Portion of the 1995 Annual Report to Shareholders for the 
year ended December 31, 1995 which is incorporated by 
reference in this filing on Form 10-K.



      MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED 
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

                             
     E'town Corporation (E'town or Corporation), a New 
Jersey holding company, is the parent company of 
Elizabethtown Water Company (Elizabethtown or Company) and 
E'town Properties, Inc. (Properties). The Mount Holly Water 
Company (Mount Holly) is a wholly owned subsidiary of 
Elizabethtown.  Mount Holly contributed 3% of the Company's 
consolidated operating revenues for 1995.  The assets and 
operating results of Elizabethtown constitute the 
predominant portions of E'town's assets and operating 
results.  The following analysis sets forth significant 
events affecting the financial condition of E'town and 
Elizabethtown at December 31, 1995, and the results of 
operations for the years ended December 31, 1995, 1994 and 
1993. 

LIQUIDITY AND CAPITAL RESOURCES 
Capital Expenditures Program 

    Consolidated capital expenditures, primarily for water 
utility plant, were $73.9 million during 1995.  Capital 
expenditures for the three-year period ending December 31, 
1998, are estimated to be $149.8 million, of which 
$148.9 million is for utility plant ($128.4 million for 
Elizabethtown and $20.5 million for Mount Holly) and 
$.9 million is for non-utility expenditures.  A major 
portion of the utilities' capital outlays will occur in the 
first nine months of the three-year period as Elizabethtown 
completes its new water treatment plant.  After this project 
is completed in late 1996, the capital outlays for 
Elizabethtown are expected to return to levels experienced 
in the early 1990s.  Mount Holly expects to incur 
significant capital expenditures in 1997 as it constructs 
new water supply, treatment and transmission facilities as 
discussed below.  

Elizabethtown 

     Elizabethtown's capital program includes the 
construction of a new water treatment plant, the Canal Road 
Water Treatment Plant (Plant), near Elizabethtown's existing 
plant.  The Plant, which will have an initial rated 
production capacity of 40 million gallons per day (mgd) and 
has been designed to permit expansion to 200 mgd, is 
necessary to meet existing and anticipated customer demands 
and to replace groundwater supplies withdrawn from service 
as a result of more restrictive water quality regulations 
and groundwater contamination.  Expansion of the Plant's 
production capacity beyond 40 mgd is not expected to occur 
in the foreseeable future.  Elizabethtown's construction 
program also includes additional mains and storage 
facilities necessary to serve existing and future customers.  

     In April 1994, Elizabethtown executed a lump-sum 
contract for the construction of the Plant.  The estimated 
cost of the Plant is approximately $100 million, excluding 
an Allowance for Funds Used During Construction (AFUDC).  
The Company has expended $83.0 million, excluding AFUDC of 
$7.2 million on the Plant, as of December 31, 1995.  The 
project is proceeding on schedule, the construction contract 
remains on budget and the project is expected to be 
completed during the third quarter of 1996. 

    In August 1993, the New Jersey Board of Public Utilities 
(BPU) approved a stipulation (1993 Plant Stipulation) signed 
by the Department of Ratepayer Advocate, the BPU staff and 
several of Elizabethtown's major wholesale customers, all of 
whom typically participate in Elizabethtown's rate cases.  
The 1993 Plant Stipulation states the Plant is necessary and 
the Company's estimate regarding the Plant's cost, at that 
time $87 million and construction period are reasonable.  In 
April 1994, Elizabethtow-n notified all parties to the 1993 
Plant Stipulation that the estimated cost of the Plant had 
increased.  

     The 1993 Plant Stipulation authorizes Elizabethtown to 
levy a rate surcharge during the Plant's construction period 
if the Company's pre-tax interest coverage ratio for any 
12-month historical period drops below 2.0 times.  The 
pre-tax interest coverage has remained above the 2.0 times 
trigger level and therefore, the surcharge has not been 
required.  The 1993 Plant Stipulation also provides that the 
rate of return on common shareholder's equity used to 
calculate the rate for the equity component of the AFUDC for 
the Plant will be 1.5% less than the rate of return on 
common shareholder's equity established in Elizabethtown's 
most recent base rate case.  The authorized rate of return 
on Elizabethtown's common shareholder's equity is currently 
11.5%. Elizabethtown has filed for a rate increase to 
reflect the financing and operating costs of the Plant which 
is expected to take effect when the Plant, is completed 
later this year (see Economic Outlook). 

Mount Holly 

     To ensure an adequate supply of quality water from an 
aquifer serving parts of southern New Jersey, state 
legislation requires Mount Holly, as well as other suppliers 
obtaining water from designated portions of this aquifer, to 
reduce pumpage from its wells.  Mount Holly has received 
approval from the New Jersey Department of Environmental 
Protection (NJDEP) for its plan to develop a new water 
supply, treatment and transmission system necessary to 
obtain water outside the designated portion of the aquifer 
and to treat the water and pump it into the Mount Holly 
system.  This is referred to as the Mansfield Project.  The 
project is currently estimated to cost $16.5 million, 
excluding AFUDC, and is expected to be completed in 1997.  
The land for the supply and treatment facilities has been 
purchased and wells have been drilled and can produce the 
required supply.  Mount Holly has filed for rate relief 
relating to the Mansfield Project (see Economic Outlook.)

     On October 5, 1995, the NJDEP granted Mount Holly a 
water allocation diversion permit for four wells that are to 
be the water supply for the Mansfield Project.  On October 
20, 1995, New Jersey-American Water Company requested, and 
was subsequently granted, an adjudicatory hearing on the 
permit.  The Company and Mount Holly believe that the permit 
in question will be upheld but cannot predict the outcome of 
the objection.  In the event that the objection is 
successful and the permit is rescinded, Mount Holly would 
utilize the alternative plan of purchasing water from New 
Jersey-American Water Company.


CAPITAL RESOURCES 

    During 1995, Elizabethtown, including Mount Holly, 
financed 8.4% of its capital expenditures from internally 
generated funds (after payment of common stock dividends).  
The balance was financed with a combination of proceeds from 
capital contributions from E'town (funded by sale of its 
Common Stock), tax exempt bonds issued through the New 
Jersey Economic Development Authority (NJEDA) and short-term 
borrowings under a revolving credit agreement discussed 
below. 

    For the three-year period ending December 31, 1998, 
Elizabethtown, including Mount Holly, estimates 34.4% of its 
capital expenditures will be financed with internally 
generated funds (after payment of common stock dividends).  
The balance will be financed with a combination of proceeds 
from the sale of E'town common stock, long-term debentures, 
proceeds of tax-exempt NJEDA bonds and short-term borrowings 
under the revolving credit agreement.  -The NJEDA has granted 
preliminary approval for the financing of almost all of 
Elizabethtown's major projects over the next three years, 
including the Plant.  Elizabethtown expects to pursue 
tax-exempt financing to the extent that final allocations 
are granted by the NJEDA.  The Company's senior debt is 
rated A3 and A by Moody's and Standard & Poor's, 
respectively. 

     In June 1995, E'town issued 660,000 shares of common 
stock for net proceeds of $16.9 million which were used to 
fund an equity contribution to Elizabethtown of $16.9 
million.  The equity contribution has been used to repay 
short-term debt that had been issued under Elizabethtown's 
revolving credit agreement to partially fund the Company's 
capital program, the predominant portion of which relates to 
the construction of the Plant.  During 1995, 248,846 shares 
of common stock were issued for proceeds of $6.4 million 
under E'town's Dividend Reinvestment and Stock Purchase Plan 
(DRP).  The proceeds are used on an ongoing basis to make 
capital contributions to Elizabethtown to partially fund its 
capital program. 

     In December 1995, Elizabethtown issued $40.0 million of 
5.60% tax-exempt Debentures through the NJEDA.  The proceeds 
of the issue were used to repay amounts outstanding under 
Elizabethtown's revolving credit agreement.

    During 1995, Elizabethtown obtained a portion of funds 
required for its capital program through borrowings under 
its revolving credit agreement (Agreement) with an agent 
bank and five additional banks.  The Agreement provides up 
to $60.0 million in revolving short-term financing, which 
together with internal funds, other short-term financing, 
proceeds of future issuances of debt and preferred stock and 
capital contributions from E'town, is expected to be 
sufficient to finance Elizabethtown's and Mount Holly's 
capital needs through 1998.  The Agreement allows 
Elizabethtown to borrow, repay and reborrow up to $60.0 
million during the first three years, after which time 
Elizabethtown may convert any outstanding balances to a 
five-year fully amortizing term loan.  The Agreement further 
provides that, among other covenants, Elizabethtown must 
maintain a percentage of common and preferred equity to 
total capitalization of not less than 35% and a pre-tax 
interest coverage ratio of at least 1.5 to 1.  As of 
December 31, 1995, the percentage o-f Elizabethtown's common 
and preferred equi-ty to total capitalization, calculated in 
accordance with the Agreement, was 47%.  For the 12 months 
ended December 31, 1995, Elizabethtown's pre-tax interest 
coverage ratio, calculated in accordance with the Agreement, 
was 3.12 to 1.  At December 31, 1995, Elizabethtown had 
borrowings outstanding of $27.0 million under the Agreement 
at interest rates from 5.75% to 6.00%, at a weighted average 
rate of 5.94%. 

1994 and 1993

     In May 1994, E'town issued 690,000 shares of common 
stock for net proceeds of $18.2 million. The net proceeds 
were used to fund an equity contribution to Elizabethtown of 
$16.0 million.  This contribution had been used to partially 
fund Elizabethtown's construction program, the predominant 
portion of which related to the Plant.  The balance of the 
proceeds had been used to fund working capital requirements 
of the Corporation.  During 1994, 273,159 shares of common 
stock were issued for proceeds of $7.1 million under 
E'town's DRP.  The proceeds were used to make capital 
contributions to Elizabethtown to partially fund its capital 
program.

    In March 1994, Elizabethtown issued 120,000 shares of 
$100 par value, $5.90 Cumulative Preferred Stock for 
proceeds of $12.0 million at an effective rate of 7.37%.  
The proceeds were used to redeem $12.0 million of the 
Company's $8.75 Cumulative Preferred Stock.  The redemption 
premium of $1.0 million was paid from general Company funds.

    In May 1993, E'town issued 575,000 shares of common 
stock for net proceeds of $16.6 million.  The net proceeds 
were used to fund equity contributions to Elizabethtown of 
$11.0 million in May 1993 and $2.8 million in September 
1993.  Elizabethtown used a portion of such contributions to 
repay $7.0 million of short-term bank debt incurred for 
construction expenditures and invested the balance on a 
short-term basis to fund working capital requirements. 

    During 1993, 200,878 shares of common stock were issued 
for proceeds of $6.0 million under E'town's DRP.  Such 
proceeds were used to fund equity contributions to 
Elizabethtown, primarily for Elizabethtown's capital 
expenditures. 

