhibit 6 to the
           CEC Form 10-Q (March 1987), File No. 2-30057).

10.1.16.2  Amendment No. 2 to 10.1.16 as amended September 1, 1987 (Exhibit 3
           to the CEC Form 10-Q (September 1987), File No. 2-30057).

10.1.17    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).

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

10.1.19    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).

10.1.19.1  Amendments Nos. 1 and 2 to 10.1.19 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.19.2  Amendments Nos. 3 and 4 to 10.1.19 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

<PAGE>
<PAGE 46>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

10.1.20    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).

10.1.20.1  Amendments Nos. 1 and 2 to 10.1.20 as amended May 1, 1986 and
           February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-Q
           (March 1987), File No. 2-30057).

10.1.20.2  Amendments Nos. 3 and 4 to 10.1.20 as amended June 1, 1987 and
           September 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q
           (September 1987), File No. 2-30057).

10.1.21    Agreement Authorizing Execution of Phase II Firm Energy Contract
           among certain NEPOOL utilities to participate 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).

10.1.22    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).

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

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

10.2       Other Agreements.

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

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

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

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

<PAGE>
<PAGE 47>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>
<PAGE 48>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Exhibit 27.   Financial Data Schedule

    Filed herewith as Exhibit 1 is the Financial Data Schedule for the twelve
    months ended December 31, 1997

(b) Reports on Form 8-K

    No reports on Form 8-K were filed during the three months ended Decem-
    ber 31, 1997.

<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, 1997
                                           (Dollars in Thousands)
<CAPTION>
                                                                   1997
                                 Balance                                     Balance
                               December 31,         Equity                 December 31,
Name of Issuer and                 1996               in       Dividends       1997
Description of Investment     Shares  Amount       Earnings    Received       Amount
<S>                           <C>     <C>          <C>         <C>             <C>
Common Stock
Connecticut Yankee
 Atomic Power Company         15 750  $4 747       $  710      $  450          $5 007
Maine Yankee Atomic
 Power Company                20 000   2 829          293           -           3 122
Vermont Yankee Nuclear
 Power Corporation             9 801   1 324          174         183           1 315
Yankee Atomic Electric
 Company                       3 068     503          (58)         40             405
   Total                              $9 403       $1 119      $  673          $9 849

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

<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder; however, no market exists for these securities.
<FN>
See Note 3(b) of the Notes to Financial Statements included in Item 8 of this report for a information
pertaining to the permanent closing of the nuclear plants owned by Connecticut Yankee Atomic Power Company,
Maine Yankee Atomic Power Company and Yankee Atomic Electric Company.
</TABLE>

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

<PAGE>
<PAGE 51>


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


<PAGE>
<PAGE 52>


SCHEDULE II

                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                            (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, 1997

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


                                 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

<PAGE>
<PAGE 53>
                       CAMBRIDGE ELECTRIC LIGHT COMPANY
                       FORM 10-K      DECEMBER 31, 1997

                                  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

    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 31, 1998
William G. Poist,
Chairman of the Board

R. D. WRIGHT                                             March 31, 1998
Russell D. Wright,
Vice Chairman and Chief Executive Officer

DEBORAH A. McLAUGHLIN                                    March 31, 1998
Deborah A. McLaughlin
President and Chief Operating Officer

Principal Financial and Accounting Officer:

JAMES D. RAPPOLI                                         March 31, 1998
James D. Rappoli,
Financial Vice President and Treasurer


A majority of the Board of Directors:

WILLIAM G. POIST                                         March 31, 1998
William G. Poist, Director

R. D. WRIGHT                                             March 31, 1998
Russell D. Wright, Director

JAMES D. RAPPOLI                                         March 31, 1998
James D. Rappoli, Director

DEBORAH A. McLAUGHLIN                                    March 31, 1998
Deborah A. McLaughlin, Director