SERVICE AGREEMENT
              FOR TRANSPORTATION OF NATURAL GAS
                   UNDER RATE SCHEDULE FT
             [Part 284 Service - Rate Discount]
                              
                              
     AGREEMENT made as of this 30th day of April, by and
between CNG TRANSMISSION CORPORATION, a Delaware
corporation, hereinafter called "Pipeline", and PG ENERGY
INC., a Pennsylvania corporation, hereinafter called
"Customer".

     WITNESSETH:  That, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:

                          ARTICLE I
                         Quantities
                              
     A. During the term of this Agreement, Pipeline will
transport for Customer, on a firm basis, and Customer may
furnish, or cause to be furnished, to Pipeline natural gas
for such transportation, and Customer will accept, or cause
to be accepted, delivery from Pipeline of the quantities
Customer has tendered for transportation.

     B. The maximum quantities of gas which Pipeline shall
deliver and which Customer may tender shall be as set forth
on Exhibit A, attached hereto.

                         ARTICLE II
                            Rate
                              
     A. Beginning on November 1, 1997, Customer shall pay
Pipeline for transportation services rendered pursuant to
this Agreement, the following rates and charges:

        1.   A Reservation Charge of $4.55 per dekatherm of
             MDTQ plus the currently effective reservation
             Section 18 surcharge in Rate Schedule FT,
        
        2.   The maximum Usage Charge in Rate Schedule FT
             per dekatherm of gas transported,
        
        3.   All applicable surcharges, including ACA, as
             provided in Rate Schedule FT, and
        
        4.   The Fuel Retention Percentage as provided in
             Rate Schedule FT.
        
     B. Pipeline shall have the right to propose, file and
make effective with the FERC or any other body having
jurisdiction, revisions to any applicable rate schedule, or
to propose, file, and make effective superseding rates or
rate schedules for the purpose of changing the rate,
charges, and other provisions thereof effective as to
Customer; provided, however, that (i) Section 2 of Rate
Schedule FT "Applicability and Character of Service", (ii)
term, (iii) quantities, and (iv) points of receipt and
points of delivery shall not be subject to unilateral change
under this Article.  Said rate schedule or superseding rate
schedule, and any revisions thereof which shall be filed and
made effective shall apply to and become a part of this
Agreement.  The filing of such changes and revisions to any
applicable rate schedule shall be without prejudice to the
right of Customer to contest or oppose such filing and its
effectiveness.

     C. Customer understands and agrees that the discounted
rate set forth above applies solely to the Primary Receipt
and Delivery Points provided for in this Agreement.  Use of
Secondary Receipt and Delivery Points is subject to FT Rate
Schedule Section 6.2.C, or superseding rate schedule
section, regarding Customer's agreement to pay maximum FT
rates.

                         ARTICLE III
                       Term of Service
                              
     Subject to all the terms and conditions herein, the
term of service shall be effective as of November 1, 1997,
and shall continue in effect for a primary term of five (5)
years, and from year to year thereafter, until either party
terminates this Agreement by giving written notice to the
other at least twenty-four (24) months prior to the start of
the next service year, except, however, this Agreement shall
terminate immediately, without notice, if and when Pipeline
begins to transport gas for Customer on a firm basis to
and/or from the proposed Avoca Gas Storage Project in
Steuben County, New York.
                         ARTICLE IV
               Points of Receipt and Delivery
                              
     The Primary Points of Receipt and Delivery and the
maximum quantities for each point for all gas that may be
received for Customer's account for Transportation by
Pipeline shall be as set forth on Exhibit A.

                          ARTICLE V
                     Regulatory Approval
                              
     Performance under this Agreement by Pipeline and
Customer shall be contingent upon Pipeline and Customer
receiving all necessary regulatory or other governmental
approvals upon terms satisfactory to each.  Should Pipeline
and Customer be denied such approvals to provide or continue
the service contemplated herein or to construct and operate
any necessary facilities therefor upon the terms and
conditions requested in the application therefor, then
Pipeline's and Customer's obligations hereunder shall
terminate.