    In August 1993, E'town, Properties and Elizabethtown 
sold three parcels of land totalling 260 acres to the 
Somerset County Park Commission for $3.4 million.  Of the 
total proceeds received by E'town, $2.2 million was used to 
fund an equity contribution to Elizabethtown and the 
remainder was used to fund working capital requirements of 
the Corporation. 

    In November 1993, Elizabethtown issued $50.0 million of 
7 1/4% Debentures due November 1, 2028.  The proceeds of the 
issue were used to redeem $30.0 million of the Company's 8 
5/8% Debentures due 2007 and $20.0 million of the Company's 
10 1/8% Debentures due 2018.  The aggregate redemption 
premiums of $2.7 million were paid from general Company 
funds. 

RESULTS OF OPERATIONS 

    Net Income for 1995 was $15.3 million or $2.16 per share 
on a primary basis as compared to $12.1 million or $1.95 per 
share for 1994.  The combined effect of a $5.3 million rate 
increase in February 1995 (discussed below), increases in 
AFUDC in 1995 and a non-recurring charge in 1994 all 
contributed to the increase in net income between 1994 and 
1995.  Earnings Per Share of Common Stock in 1995 were 
further affected by an increase in outstanding shares. 

    Net Income for 1994 was $12.1 million or $1.95 per share 
on a primary basis, as compared to $13.8 million or $2.59 
per share for 1993.  A return to more normal summer weather 
and water consumption patterns, the combined effect of 
non-recurring charges in 1994, and increases in operating 
and depreciation expenses since March 1993, when rates were 
last increased, all contributed to the decrease in net 
income between 1993 and 1994.  Earnings Per Share of Common 
Stock in 1994 were further affected by an increase in shares 
outstanding. 

     Operating Revenues increased $6.4 million or 6.2% in 
1995.  Of this increase, $4.6 million relates to the rate 
increase, discussed below, effective February 1995.  
Increased consumption by retail customers and an increase in 
the number of customers increased revenues by $1.4 million.  
Revenues from industrial customers resulting from 
consumption increased $.2 million while revenues from other 
water systems resulting from consumption decreased $.2 
million.  Revenues from fire service customers increased $.4 
million.

    Operating Revenues increased $2.0 million or 2.0% in 
1994.  Of this increase, $1.2 million relates to a rate 
increase discussed below, effective March 1993.  Sales to 
retail customers related to consumption decreased by $.9 
million, primarily due to a return to more normal weather 
patterns during the spring and summer months of 1994, 
compared to 1993.  However, despite the return to more 
normal weather patterns, sales to other water systems and to 
large industrial customers related to consumption increased 
by $.6 million and $.7 million, respecti-vely.  Due to normal 
growth within the service territory, fire service revenues 
increased by $.4 million. 

    Operation Expenses increased $2.8 million or 6.7% in 
1995.  The increase is due, primarily, to increased costs 
for labor, benefits and the cost of purchased water 
calculated in accordance with a Purchased Water Adjustment 
Clause (PWAC) (see Note 10 to the Notes to Consolidated 
Financial Statements.)  Benefit costs increased due to 
increases in the actuarially calculated pension expense and 
the cost of postemployment benefits, a portions which is 
being expensed in 1995 as it is recognized in rates pursuant 
to the 1995 Stipulation effective February 1995 (see 
Economic Outlook - Elizabethtown and Subsidiary.) 

    Operation Expenses increased $2.1 million or 5.3% in 
1994.  The increase is due, primarily, to increased costs 
for labor, benefits, miscellaneous expenses and the unit 
cost of raw water purchased from the New Jersey Water Supply 
Authority (NJWSA), which is reflected in the PWAC, in 
addition to the cost of chemicals to treat such water.  
Benefit costs increased due, primarily, to an increase in 
the actuarially calculated pension expense. 

     Maintenance Expenses decreased $.8 million or 12.4% in 
1995.  The decrease is due, primarily, to the absence in 
1995 of the unusually harsh winter weather that occurred in 
1994.  Also, the results of preventive maintenance programs 
have contributed to an overall decrease in maintenance 
expenses.
 
    Maintenance Expenses increased $.9 million or 15.9% in 
1994 due, primarily, to the effects of unusually harsh 
winter weather in the first quarter of 1994, in addition to 
an increased level of preventive maintenance at various 
operating facilities throughout the Company. 

    Depreciation Expense increased $.9 million or 12.1% in 
1995 and $.6 million or 7.9% in 1994 due, primarily, to 
additional depreciable plant being placed in service during 
those periods.  Also, an increase in authorized depreciation 
rates as a result of the 1995 Stipulation, effective 
February 1995, accounted for $.4 million of the increase. 

    Revenue Taxes increased $.8 million or 6.6% in 1995 and 
$.2 million or 2.0% in 1994, due to additional taxes on the 
higher revenues discussed above.  

    Real Estate, Payroll and Other Taxes increased $.1 
million or 2.4% and $.1 million or 3.0% in 1995 and 1994, 
respectively, due to increased payroll taxes resulting from 
labor cost increases.  

    Federal Income Taxes increased $.8 million or 12.4% in 
1995 and decreased $.4 million or 5.6% in 1994 due to 
changes in the components of taxable income discussed 
herein.  Contributing to the increase in 1995 and also 
offsetting the decrease in 1994 is $.2 million and $.1 
million, respectively, for the effect on federal income 
taxes of the settlement with the Internal Revenue Service 
from an audit of the Corporation's tax returns.   In 
addition, in 1995 the Corporation received tax refunds 
related to the years 1984 and 1985 of $.1 million (see 
Economic Outlook - E'town.) 

     Other Income increased $2.0 million in 1995 due, 
primarily, to an increase in the equity component of AFUDC 
of $1.8 million and a non-recurring litigation settlement of 
$.9 million in 1994 as discussed below.  These increases 
were offset by the federal income taxes associated with the 
various components.

    Other Income decreased $1.2 million in 1994.  Included 
in this net decrease is a litigation settlement of $.9 
million (see Note 13 to the Notes to Consolidated Financial 
Statements.)  Also included in the net decrease is a gain on 
the sale of land in 1993 of $1.7 million.  Other income 
decreased by $.2 million due to the effect of 
adjusting the carrying values of certain investments 
downward to their estimated net realizable values (see 
Economic Outlook-Properties.)  This decrease included a 
downward adjustment of $.1 million in the Corporation's 
investment in Solar Electric Generating System V (SEGS).  In 
addition, increases in the equity component of AFUDC of $.7 
million resulted from increased construction expenditures, 
primarily related to the Plant.  Other increases of $.2 
million resulted from miscellaneous items. Federal income 
taxes, as a result of all of the above, decreased $.8 
million. 

     Total Interest Charges increased $.5 million or 4.6%  
in 1995 due, primarily, to an increase in interest expense 
of $2.1 million on increased borrowings under 
Elizabethtown's revolving credit agreement to finance the 
Company's ongoing capital program, the largest component of 
which is the Plant.  This amount was offset by an increase 
in the debt component of AFUDC of $1.5 million, also 
primarily related to the construction of the Plant.  In 
addition, in 1995 the Corporation received interest on tax 
refunds related to 1984 and 1985 of $.1 million.

    Total Interest Charges decreased $.7 million or 6.2% in 
1994 due, primarily, to savings from refinancing of 
long-term debt in 1993.  Also, an increase in the debt 
component of AFUDC of $.5 million resulted in a reduction of 
interest expense.  Offsetting the decrease in Total Interest 
Charges in 1994 is $.3 million related to the tentative 
settlement of the Internal Revenue Service audit referred to 
above.
     
     Preferred Stock Dividends decreased less than $.1 
million due to savings from the refinancing of the $8.75 
series preferred stock with $5.90 series preferred stock in 
March 1994. 

ECONOMIC OUTLOOK 

    Consolidated earnings for E'town for the next several 
years will be determined primarily by Elizabethtown's and 
Mount Holly's ability to obtain adequate and timely rate 
relief in connection with their additions to utility plant 
and, to a lesser degree, the ability of Properties and 
E'town to generate earnings from their unregulated 
businesses. 

Elizabethtown and Subsidiary 

    Over the last several years, governmental water quality 
and service regulations have required Elizabethtown and 
Mount Holly to make significant investments in water supply, 
water treatment, transmission and storage facilities, 
including the Plant and the Mansfield Project, to augment 
existing facilities.  This capital program is requiring 
regular external financing and rate relief.  Currently, 
Elizabethtown and Mount Holly believe they are in compliance 
with all water quality standards in all material respects.

     In November 1995, Elizabethtown filed for a $31.6 
million or 29.6% rate increase primarily to cover the 
financing and operating costs of the Plant.  While Mount 
Holly received a $.6 million or 19.9% rate increase 
effective January 1996, deliberations regarding the portion 
of the rate case related to the Mansfield Project, in which 
Mount Holly is requesting an additional 84.2% rate increase, 
are ongoing and awaiting the award of the final water 
diversion permit.  Accordingly, the timing and amount of 
rate increases obtained by Elizabethtown and Mount Holly, in 
response to the pending rate requests, will be a major 
factor affecting earnings in 1996 and beyond.  Once the new 
facilities, referred to above, are constructed and reflected 
in rates, Elizabethtown expects its internally generated 
cash flow to increase and capital outlays to return to 
levels experienced in the early 1990's.  As a result, the 
need for external financing and rate relief should become 
less frequent.  Therefore, more so than in recent years, 
management's ongoing efforts to grow unit sales and control 
operating cost will benefit the customer by reducing the 
frequency of rate increases and will benefit shareholders by 
positively affecting earnings. 

     On November 20, 1995, Elizabethtown filed a petition 
with the BPU for an increase in rates of $31.6 million, or 
29.6%.  The largest portion of the request, $22.9 million, 
is needed to cover the costs to finance and operate the 
Plant.  The remainder of the rate increase, $8.7 million, is 
needed to cover the cost to finance additional construction 
projects and to cover increases in operating expenses since 
rates were last established in February 1995.  A decision by 
the BPU is expected in the summer of 1996.  In light of the 
approval by the BPU of the 1993 Plant Stipulation and 
Elizabethtown's experience in obtaining base rate relief, 
Elizabethtown expects the BPU to grant timely and adequate 
rate relief, but cannot predict the ultimate outcome of any 
rate proceeding. 

     In January 1995, the BPU approved a stipulation (1995 
Stipulation) for Elizabethtown for a rate increase of $5.3 
million or 5.34%, effective February 1, 1995.  The 1995 
Stipulation provides for an authorized rate of return on 
common equity of 11.5%.  It also provides for recovery of 
the 1994 current service cost portion of the obligation 
accrued under Statement of Financial Accounting Standards 
No. 106, "Employer's Accounting for Postretirement Benefits 
Other Than Pensions," provided this amount is funded by the 
Company.  Elizabethtown funded $.3 million in 1995, which 
represents the 1994 current service cost allowed in the 1995 
Stipulation.  The rate increase is covering the cost to 
finance $62.0 million of construction projects since rates 
were last established in March 1993.  These projects include 
treatment, transmission and storage facilities needed to 
ensure that Elizabethtown continues to meet federal and 
state regulations on water quality and service.  The 
increase is also offsetting increased costs for power, labor 
and benefits, primarily medical.  The 1995 Stipulation also 
provides for an increase in depreciation rates resulting in 
an increase in annual depreciation expense of approximately 
$.5 million.  The 1995 Stipulation also required 
Elizabethtown to maintain a monthly average percentage of 
common equity to total capitalization of at least 45.1% for 
the 12 months ended January 31, 1996.  The Company has met 
this requirement.

     On June 26, 1995, Mount Holly petitioned the BPU for an 
increase in rates, to take place in two phases.  In the 
first phase rates would be increased by $.9 million and in 
the second phase by $2.8 million.  The first phase is 
necessary to recover costs that were not reflected in rates 
last increased in October 1986.  The second phase would 
recover the cost of the Mansfield Project as discussed 
above.  The project is currently estimated to cost $16.5 
million.  Construction is expected to begin upon final 
issuance of the water allocation diversion permit from the 
NJDEP, and the project is expected to be completed in 1997.

     On January 24, 1996, the BPU approved a stipulation 
(Mount Holly Stipulation) for an increase in rates of 
$.6 million effective as of that date.  The Mount Holly 
Stipulation has, effectively, concluded the first phase of 
the rate proceeding.  Mount Holly is continuing with the 
adjudicatory process with respect to the second phase of the 
petition.  While management believes that the water supply, 
treatment and transmission project planned for Mount Holly 
is the most cost-effective response to the state legislation 
affecting the area, management cannot predict the ultimate 
outcome of the rate proceeding at this time.

E'town 

    In 1995, the Corporation entered into a three-year joint 
venture agreement with Applied Wastewater General 
Partnership (AWG) to form a New Jersey limited liability 
company, Applied Watershed Management, L.L.C. (AWM).  AWG is 
a unit of several privately held and affiliated companies 
providing design, engineering, construction and operating 
services for water and wastewater facilities in the western 
portion of Elizabethtown's service area.  AWM intends to 
design, finance, engineer, construct, own, operat-e and/or 
sell water and wastewater facilities for municipal and 
corporate clients, primarily in New Jersey.  E'town has 
agreed to provide capital contributions to AWM of up to $.5 
million to finance AWM's working capital needs.  E'town may 
provide additional financing for particular projects of AWM.  
AWG will provide the substantial portion of the 
operations-related services required to be performed by AWM.  
Either party may terminate the agreement at any time.  

    Included in Non-utility Property and Other Investments 
at December 31, 1995 is an investment of $1.4 million ($.3 
million net of related deferred taxes), in a limited 
partnership that owns SEGS, located in California.  

     The Internal Revenue Service (Service) has concluded an 
examination of the Corporation's federal income tax returns 
for the tax years 1987 through 1992.  The Service had raised 
issues related to tax deductions taken initially in 1988 for 
certain land transactions.  In February 1995, the 
Corporation reached a tentative agreement to settle this 
matter with the Service.  This settlement resulted in a 
charge to net income for the year ended December 31, 1994 of 
approximately $.3 million or $.05 per common share.  An 
additional charge of $.2 million or $.02 per common share 
has been recognized in 1995 for the final assessment.  In 
addition, in 1995 the Corporation received tax refunds and 
interest related to 1984 and 1985 that contributed to an 
increase in net income of approximately $.2 million or $.03 
per common share. 

Properties 

    Also included in Non-utility Property and Other 
Investments in the Consolidated Balance Sheets of E'town at 
December 31, 1995 is $12.1 million of investments in various 
parcels of undeveloped land in New Jersey.  The carrying 
value of each parcel includes the original cost plus any 
real estate taxes, interest and, where applicable, direct 
costs capitalized while rezoning or governmental approvals 
are or were being sought.  Based upon independent appraisals 
received at various times prior to and during- 1995, the 
estimated net realizable value of each property exceeds its 
respective carrying value as of December 31, 1995. 

    Properties continues to seek permits for its Mansfield 
property and, accordingly, continues to capitalize various 
carrying charges.  During the second quarter of 1993, the 
carrying value of the Mansfield property exceeded its 
estimated net realizable value.  This is due to the fact 
that the Mansfield property is not yet ready for its 
intended use and, therefore, various carrying charges 
continue to be capitalized while based upon prior 
appraisals, the estimated net realizable value of the 
property had remained constant.  Charges of $.4 million, $.4 
million and $.2 million for 1995, 1994 and 1993, 
respectively, to adjust the ca-rrying value of the Mansfield 
property, have been reflected in the Statements of 
Consolidated Income and Consolidated Balance Sheets.  
Properties expects to continue capitalizing carrying charges 
on the Mansfield property until it is ready for its intended 
use.  In October 1995, Properties obtained more favorable 
zoning treatment for the Mansfield property.  As a result of 
the rezoning, a recent appraisal has revealed that the 
market value of the property has increased to the extent 
that, barring any significant changes in the circumstances 
surrounding this property, no further adjustments to the 
carrying value are presently expected.

     The Corporation will continue to monitor the 
relationship between the carrying and net realizable values 
of its properties through updated appraisals and of its 
investment in SEGS based upon information provided by SEGS 
management and through cash flow analyses. 

     Properties has entered into an agreement to sell a 
parcel of land to a developer.  The agreement requires the 
buyer to obtain all approvals required by governmental 
agencies in order to develop the property.  Properties may 
cancel the agreement if the closing does not occur by 
December 31, 1996.  Other events have been established 
during this period, at which time either the buyer or 
Properties may cancel the agreement if certain criteria, 
generally relating to the development potential of the 
property, are not met. 

New Accounting Pronouncements

     See Note 2 of the Notes to Consolidated Financial 
Statements for a discussion of two new accounting standards 
that will become effective in 1996. 

                






E'town Corporation and Subsidiaries

Statements of Consolidated Income
                                              Year Ended December 31,

                                     ________________________________________
                                         1995          1994          1993

                                      ____________ _____________  ____________

Operating Revenues                    $108,398,105  $102,032,505  $ 99,996,120

                                      ____________  ____________  ____________

Operating Expenses:
  Operation                             44,148,007    41,373,842    39,280,920
  Maintenance                            5,805,511     6,623,772     5,716,157
  Depreciation                           8,808,169     7,860,180     7,285,309
  Revenue taxes                         13,591,212    12,748,161    12,501,804
  Real estate, payroll and other taxes   2,853,169     2,786,746     2,706,447
  Federal income taxes (Note 3)          7,611,389     6,768,887     7,170,406

                                      ____________  ____________  ____________
        Total operating expenses        82,817,457    78,161,588    74,661,043

                                      ____________  ____________  ____________

Operating Income                        25,580,648    23,870,917    25,335,077

                                      ____________  ____________  ____________

Other Income:
  Litigation settlement (Note 13)                       (932,203)
  Gain on sale of land                                               1,685,521
  Allowance for equity funds used
   during construction (Note 2)          2,976,290     1,178,133       445,339
  Write-down of non-utility property
   and other investments (Note 7)         (350,319)     (481,754)     (269,315)
  Federal income taxes (Note 3)         (1,141,771)     (138,970)     (790,320)
  Other--net                               741,397       632,878       396,515

                                      ____________  ____________  ____________
        Total other income               2,225,597       258,084     1,467,740

                                      ____________  ____________  ____________


Total Operating and Other Income        27,806,245    24,129,001    26,802,817

                                      ____________  ____________  ____________

Interest Charges:
  Interest on long-term debt            11,696,183    11,610,777    12,374,224
  Other interest expense--net            2,389,684       470,038        95,848
  Capitalized interest (Note 2)         (2,746,128)   (1,247,666)     (805,882)
  Amortization of debt discount--net       357,973       354,062       258,799

                                      ____________  ____________  ____________
        Total interest charges          11,697,712    11,187,211    11,922,989

                                      ____________  ____________  ____________

Income Before Preferred Stock
  Dividends of Subsidiary               16,108,533    12,941,790    14,879,828
Preferred Stock Dividends                  813,000       854,047     1,050,000

                                      ____________  ____________  ____________

Net Income                            $ 15,295,533  $ 12,087,743  $ 13,829,828

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________

Earnings Per Share of Common
 Stock (Note 2):
 Primary                              $       2.16  $       1.95  $       2.59

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________
 Fully Diluted                        $       2.14  $       1.94  $       2.54

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________
Average Number of Shares Outstanding
 for the Calculation of Earnings
 Per Share:
 Primary                                 7,095,183     6,210,409     5,337,939

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________






 Fully Diluted                           7,393,796     6,519,352     5,651,808

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________
Dividends Paid Per Common Share       $       2.04  $       2.04  $       2.01

                                      ____________  ____________  ____________

                                      ____________  ____________  ____________

See Notes to Consolidated Financial Statements.








E'town Corporation and Subsidiaries

Consolidated Balance Sheets

                                                             December 31,

                                                    ___________________________
Assets                                                  1995           1994

                                                    ____________   ____________

Utility Plant--At Original Cost:
  Utility plant in service                          $502,572,255   $469,172,575
  Construction work in progress                      100,212,636     55,739,951

                                                    ____________   ____________
       Total utility plant                           602,784,891    524,912,526
 Less accumulated depreciation and amortization       94,926,413     87,456,550

                                                    ____________   ____________
       Utility plant--net                            507,858,478    437,455,976

                                                    ____________   ____________



Non-utility Property and Other Investments (Note 7)   13,601,191     13,468,879

                                                    ____________   ____________



Current Assets:
  Cash and cash equivalents                            4,925,400      4,254,708
  Short-term investments                                  30,622         30,622
  Customer and other accounts receivable
   (less reserve: 1995, $532,000; 1994, $463,000)     15,984,043     12,346,871
  Unbilled revenues                                    7,443,656      7,161,483
  Materials and supplies--at average cost              1,912,015      1,724,969
  Prepaid insurance, taxes, other                      1,874,338      1,410,401
  Prepaid federal income taxes                                          711,860

                                                    ____________   ____________
       Total current assets                           32,170,074     27,640,914

                                                    ____________   ____________



Deferred Charges (Note 9):
  Prepaid pension expense (Note 12)                      512,691        871,181
  Waste residual management                              970,182        325,785
  Unamortized debt and preferred stock expenses        9,938,130      9,490,208
  Taxes recoverable through future rates (Note 3)     26,427,627     26,339,057
  Postretirement benefit expense (Note 12)             2,900,569      2,077,051
  Purchased water under recovery-net                      37,316        314,128
  Other unamortized expenses                             739,857        997,286

                                                    ____________   ____________
       Total deferred charges                         41,526,372     40,414,696

                                                    ____________   ____________
           Total                                    $595,156,115   $518,980,465

                                                    ____________   ____________

                                                    ____________   ____________


See Notes to Consolidated Financial Statements.