                         ARTICLE VI
       Incorporation By Reference of Tariff Provisions
                              
     A. To the extent not inconsistent with the terms and
conditions of this Agreement, the following provisions of
Pipeline's effective FERC Gas Tariff, and any revisions
thereof that may be made effective hereafter are hereby made
applicable to and a part hereof by reference:

        1.  All of the provisions of Rate Schedule FT, or
any effective superseding rate schedule or otherwise
applicable rate schedule; and

        2.  All of the provisions of the General Terms and
Conditions, as they may be revised or superseded from time
to time.

                         ARTICLE VII
                        Miscellaneous
                              
     A. No change, modification or alteration of this
Agreement shall be or become effective until executed in
writing by the parties hereto; provided, however, that the
parties do not intend that this Article VII.A. requires a
further written agreement either prior to the making of any
request or filing permitted under Article II hereof or prior
to the effectiveness of such request or filing after
Commission approval, provided further, however, that nothing
in this Agreement shall be deemed to prejudice any position
the parties may take as to whether the request, filing or
revision permitted under Article II must be made under
Section 7 or Section 4 of the Natural Gas Act.

     B. Any notice, request or demand provided for in this
Agreement, or any notice which either party may desire to
give the other, shall be in writing and sent to the
following addresses:

        Pipeline:        CNG Transmission Corporation
                         445 West Main Street
                         Clarksburg, West Virginia  26301
                         Attention:  Vice President,
Marketing
                                           and Customer
Service

        Customer:        PG Energy Inc.
                         One PEI Center
                         Wilkes-Barre, PA  18711-0601
                         Attention:  Director of Gas Supply

or at such other address as either party shall designate by
formal written notice.

     C. No presumptions shall operate in favor of or against
either party hereto as a result of any responsibility either
party may have had for drafting this Agreement.

     D. The subject headings of the provisions of this
Agreement are inserted for the purpose of convenient
reference and are not intended to become a part of or to be
considered in any interpretation of such provisions.

     IN WITNESS WHEREOF, the parties intending to be legally
bound, have caused this Agreement to be signed by their duly
authorized officials as of the day and year first written
above.

                              CNG TRANSMISSION CORPORATION
                                                  (Pipeline)



By:  /s/ Georgia Carter
         Georgia Carter
         
Its:  Vice President, Marketing


                              PG ENERGY INC.
                                                  (Customer)




By:  /s/ John F. Kell, Jr.
         John F. Kell, Jr.

Its:  Vice President, Financial Services
                                                  (Title)

                          EXHIBIT A
                              
To the Transportation Service Agreement dated April 30, 1997
   Between CNG Transmission Corporation and PG Energy Inc.
                              
A.   Quantities

     1. The maximum quantities of gas which Pipeline shall
deliver and which Customer may tender shall be as follows:

     a.   A Maximum Daily Transportation Quantity ("MDTQ")
          of 29,331 Dt for transportation on withdrawal from
          the Seneca Lake Storage Field ("Seneca Lake").
     
     b.   A MDTQ of 15,000 Dt for transportation for
          injections into Seneca Lake.
     
     2. For billing purposes Customer's Reservation Charge
shall be based on the quantity set forth in Subparagraph 1.a
above.

B.   Primary Points of Receipt and Delivery

     1. The Primary Points of Receipt and the maximum
quantities for each point shall be as follows:

     a.   The interconnection of the facilities of Pipeline
          and New York State Electric & Gas Corporation
          ("NYSEG") at the Yawger Road M&R Station in
          Chemung County, New York, on withdrawal from
          Seneca Lake at 29,331 Dt/d.
     
     b.   The interconnection of the facilities of Pipeline
          and Transcontinental Gas Pipe Line Corporation
          ("Transco") in Clinton County, Pennsylvania, known
          as the Leidy Interconnection, for injection into
          Seneca Lake at 15,000 Dt/d.
     
     2. The Primary Points of Delivery and the maximum
quantities for each point shall be as follows:

     a.   The interconnection of the facilities of Pipeline
          and Transco in Clinton County, Pennsylvania, known
          as the Leidy Interconnection, on withdrawal from
          Seneca Lake at 29,331 Dt/d.
     
     b.   The interconnection of the facilities of Pipeline
          and NYSEG at the Yawger Road M&R Station in
          Chemung County, New York, for injection into
          Seneca Lake at 15,000 Dt/d.