                                                             December 31,

                                                    ____________________________
Capitalization and Liabilities                          1995           1994

                                                    ____________   ____________

Capitalization (Notes 4 and 5):
  Common shareholders' equity                       $177,080,580   $152,970,602
  Cumulative preferred stock                          12,000,000     12,000,000
  Long-term debt--net                                193,673,528    154,073,430









                                                    ____________   ____________
       Total capitalization                          382,754,108    319,044,032

                                                    ____________   ____________



Current Liabilities:
  Notes payable--banks (Note 6)                       27,000,000     23,000,000
  Long-term debt--current portion (Note 4)                30,000         42,000
  Accounts payable and other liabilities              16,826,104     18,249,580
  Customers' deposits                                    305,349        278,895
  Municipal and state taxes accrued                   13,661,620     12,831,524
  Federal income taxes accrued (Note 3)                  150,735
  Interest accrued                                     3,268,134      3,173,468
  Preferred stock dividends accrued                       59,000         59,000

                                                    ____________   ____________
       Total current liabilities                      61,300,942     57,634,467

                                                    ____________   ____________



Deferred Credits:
  Customer advances for construction                  45,460,749     45,554,476
  Federal income taxes (Note 3)                       66,825,738     62,115,801
  State income taxes (Note 3)                            173,365        162,008
  Unamortized investment tax credits                   8,448,811      8,650,537
  Accumulated postretirement benefits (Note 12)        2,939,217      2,100,628

                                                    ____________   ____________
       Total deferred credits                        123,847,880    118,583,450

                                                    ____________   ____________



Contributions in Aid of Construction                  27,253,185     23,718,516

                                                    ____________   ____________

Commitments and Contingent Liabilities (Note 11)

                                                    ____________   ____________
           Total                                    $595,156,115   $518,980,465

                                                    ____________   ____________

                                                    ____________   ____________

See Notes to Consolidated Financial Statements.





E'town Corporation and Subsidiaries


Statements of Consolidated Capitalization

                                                            December 31,

                                                   ____________________________
                                                       1995            1994

                                                   ____________    ____________

 E'town Corporation:
  Common Shareholders' Equity (Notes 4 and 5):
   Common stock without par value, authorized,
   15,000,000 shares; issued 1995, 7,549,078
   shares; 1994, 6,624,663 shares                 $138,667,930    $114,136,195
   Paid-in capital                                   1,315,025       1,315,025
   Capital stock expense                            (5,159,834)     (4,286,194)
   Retained earnings                                42,994,743      42,439,552
   Less cost of treasury stock; 1995, 25,876
    shares; 1994, 22,032 shares                       (737,284)       (633,976)

                                                  ____________    ____________
     Total common shareholders' equity             177,080,580     152,970,602

                                                  ____________    ____________

 Elizabethtown Water Company:
  Cumulative Preferred Stock (Note 4):
   $100 par value, authorized, 200,000
    shares; $5.90 series, issued  and
    outstanding, 120,000 shares                     12,000,000      12,000,000

                                                  ____________     ___________

  Cumulative Preferred Stock:
   $25 par value, authorized, 500,000 shares;
   none issued

 Long-Term Debt (Note 4):
  E'town Corporation:
   6 3/4% Convertible Subordinated Debentures,
   due 2012                                         11,751,000      12,165,000

  Elizabethtown Water Company:
   7.20% Debentures, due 2019                       10,000,000      10,000,000
   7 1/2% Debentures, due 2020                      15,000,000      15,000,000
   6.60% Debentures, due 2021                       10,500,000      10,500,000
   6.70% Debentures, due 2021                       15,000,000      15,000,000
   8 3/4% Debentures, due 2021                      27,500,000      27,500,000
   8% Debentures, due 2022                          15,000,000      15,000,000
   7 1/4% Debentures, due 2028                      50,000,000      50,000,000
   5.60% Debentures, due 2025                       40,000,000

  The Mount Holly Water Company:
   Notes Payable (due serially through 2000)           117,500         144,300

                                                  ____________    ____________
    Total long-term debt                           194,868,500     155,309,300
    Unamortized discount--net                       (1,194,972)     (1,235,870)

                                                  ____________    ____________
    Total long-term debt--net                      193,673,528     154,073,430

                                                  ____________    ____________
          Total capitalization                    $382,754,108    $319,044,032

                                                  ____________    ____________

                                                  ____________    ____________


See Notes to Consolidated Financial Statements.





E'town Corporation and Subsidiaries

Statements of Consolidated Shareholders' Equity


                                               Year Ended December 31,

                                       _______________________________________
                                          1995          1994          1993

                                       ____________   ___________   ___________

Common Stock:
 Balance at Beginning of Year          $114,136,195  $ 87,842,657  $ 64,261,763
 Public sale of common stock (1995,
   660,000 shares; 1994, 690,000
   shares; 1993, 575,000 shares)         17,737,500    19,147,500    17,465,625
 Common stock issued under Dividend
   Reinvestment and Stock Purchase
   Plan (1995, 248,846 shares; 1994,
   273,159 shares; 1993, 200,878 shares)  6,388,716     7,146,038     6,009,298
 Exercise of stock options (1995,
   15,569 shares; 1993, 4,050 shares)       405,519                     105,971

                                       ____________  ____________  ____________
 Balance at End of Year                 138,667,930   114,136,195    87,842,657

                                       ____________  ____________  ____________

Paid-in Capital:                          1,315,025     1,315,025     1,315,025

                                       ____________  ____________  ____________

Capital Stock Expense:
 Balance at Beginning of Year            (4,286,194)   (3,357,165)   (2,479,987)
 Expenses incurred for the issuance
  and sale of common stock                 (873,640)     (929,029)     (877,178)

                                       ____________  ____________  ____________
 Balance at End of Year                  (5,159,834)   (4,286,194)   (3,357,165)

                                       ____________  ____________  ____________

Retained Earnings:
 Balance at Beginning of Year            42,439,552    43,207,666    40,228,199
 Net income                              15,295,533    12,087,743    13,829,828
 Dividends on Common Stock (1995 and
  1994, $2.04, 1993, $2.01)             (14,740,342)  (12,855,857)  (10,850,361)

                                       ____________  ____________  ____________
 Balance at End of Year                  42,994,743    42,439,552    43,207,666

                                       ____________  ____________  ____________

Treasury Stock:
 Balance at Beginning of Year              (633,976)     (633,976)     (575,107)
 Cost of shares redeemed to exercise
   stock options (1995, 3,844 shares;
   1993, 1,676 shares)                     (103,308)                    (58,869)

                                       ____________  ____________  ____________
 Balance at End of Year                    (737,284)     (633,976)     (633,976)

                                       ____________  ____________  ____________

Total Common Shareholders' Equity      $177,080,580  $152,970,602  $128,374,207

                                       ____________  ____________  ____________

                                       ____________  ____________  ____________



See Notes to Consolidated Financial Statements.




<TABLE>
E'town Corporation and Subsidiaries

Statements of Consolidated Cash Flows
                                                                Year Ended December 31,
                                                        -------------------------------------
<CAPTION>                                                        
                                                           1995          1994          1993

                                                        ___________   ___________   ___________
<S>                                                   <C>           <C>           <C>
Cash Flows from Operating Activities:
  Net Income                                          $ 15,295,533  $ 12,087,743  $ 13,829,828
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Depreciation                                         8,808,169     7,860,180     7,285,309
    Write-down of non-utility property
     and other investments                                 350,319       481,754       269,315
    Gain on sale of land                                                            (1,685,521)
    Decrease (increase) in deferred charges                248,334      (159,348)      271,191
    Deferred income taxes and investment
     tax credits--net                                    4,430,998     3,865,417     3,274,054
    Capitalized interest and AFUDC                      (5,722,418)   (2,425,799)   (1,251,221)
    Other operating activities--net                         16,327        19,833      (390,231)
  Change in current assets and current
   liabilities excluding cash, short-term
   investments and current portion of debt:
    Customer and other accounts receivable              (3,637,172)     (315,457)     (998,517)
    Unbilled revenues                                     (282,173)       86,839      (688,601)
    Accounts payable and other liabilities              (1,397,022)    8,576,745       662,837
    Accrued/prepaid interest and taxes                   1,323,420    (1,082,193)    1,283,955
    Other                                                 (187,046)     (101,267)       (6,870)

                                                      ____________  ____________  ____________
      Net cash provided by operating activities         19,247,269    28,894,447    21,855,528

                                                      ____________  ____________  ____________

Cash Flows Provided by Financing Activities:
  Decrease in funds held by Trustee for
   construction expenditures                                             382,306     8,519,877
  Proceeds from issuance of debentures                  40,000,000                  50,000,000
  Proceeds from issuance of common stock                23,554,787    25,364,509    22,644,847
  Proceeds from issuance of preferred stock                           12,000,000
  Redemption of preferred stock                                      (12,000,000)
  Debt and preferred stock issuance costs                 (447,922)     (842,178)   (3,105,156)
  Repayment of long-term debt                             (452,800)     (374,000)  (50,245,000)
  Contributions and advances for construction--net       3,440,942     3,453,604     1,909,905
  Net increase (decrease) in notes payable--banks        4,000,000    23,000,000    (6,500,000)
  Dividends paid on common stock                       (14,740,342)  (12,855,857)  (10,850,361)

                                                      ____________  ____________  ____________
      Net cash provided by financing activities         55,354,665    38,128,384    12,374,112

                                                      ____________  ____________  ____________

Cash Flows Used for Investing Activities:
  Utility plant expenditures (excluding AFUDC)         (73,789,288)  (69,980,619)  (32,516,755)
  Development costs of land (excluding
   capitalized interest)                                  (141,954)     (163,976)     (194,842)
  Proceeds from sale of land                                                         3,450,000

                                                      ____________  ____________  ____________
      Cash used for investing activities               (73,931,242)  (70,144,595)  (29,261,597)

                                                      ____________  ____________  ____________

Net Increase (Decrease) in Cash and Cash Equivalents       670,692    (3,121,764)    4,968,043
Cash and Cash Equivalents at Beginning of Year           4,254,708     7,376,472     2,408,429

                                                      ____________  ____________  ____________
Cash and Cash Equivalents at End of Year              $  4,925,400  $  4,254,708  $  7,376,472

                                                      ____________  ____________  ____________

                                                      ____________  ____________  ____________

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for:
   Interest (net of amount capitalized)               $  8,350,882 $  10,416,716  $ 12,296,508
   Income taxes                                          4,746,176     6,771,254     5,881,008
   Preferred stock dividends of subsidiary            $    708,000 $     805,475  $  1,050,000
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
                  E'TOWN CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1.  ORGANIZATION
     E'town Corporation (E'town or Corporation), a New Jersey holding 
     company, is the parent company of Elizabethtown Water Company 
     (Elizabethtown or Company) and E'town Properties, Inc. (Properties).  
     The Mount Holly Water Company (Mount Holly) is a wholly owned 
     subsidiary of Elizabethtown.  
  
 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Basis of Presentation
     The consolidated financial statements include E'town and its 
     subsidiaries.  Significant intercompany accounts and transactions have 
     been eliminated.  Elizabethtown and Mount Holly are regulated water 
     utilities and follow the Uniform System of Accounts, as adopted by the 
     New Jersey Board of Public Utilities (BPU).

     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.

     Utility Plant and Depreciation
     Income is charged with the cost of labor, materials and other expenses 
     incurred in making repairs and minor replacements and in maintaining 
     the properties.  Utility plant accounts are charged with the cost of 
     improvements and major replacements of property.  When depreciable 
     property is retired or otherwise disposed of, the cost thereof, plus 
     the cost of removal net of salvage, is charged to accumulated 
     depreciation.  Depreciation generally is computed on a straight-line 
     basis at functional rates for various classes of assets.  The 
     provision for depreciation, as a percentage of average depreciable 
     property, was 1.83% for 1995, 1.75% for 1994 and 1.74% for 1993.  The 
     1995 rate case (see Note 10) allowed an increase in depreciation rates 
     effective February 1, 1995.

     Allowance for Funds Used During Construction
     Elizabethtown capitalizes, as an appropriate cost of utility plant, an 
     Allowance for Funds Used During Construction (AFUDC), which represents 
     the cost of financing major projects during construction.  AFUDC, a 
     non-cash credit on the Statements of Consolidated Income, is added to 
     the construction cost of the project and included in rate base and 
     then recovered in rates during the project's useful life.  AFUDC is 
     comprised of a debt component (credited to Interest Charges), and an 
     equity component (credited to Other Income) in the Statements of 
     Consolidated Income.  AFUDC totaled $5,421,383, $2,045,234 and 
     $837,234 for 1995, 1994 and 1993, respectively (see Note 10).

     Non-utility Property
     Properties capitalizes direct costs, real estate taxes and interest 
     costs associated with real estate parcels that are being developed.  
     These costs are expensed on parcels ready for their intended use.  The 
     amount of interest capitalized for 1995, 1994 and 1993 totaled 
     $301,035, $380,566 and $413,987, respectively (see Note 7). 

     Revenues
     Revenues are recorded based on the amounts of water delivered to 
     customers through the end of each accounting period.  This includes an 
     accrual for unbilled revenues for water delivered from the time meters 
     were last read to the end of the respective accounting periods.

     Federal Income Taxes
     E'town files a consolidated federal tax return.  Deferred income taxes 
     are provided for temporary differences between the bases of assets and 
     liabilities for tax and financial statement purposes for E'town and 
     Properties.  Deferred income taxes are also provided for each 
     regulated water utility to the extent permitted by the BPU.

     The regulated water utilities account for prior years' investment tax 
     credits by the deferral method, which amortizes the credits over the 
     lives of the respective assets.  The non-regulated companies utilize 
     the flow-through method to account for investment tax credits.  This 
     method treats the credits as a reduction of federal income taxes in 
     the year the credits arise.  

     Customer Advances for Construction and Contributions in Aid of 
     Construction
     Customer Advances for Construction and Contributions in Aid of 
     Construction represent capital provided by developers for main 
     extensions to new real estate developments.  Some portion of Customer 
     Advances for Construction is refunded based upon the revenues that the 
     new developments generate.  Contributions in Aid of Construction are 
     Customer Advances for Construction that, under the terms of individual 
     main extension agreements, are no longer subject to refund.

     Short-term Investments
     Short-term investments are stated at cost, which approximates market 
     value.

     Earnings Per Share of Common Stock
     Primary earnings per share are computed on the basis of the weighted 
     average number of shares outstanding, plus common stock equivalents, 
     assuming all stock options are exercised.  Fully diluted earnings per 
     share assumes both the conversion of the 6 3/4% Convertible 
     Subordinated Debentures and the common stock equivalents referred to 
     above.

     Cash Equivalents
     The Corporation considers all highly liquid debt instruments purchased 
     with maturities of three months or less to be cash equivalents.

     New Accounting Pronouncements
     In March 1995, the Financial Accounting Standards Board issued 
     Statement of Financial Accounting Standards (SFAS) 121, "Accounting 
     for the Impairment of Long-Lived Assets and for Long-Lived Assets to 
     Be Disposed of," which is effective in 1996.  The statement requires 
     that long-lived assets be reviewed for impairment whenever events or 
     changes in circumstances indicate that the carrying amount of an asset 
     may not be recoverable.  The resultant impairment, if any, would be 
     measured based on the fair value of the asset.  The Corporation 
     believes that the adoption of SFAS 121 will not have any effect on the 
     Corporation's results of operations or financial position.
<PAGE>
     SFAS 123 "Accounting for Stock-Based Compensation" which will be 
     adopted by the Corporation in 1996, includes certain elective 
     provisions which, if followed, would require the Corporation to record 
     compensation for awards made under the E'town Corporation 1987 Stock 
     Option Plan (Stock Option Plan).  The Corporation has elected to 
     continue to account for its Stock Option Plan using the method 
     prescribed by Accounting Principles Board Opinion No. 25, "Accounting 
     for Stock Issued to Employees."  SFAS 123 will not have any effect on 
     the results of operations but will require expanded disclosure 
     regarding the Corporation's Stock Option Plan.

     Reclassification
     Certain prior year amounts have been reclassified to conform to the 
     current year's presentation.

<PAGE>
3.   FEDERAL INCOME TAXES
     The computation of federal income taxes and the reconciliation of the 
     tax provision computed at the federal statutory rate (35%) with the 
     amount reported in the Statements of Consolidated Income follow: 
                                                    1995     1994     1993   
                                                  ------------------------
                                                    (Thousands of Dollars) 
                                                                         
     Tax expense at statutory rate ........        $8,701   $6,947  $7,994      
    
     Items for which deferred taxes 

      are not provided:

       Capitalized interest ...............                    (2)      (2)    

       Difference between book and tax     

         depreciation .....................           133       92      81 

       Investment tax credits..............          (204)    (209)   (208)    

       Other...............................           123       80      96
                                                   -----------------------
     Provision for federal income taxes....        $8,753   $6,908  $7,961 
                                                   =======================  
     The provision for federal income taxes 

      is composed of the following:     

     Current ..............................        $6,068   $4,983  $6,180    

     Tax collected on main extensions .....        (1,734)  (1,931) (1,341)    

     Deferred:

       Tax depreciation....................         3,447    3,324   3,183     

       Capitalized interest................           905      517     217   

       Main cleaning and lining............           405      396     323

       Other...............................          (136)    (179)   (407)   

     Investment tax credits--net...........          (202)    (202)   (194)
                                                   -----------------------
     Total provision ......................        $8,753   $6,908  $7,961
                                                   =======================


Effective January 1, 1993, the Company adopted SFAS 109, 
"Accounting for Income Taxes."  SFAS 109 established 
accounting rules that changed the manner in which income tax 
expense is determined for accounting purposes.  SFAS 109 
utilizes a liability method under which deferred taxes are 
provided at the enacted statutory rate for all temporary 
differences between financial statement earnings amounts
and the tax basis of existing assets or liabilities. 

In addition, the adoption of SFAS 109 resulted in a credit 
to Federal Income Taxes of $63,271 and a charge to Real 
Estate, Payroll and Other Taxes of $141,068 in 1993 to 
record the changes in deferred income taxes payable by the 
non-regulated companies.

In connection with the adoption of SFAS 109, Elizabethtown 
and Mount Holly recorded additional deferred taxes for water 
utility temporary differences not previously recognized.  
The increased deferred tax liability was offset by a 
corresponding asset representing the future revenue expected 
to be recovered through rates based on established 
regulatory practice permitting such recovery.  

In accordance with SFAS 109, deferred tax balances have been 
reflected at E'town's current consolidated federal income 
tax rate, which is 35%.  

The tax effect of significant temporary differences 
representing deferred income tax assets and liabilities as 
of December 31, 1995 and 1994 is as follows:                                   
                                                  1995        1994   
                                               ----------------------
                                               (Thousands of Dollars)

     Water utility plant--net                  $(56,956)  $(53,517)
     Non-utility property                          (955)    (1,061)
     Other investments                           (1,022)      (969)
     Taxes recoverable through future rates      (9,250)    (9,219)
     Investment tax credit                        2,957      3,028 
     Prepaid pension expense                       (166)      (301)
     Capitalized interest                        (1,308)      (508)
     Other assets                                   654        557
     Other liabilities                             (780)      (126)
                                               -------------------
     Net deferred income tax liabilities       $(66,826)  $(62,116)
                                               ===================

     The Internal Revenue Service (Service) has concluded an examination of 
     the Corporation's federal income tax returns for the tax years 1987 
     through 1992.  The Service had raised issues related to tax deductions 
     taken initially in 1988 for certain land transactions.  In February 
     1995, the Corporation reached a tentative agreement to settle this 
     matter with the Service.  This resulted in a charge to net income for 
     the year ended December 31, 1994 of $310,445 or $.05 per common share.  
     An additional charge of $168,610 or $.02 per share has been recognized 
     in 1995 based upon the final assessment.  In addition, in 1995 the 
     Corporation received tax refunds and interest related to the years 
     1984 and 1985 that contributed to an increase in net income of 
     $206,948 or $.03 per common share. 

 4.  CAPITALIZATION
     In June 1995, E'town issued 660,000 shares of common stock for net 
     proceeds of $16,863,860.  The gross proceeds of $17,737,500 were used 
     to fund equity contributions to Elizabethtown totalling $16,900,000.  
     These equity contributions have been used to repay short-term debt 
     that had been issued under Elizabethtown's revolving credit agreement 
     (see below) to partially fund the Company's capital program, the 
     predominant portion of which relates to the construction of the Canal 
     Road Water Treatment Plant (Plant) (see Note 11).

     In May 1994, E'town issued 690,000 shares of common stock for net 
     proceeds of $18,218,471.  The net proceeds were used to fund an equity 
     contribution to Elizabethtown of $16,000,000.  This contribution had 
     been used to partially fund Elizabethtown's construction program, the 
     predominant portion of which related to the Plant.  The balance of the 
     net proceeds had been used to fund working capital requirements of the 
     Corporation.

     E'town routinely makes equity contributions to Elizabethtown which 
     represent the proceeds of common stock issued under E'town's Dividend 
     Reinvestment and Stock Purchase Plan (DRP).  E'town contributed 
     $6,388,716 and $7,146,038 in 1995 and 1994, respectively, to 
     Elizabethtown from the proceeds of DRP issuances.

     In January 1991, the Board of Directors of E'town adopted a 
     Shareholders' Rights Plan (Rights Plan).  Generally, under the Rights 
     Plan, if a person or group acquires 10% or more of the Corporation's 
     common stock or announces a tender offer for the Corporation's common 
     stock, non-acquiring shareholders may, under certain circumstances, 
     exercise rights (Rights) to purchase additional shares of common stock 
     on terms that allow them to significantly increase their percentage of 
     ownership of the Corporation's common stock.  Such Rights may be 
     redeemed by the Board of Directors.

     Cumulative Preferred Stock 
     In March 1994, Elizabethtown issued 120,000 shares of $100 par value, 
     $5.90 Cumulative Preferred Stock for proceeds of $12,000,000 at an 
     effective rate of 7.37%.  The proceeds were used to redeem $12,000,000 
     of the Company's $8.75 Cumulative Preferred Stock.  The redemption 
     premium of $1,050,000 was paid from general Company funds and is being 
     amortized over 10 years for ratemaking purposes.

     The $5.90 Cumulative Preferred Stock is not redeemable at the option 
     of Elizabethtown.  Elizabethtown is required to redeem all 120,000 
     shares of the Preferred Stock on March 1, 2004 at $100 per share. 
     
     Long-term Debt
     Elizabethtown's long-term debt indentures restrict the amount of 
     retained earnings available to Elizabethtown to pay cash dividends 
     (which is the primary source of funds available to the Corporation for 
     payment of dividends on its common stock), or acquire Elizabethtown's 
     common stock, all of which is held by E'town.  At December 31, 1995,      
     $7,753,084 of Elizabethtown's retained earnings were restricted under 
     the most restrictive indenture provision.  Therefore, $35,241,659 of 
     E'town's consolidated retained earnings were unrestricted.

     In December 1995, Elizabethtown issued $40,000,000 of 5.60% tax-exempt 
     debentures through the New Jersey Economic Development Authority 
     (NJEDA). The proceeds of the issue were used to repay amounts 
     outstanding under a revolving credit agreement (see Note 6). 

     E'town's 6 3/4% Convertible Subordinated Debentures are convertible to 
     E'town common stock at $40 per share.  At December 31, 1995, 293,775 
     shares of common stock were reserved for issuance upon exercise of the 
     conversion rights. 

5.   STOCK OPTION PLAN
     E'town has a Stock Option Plan, a qualified non-compensatory 
     incentive plan under which options to purchase shares of E'town's 
     common stock have been granted to certain officers and other key 
     employees at prices not less than the fair market value at the 
     date of grant.  The plan provides that any options granted may be 
     exercised at any time up to an expiration date, not to exceed 10 
     years from the date of each grant.
     A summary of the details of stock option grants and outstanding 
     balances is presented below:
                                                                Options
      Year     Options   Option         Options               Outstanding       
     Granted   Granted   Price   Exercised or Expired   12/31/95   12/31/94  
     ----------------------------------------------------------------------
      1985     26,369   $26.17        2,250 (1991) (A)    
                                      3,300 (1992)           
                                      4,050 (1993)                      
                                     11,819 (1995)
                                      4,950 (1995) (A)      -0-         16,769

      1987     36,000   $25.67        4,050 (1989)          
                                      3,750 (1990)        
                                      3,750 (1991) 
                                      4,500 (1991) (A)      
                                     11,700 (1992)                       
                                      3,750 (1995)           
                                      4,500 (1995) (A)       -0-         8,250 

      1989      7,500   $24.67                             7,500         7,500 

      1990      7,500   $26.67                             7,500         7,500

      1995     77,000   $27.12                            77,000              
              
      ------------------------------------------------------------------------
      Total   154,369                62,369               92,000        40,019
      ======================================================================== 

      (A) Expired Options 



<PAGE>
6.   LINES OF CREDIT
     In 1994, Elizabethtown executed a committed revolving credit agreement 
     (Agreement) with an agent bank and five additional banks that replaced 
     the Company's uncommitted lines of credit.  The Agreement provides up 
     to $60,000,000 in revolving short-term financing, which together with 
     internal funds, other short-term financing, proceeds of future 
     issuances of debt and preferred stock by Elizabethtown and capital 
     contributions from E'town, is expected to be sufficient to finance 
     Elizabethtown's and Mount Holly's capital needs, which are estimated 
     to be $148,905,000 through 1998.  At December 31, 1995, Elizabethtown 
     had outstanding borrowings of $27,000,000 under the Agreement at 
     interest rates from 5.75% to 6.00%, at a weighted average rate of 
     5.94%.

     The Agreement allows Elizabethtown to borrow, repay and reborrow up to
     $60,000,000 during the first three years, after which time 
     Elizabethtown may convert any outstanding balances to a five-year, 
     fully amortizing term loan.  The Agreement further provides that, 
     among other covenants, Elizabethtown must maintain a percentage of 
     common and preferred equity to total capitalization of not less than 
     35% and a pre-tax interest coverage ratio of at least 1.5 to 1.  As of 
     December 31, 1995, the percentage of Elizabethtown's common and 
     preferred equity to total capitalization, as calculated in accordance 
     with the Agreement, was 47%.  For the 12 months ended December 31, 
     1995, Elizabethtown's pre-tax interest coverage ratio, calculated in 
     accordance with the Agreement, was 3.12 to 1.

     E'town has $30,000,000 of uncommitted lines of credit with several 
     banks in addition to the lines under the Agreement, of which 
     $17,000,000 is available to Elizabethtown.

     Information relating to bank borrowings for 1995, 1994 and 1993 is as 
     follows:
                                             1995        1994        1993
                                           -------------------------------
                                                (Thousands of Dollars)    

     Maximum amount outstanding..........  $60,000    $23,000       $8,000
     Average monthly amount outstanding..  $39,636    $ 2,958       $2,514
     Average interest rate at year end...      5.9%       6.1%          (A)
     Compensating balances at year end...     $ 0      $    0      $   195
     Weighted average interest rate based
      on average daily balances..........      6.2%       5.7%         3.8%
     (A) No outstanding bank borrowings at year end.

7.   NON-UTILITY PROPERTY AND OTHER INVESTMENTS
     Included in Non-utility Property and Other Investments at 
     December 31, 1995 is an investment of $1,358,016 ($258,991 
     net of related deferred taxes) in a limited partnership that 
     owns Solar Electric Generating System V (SEGS), located in 
     California.  

     Also included in Non-utility Property and Other Investments 
     at December 31, 1995 and 1994 is $12,141,419 and 
     $12,048,749, respectively, of investments in various parcels 
     of undeveloped land in New Jersey.  The carrying value of 
     each parcel includes the original cost plus any real estate 
     taxes, interest and, where applicable, direct costs 
     capitalized while rezoning or governmental approvals are, or 
     were, being sought.  Based upon independent appraisals 
     received at various times, prior to and during 1995, the 
     estimated net realizable value of each property exceeds its 
     respective carrying value as of December 31, 1995.

     Properties continues to seek permits for its Mansfield property and, 
     accordingly, continues to capitalize various carrying charges.  During 
     the second quarter of 1993, the carrying value of the Mansfield 
     property exceeded its estimated net realizable value.  This was due to 
     the fact that the Mansfield property was not ready for its intended 
     use and various carrying charges were being capitalized while, based 
     upon prior appraisals, the market value of the property had remained 
     constant.  Charges of $350,319, $381,754 and $183,789 for the years 
     ended December 31, 1995, 1994 and 1993, respectively, to adjust the 
     carrying value of the Mansfield property, have been reflected in the 
     Statements of Consolidated Income and Consolidated Balance Sheets.  
     Properties expects to continue capitalizing carrying charges on the 
     Mansfield property until it is ready for its intended use.  In October 
     1995, Properties obtained more favorable zoning treatment for the 
     Mansfield property.  As a result of the rezoning, a recent appraisal 
     has revealed that the market value of the property has increased to 
     the extent that, barring any significant changes in the circumstances 
     surrounding this property, further adjustments to reduce the carrying 
     value by the amount of the capitalized carrying charges are not 
     presently expected.

     The Corporation will continue to monitor the relationship between the 
     carrying and net realizable values of its properties through updated 
     appraisals and its investment in SEGS through cash flow analyses.
     
     Properties has entered into an agreement to sell a parcel of land to a 
     developer.  The agreement requires the buyer to obtain all approvals 
     required by governmental agencies in order to develop the property.  
     Properties may cancel the agreement if the closing does not occur by 
     December 31, 1996.  Other events have been established during this 
     period, at which time either the buyer or Properties may cancel the 
     agreement if certain criteria, generally relating to the development 
     potential of the property, are not met. 

8.   FINANCIAL INSTRUMENTS
     The carrying amounts and the estimated fair values, as of 
     December 31, 1995 and 1994, of financial instruments issued or held 
     by the Corporation, are as follows:

                                                1995           1994    
                                             ------------------------
                                               (Thousands of Dollars)

     Short-term investments (1):

       Carrying amount                      $     31        $     31           

       Estimated fair value                       38              34

     Cumulative preferred stock (1):         

       Carrying amount                      $ 12,000        $ 12,000           

       Estimated fair value                   11,940          10,860

     Long-term debt (1):                      

       Carrying amount                      $193,674        $154,073

       Estimated fair value                  200,710         139,910


     (1) Estimated fair values are based upon quoted market prices for 

         these or similar securities.


9.   REGULATORY ASSETS AND LIABILITIES 
     Certain costs incurred by Elizabethtown and Mount Holly which have 
     been deferred have been recognized as regulatory assets and are 
     being amortized over various periods as set forth below:

                                          1995          1994  
                                        ----------------------
                                        (Thousands of Dollars)

     Waste residual management            $    970  $      546
     Unamortized debt and 
       preferred stock expense               9,385       8,902
     Taxes recoverable through 
       future rates (Note 3)                26,428      26,339
     Postretirement benefit expense 
       (Note 12)                             2,901       2,077
     Purchased water under      
       recovery-net (Note 10)                   37         314
                                           -------------------
                    Total                  $39,721     $38,178
                                           ===================

     Waste Residual Management
     The costs of disposing of the waste generated by Elizabethtown's
     and Mount Holly's water treatment plants are being amortized
     over three-year periods for ratemaking and financial statement
     purposes. No return is being earned on these deferred balances.

     Unamortized Debt and Preferred Stock Expenses
     Costs incurred in connection with the issuance or redemption of 
     long-term debt have been deferred and are being amortized over the
     lives of respective issues for ratemaking and financial statement
     purposes.  Costs incurred in connection with the issuance and 
     redemption of preferred stock have been deferred and are being 
     amortized over a 10-year period for ratemaking and financial
     statement purposes.  

     There were no regulatory liabilities at December 31, 1995 or 1994.
     
10.  REGULATORY MATTERS 
     Rates
     Elizabethtown
     On November 20, 1995, Elizabethtown filed a petition with the BPU 
     for an increase in rates of $31,634,500 or 29.6%.  The largest portion 
     of the request, $22,925,227, is to cover the cost to finance and 
     operate the Plant (see Note 11).  The remainder of the rate request, 
     $8,709,273, is needed to cover the cost to finance additional 
     construction projects and to cover increases in operating expenses 
     since rates were last established in February 1995.  A decision by 
     the BPU is expected in the summer of 1996.  In light of the approval 
     by the BPU of the 1993 Plant Stipulation (discussed below) and 
     Elizabethtown's experience in obtaining base rate relief, 
     Elizabethtown expects the BPU to grant timely and adequate rate 
     relief, but cannot predict the ultimate outcome of any rate proceeding.
     
     In February 1996, Elizabethtown filed a petition with the BPU for a 
     decrease in rates of $390,318 under a Purchased Water Adjustment 
     Clause (PWAC).  This procedure, established by BPU rules, allows 
     Elizabethtown to reflect in rates a change in the cost of water 
     purchased from the New Jersey Water Supply Authority (NJWSA) without 
     a complete rate case.  The purpose of this request is to reflect in 
     rates the expected decrease in the rate for water purchased by 
     Elizabethtown from the NJWSA effective July 1, 1996. 
     

     In August 1993, the BPU approved a stipulation (1993 Plant Stipulation) 
     signed by the Department of Ratepayer Advocate, the BPU staff and several 
     of Elizabethtown's major wholesale customers, all of whom 
     typically participate in Elizabethtown's rate cases.  The 1993 Plant 
     Stipulation states that the Plant is necessary and that the Company's 
     estimates regarding the Plant's cost ($87,000,000 at that time) and 
     construction period are reasonable (see Note 11).  In April 1994, 
     Elizabethtown notified all parties to the 1993 Plant Stipulation that 
     the estimated cost of the Plant had increased.  The 1993 Plant 
     Stipulation authorizes the Company to levy a rate surcharge during 
     the Plant's construction period if the Company's pre-tax interest 
     coverage ratio for any 12-month historical period drops below 
     2.0 times.  The 1993 Plant Stipulation also provides that the rate of 
     return on common shareholder's equity used to calculate the rate for 
     the equity component of the AFUDC for the Plant will be 1.5% less than 
     the rate of return on common shareholder's equity established in 
     the Company's most recent base rate case.  The authorized rate of 
     return on common shareholder's equity is currently 11.5%.  
                                                  
     In January 1995, the BPU approved a stipulation (1995 Stipulation) for 
     Elizabethtown for a rate increase of $5,300,000, or 5.34%, effective 
     February 1, 1995.  The 1995 Stipulation provides for an authorized 
     rate of return on common equity of 11.5%.  It also provides for 
     recovery of the current service cost portion of the obligation 
     accrued under SFAS 106, "Employer's Accounting for Postretirement 
     Benefits Other Than Pensions," provided this amount is funded by 
     the Company (see Note 12.)  
     The rate increase is covering the cost to finance $62,000,000 of 
     construction projects that were not reflected in the rates established in 
     March 1993.  These projects include treatment, transmission and storage 
     facilities needed to ensure that Elizabethtown continues to meet federal 
     and state regulations on water quality and service.  The increase is also 
     offsetting increased costs for power, labor and benefits, primarily 
     medical. The 1995 Stipulation also provides for an increase in 
     depreciation rates resulting in an increase in depreciation expense of 
     approximately $469,000.  The 1995 Stipulation also required Elizabethtown 
     to maintain a percentage of common equity to total capitalization of 
     at least 45.1% for the 12 months ended January 31, 1996.  The Company 
     has met this requirement.  

     On July 7, 1995, the BPU approved a Stipulation for a decrease in rates 
     under a PWAC.  The Stipulation resulted in a decrease in rates for the 
     PWAC, effective July 13, 1995 of $348,527.  This Stipulation reflects the 
     decrease in rates for water purchased from the NJWSA.

     In June 1994, the BPU approved a Stipulation for an increase in rates 
     under a PWAC.  The Stipulation resulted in an increase in rates, 
     effective July 1, 1994, of $334,611, reflecting the increase in rates for 
     water purchased from the NJWSA.

     Mount Holly
     On June 26, 1995, Mount Holly petitioned the BPU for an increase in 
     rates, to take place in two phases.  In the first phase rates would be 
     increased by $851,171 and in the second phase by $2,794,002.  The first 
     phase is necessary to cover costs that were not reflected in rates last 
     increased in October 1986.  The second phase would cover the cost of a 
     new water supply, treatment and transmission system necessary to obtain 
     water outside a designated portion of an aquifer currently used by Mount 
     Holly and to treat and pump the water into the Mount Holly distribution 
     system.  Management believes this project is the most cost-effective  
     alternative available to Mount Holly to comply with recent state 
     legislation which restricts the amount of water that can be withdrawn 
     from an aquifer in certain areas of southern New Jersey.  The project is 
     currently estimated to cost $16,500,000.  The land for the supply and 
     treatment facilities has been purchased and wells have been drilled 
     and can produce the required supply.  On October 5, 1995, the New Jersey 
     Department of Environmental Protection granted Mount Holly a water 
     allocation diversion permit for four wells that are to be the water 
     supply for the Mansfield Project. On October 20, 1995, New 
     Jersey-American Water Company requested, and was subsequently granted, 
     an adjudicatory hearing on the permit.  The Company and Mount Holly 
     believe that the permit in question will be upheld, but cannot 
     predict the outcome of the objection. In the event that the 
     objection is successful and the permit is rescinded, Mount Holly 
     would utilize the alternative plan of purchasing water from New 
     Jersey-American Water Company.

     On January 24, 1996, the BPU approved a stipulation (Mount Holly 
     Stipulation) for an increase in rates of $550,000, effective as of 
     that date.  The Mount Holly Stipulation has, effectively, concluded
     the first phase of the rate proceeding.  Mount Holly is continuing with 
     the process with respect to the second phase of the petition.  While 
     management believes that the water supply, treatment and transmission 
     system planned for Mount Holly is the most cost-effective response to the 
     state legislation affecting the area, we cannot predict the ultimate 
     outcome of the rate proceeding at this time.

     Main Extension Refunds
     Previous disclosures have detailed events surrounding several lawsuits 
     filed by developers with respect to the BPU's suggested refund formula 
     for particular main extension agreements.  The BPU's formula suggests 
     refunds of 2 1/2 times annual revenues for each metered connection for 
     water service.  The plaintiffs had received refunds in accordance with 
     this suggested formula.  The initial petitions by the developers and the 
     related litigation have been ongoing since 1984 with numerous BPU 
     decisions, Appellate Division decisions and a New Jersey Supreme Court 
     decision.

     In June 1995, the New Jersey Supreme Court once again reviewed these 
     matters and declined to hear the final appeal of the developers.  
     
     Effectively, the BPU's suggested refund formula has been reaffirmed and 
     therefore no refunds in excess of the 2 1/2 times revenues formula are 
     required by the Company.  Based upon the New Jersey Supreme Court's 
     decision, the plaintiffs have withdrawn their suits.

11.  COMMITMENTS
   Elizabethtown is obligated, under a contract that expires in 2013, 
   to purchase from the NJWSA a minimum of 37 billion gallons of water 
   annually.  The Company purchases additional water from the NJWSA on 
   an as-needed basis.  Effective July 1, 1996, the annual cost under 
   the contract will be $7,861,486.  The total cost of water purchased 
   from the NJWSA, including additional water purchased on an 
   as-needed basis, was $9,344,792, $8,987,472 and $8,819,212 for 
   1995, 1994 and 1993, respectively.    

   The following is a schedule by years of future minimum rental 
   payments required under noncancelable operating leases with terms 
   in excess of one year at:
                                        December 31,        
                                   ----------------------
                                   (Thousands of Dollars)

                        1996                $  909 

                        1997                   859

                        1998                    12

                        1999                   -0-                             

                        2000                   -0-
                                            ------
                        Total               $1,780
                                            ======

     Rent expense totaled $820,481, $829,562 and $789,636 for 1995, 1994 
     and 1993, respectively.

     Capital expenditures through 1998 are estimated to be $149,781,000 of 
     which $148,905,000 is for Elizabethtown's and Mount Holly's utility plant
     and $876,000 is for non-utility expenditures. 

     Canal Road Water Treatment Plant                                  
     In April 1994, following a competitive bidding process, Elizabethtown 
     executed a lump-sum contract for the construction of the Canal Road 
     Water Treatment Plant.  The project is currently estimated to cost 
     $100,000,000, excluding AFUDC.   The project is being completed on 
     schedule and the construction contract is on budget.  The Company 
     has expended $82,952,434, excluding AFUDC of $7,167,396, on the Plant 
     as of December 31, 1995.  Construction is expected to be completed 
     in the third quarter of 1996.

     Joint Venture
     In March 1995, the Corporation entered into a three-year joint 
     venture agreement with Applied Wastewater General Partnership 
     (AWG) to form a New Jersey limited liability company, Applied 
     Watershed Management, L.L.C. (AWM).  AWG is a unit of several  
     privately held and affiliated companies providing design,  
     engineering, construction and operating services for water 
     and wastewater facilities in the western portion of Elizabethtown's
     service area.  AWM intends to design, finance, engineer, 
     construct, own, operate and/or sell water and wastewater 
     facilities for municipal and corporate clients, primarily in New 
     Jersey.  E'town has agreed to provide capital contributions to 
     AWM of up to $500,000 to finance AWM's working capital needs.  
     AWG shall provide the substantial portion of the operations-related 
     services required to be performed by AWM.  Either party may terminate
      the agreement at any time.  

12.  PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
     Elizabethtown has a trusteed, noncontributory Retirement Plan (Plan), 
     which covers most employees.  Under the Company's funding policy, the 
     Corporation makes contributions that meet the minimum funding 
     requirements of the Employee Retirement Income Security Act of 1974.  
     The components of the net pension costs (credits) are as follows:

                                                     1995      1994     1993   
                                                   -------------------------
                                                      (Thousands of Dollars)
 Service cost--benefits earned during the year ..  $  929   $1,068   $   913
 Interest cost on projected benefit obligation ..   2,170    1,960     1,986
 Return on Plan assets ..........................  (7,630)     944    (1,417)
 Net amortization and deferral ..................   4,890   (3,881)   (1,666)
                                                   -------------------------
 Net pension costs (credits) ....................  $  359   $   91   $  (184)
                                                   ========================= 

       
                                   
        Plan assets are invested in publicly traded debt and equity securities.
        The reconciliations of the funded status of the Plan to the amounts 
        recognized in the Consolidated Balance Sheets are presented below:
 
                                                            1995     1994     
                                                        ----------------------
                                                        (Thousands of Dollars)

     Market value of Plan assets .....................     $37,171  $30,981    
                                                           ----------------
     Actuarial present value of Plan benefits:

     Vested benefits ...............................        26,115   20,864

     Non-vested benefits ...........................           101      158
                                                           ----------------
     Accumulated benefit obligation ................        26,216   21,022

     Projected increases in compensation levels ....         8,005    5,733
                                                           ----------------
     Projected benefit obligation ....................      34,221   26,755
                                                           ----------------
     Excess of Plan assets over projected benefit 

      obligation .....................................       2,950    4,226

     Unrecognized net gain ...........................        (636)  (1,374)

     Unrecognized prior service cost .................         365      453

     Unrecognized transition asset ...................      (2,166)  (2,434) 
                                                           ----------------
     Prepaid pension expense..........................     $   513  $   871    
                                                           ================  

     The assumed rates used in determining the actuarial present value of the 
     projected benefit obligations were as follows:
                                              1995       1994       1993   
                                            -----------------------------
     Discount rate ......................     7.00%     8.00%      7.00%

     Compensation increase ..............     5.50%     5.50%      5.50%

     Rate of return on Plan assets ......     9.00%     8.50%      8.50% 

     
 The Corporation provides certain health care and life insurance benefits for 
 substantially all of its retired employees. As a result of a contract 
 negotiated in February 1996 with the Company's bargaining unit, all union 
 and non-union employees retiring after January 1, 1997 will pay 25% of 
 future increases in the premiums the Company pays for postretirement medical
 benefits.
 
 Effective January 1, 1993, the Corporation adopted SFAS 106.  Under SFAS 
 106, the costs of postretirement benefits are accrued for each year the 
 employee renders service, based on the expected cost of providing such 
 benefits to the employee and the employee's beneficiaries and covered 
 dependents, rather than expensing these benefits on a pay-as-you-go basis 
 for retired employees.

 Based upon an independent actuarial study, the transition obligation, 
 calculated under SFAS 106, was $7,255,745 as of January 1, 1993.  The 
 transition obligation is being amortized over 20 years.  The following table 
 details the postretirement benefit obligation at December 31:
                                                   1995       1994  
                                               ----------------------
                                               (Thousands of Dollars)

     Retirees                                     $2,404     $2,457

     Fully eligible plan participants              6,366      5,134      
                                                  -----------------
     Accumulated postretirement benefit 
       obligation                                  8,770      7,591
    
     Plan assets at fair value                      (320)      0
     
     Unrecognized net gain                           656      1,040 

     Unrecognized transition obligation           (6,167)    (6,530)
                                                  -----------------
     Accrued postretirement benefit     
        obligation                                $2,939     $2,101             
                                                  =================


                                                                   
 The assumed health care cost trend rate used in measuring the accumulated 
 postretirement benefit obligation as of December 31, 1995, and for 1995, was 
 12%.  This rate decreases linearly each successive year until it reaches 5% 
 in 2005, after which the rate remains constant.  The assumed rates used 
 in determining the actuarial present value of the projected benefit 
 obligations were as follows:
                                        1995      1994      1993 
                                       --------------------------
     Discount rate                      7.00%     8.00%     7.00%

     A single percentage point increase in the assumed health care cost trend 
     rate for each year would increase the accumulated postretirement benefit 
     obligation as of December 31, 1995, and net postretirement service and 
     interest cost by approximately $1,260,890 and $247,753, respectively. 

     Based upon the independent actuarial study referred to above, the annual 
     postretirement cost calculated under SFAS 106 is as follows:
                                              1995         1994       1993  
                                            ---------------------------------
                                                 (Thousands of Dollars)
  Service cost - benefits earned 
    during the year                         $  480       $  376       $   254

  Interest cost on accumulated
    postretirement benefit obligation          585          596           605

  Amortization of transition obligation        363          363           363  
                                            ---------------------------------
    Total                                    1,428        1,335         1,222

  Deferred amount for regulated
    companies pending recovery                (824)      (1,072)       (1,005)
                                            ---------------------------------
  Net postretirement benefit expense        $  604       $  263       $   217
                                            ================================= 

 The rate increases allowed by the 1995 Stipulation and the Mount Holly 
 Stipulation include as an allowable expense the pay-as-you-go portion of 
 postretirement benefits as well as the current service cost, and require 
 that the current service cost be funded.  Elizabethtown funded $318,222 in 
 1995.  These stipulations allow Elizabethtown and Mount Holly to defer the 
 amount accrued in excess of these amounts for consideration in future rate 
 cases.  Generally accepted accounting principles permit this regulatory 
 treatment, provided deferrals are not accumulated for a period of more than 
 five years.  As of December 31, 1995, the amount that has been deferred is 
 $2,900,569.  

 Recovery of Elizabethtown's deferred postretirement costs has been requested 
 in Elizabethtown's recent rate case.  Management believes that Elizabethtown 
 and Mount Holly will recover the deferred postretirement costs in future 
 rates.

13. LEGAL MATTERS
    As reported in 1994, a developer asserted in a suit filed in 1991 against 
    Elizabethtown that the Company failed to install facilities necessary to 
    provide water service to a new development in a timely manner.  

    In November 1994, the Company settled this matter by paying the developer 
    $1,750,000.  As part of the settlement, the developer agreed that part of 
    this payment represented a refund of funds deposited under a main extension 
    loan agreement for the construction of the facilities.  In addition, the 
    Company applied a portion of the settlement against an insurance reserve.  
    The effect on 1994 earnings was $932,203 or $605,932 net of federal income 
    taxes.  The Company is seeking recovery from its insurance carriers.

    As previously reported, several lawsuits had been filed against 
    Elizabethtown and other parties in connection with a fire that 
    occurred in a storage facility in 1989 resulting in damage to 
    property stored at that facility.  This matter has been settled in 
    1995 resulting in a payment by Elizabethtown of $114,250.  A 
    provision for this estimated liability was previously recorded.

14.  QUARTERLY FINANCIAL DATA (Unaudited)

     A summary of financial data for each quarter of 1995 and 1994 follows:
                                                      Primary     Fully Diluted 
                  Operating   Operating      Net    Earnings Per  Earnings Per
     Quarter      Revenues     Income      Income     Share           Share    
     --------------------------------------------------------------------------
                (Thousands of Dollars Except Per Share Amounts)
                                                                               
     1995

      1st         $ 25,174     $ 5,845     $ 3,015     $ .45        $ .45

      2nd           27,101       6,458       4,175       .61          .61  

      3rd           30,451       7,873       5,151       .69          .68

      4th           25,672       5,405       2,955       .41          .40
      -------------------------------------------------------------------
      Total       $108,398     $25,581     $15,296     $2.16        $2.14
      ===================================================================

    1994     

      1st         $ 24,657     $ 5,513     $ 2,537     $ .45        $ .45

      2nd           25,208       5,807       2,965       .49          .49

      3rd           27,370       6,914       3,673       .56          .56

      4th           24,798       5,637       2,913       .45          .44 
      -------------------------------------------------------------------
      Total       $102,033     $23,871     $12,088     $1.95        $1.94
      ===================================================================

     Water utility revenues are subject to a seasonal fluctuation due to 

     normal increased consumption during the third quarter of each year. 







INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF E'TOWN CORPORATION:

     We have audited the accompanying consolidated balance sheets and 
statements of consolidated capitalization of E'town Corporation and its 
subsidiaries as of December 31, 1995 and 1994, and the related 
statements of consolidated income, shareholders' equity, and cash flows 
for each of the three years in the period ended December 31, 1995.  
These financial statements are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these 
financial statements 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, such consolidated financial statements present 
fairly, in all material respects, the financial position of E'town 
Corporation and its subsidiaries at December 31, 1995 and 1994, and the 
results of their operations and their cash flows for each of the three 
years in the period ended December 31, 1995 in conformity with generally 
accepted accounting principles.  


/s/ Deloitte & Touche LLP

Parsippany, New Jersey
February 15, 1996





<TABLE> 
OTHER FINANCIAL AND STATISTICAL DATA
<CAPTION>
                                                        1995           1994           1993             1992             1991 
-------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>             <C>              <C>              <C>
UTILITY PLANT (Thousands) 
  Utility Plant-net                                $   507,858   $     437,456   $   373,293      $   347,253      $   319,421
  Construction Expenditures (excluding AFUDC)           73,789          69,981        32,517           33,293           27,732
CAPITALIZATION (Thousands)
  Shareholders' Equity                                 177,081         152,971       128,374          102,750           84,544
  Preferred Stock                                       12,000          12,000        12,000           12,000           12,000
  Debt(1)                                              220,703         177,115       154,448          161,541          169,648
  Total Capitalization                                 409,784         342,086       294,822          276,291          266,192
CAPITALIZATION RATIOS
  Common Stock                                              43%             44%           44%              37%              32%
  Preferred Stock                                            3%              4%            4%               4%               4%
  Debt(1)                                                   54%             52%           52%              59%              64%
COMMON STOCK DATA
  Earnings Per Share:
    Primary                                        $      2.16   $        1.95   $      2.59      $      2.21      $      2.32
    Fully Diluted                                         2.14            1.94          2.54             2.18             2.28
  Dividends Per Share                                     2.04            2.04          2.01             2.00             2.00
  Book Value Per Share                                   23.54           23.17         22.76            21.14            20.21
  Average Shares Outstanding:
    Primary                                          7,095,183       6,210,409     5,337,939        4,627,814        4,080,118
    Fully Diluted                                    7,393,796       6,519,352     5,651,808        4,950,768        4,413,178
  Number of Common Shareholders                          5,504           5,493         5,240            4,832            3,965
OPERATING STATISTICS
  Revenues (Thousands)
    General Customers                              $    67,455   $      62,923   $    63,100      $    55,570      $    54,071
    Other Water Systems                                 18,720          18,082        17,187           15,080           14,082
    Industrial Wholesale                                 7,947           7,458         6,652            6,044            5,846
    Fire Service/Miscellaneous                          14,276          13,570        13,057           12,473           12,087
    Total Revenues                                 $   108,398   $     102,033   $    99,996      $    89,167      $    86,086
  Net Income                                       $    15,296   $      12,088   $    13,830      $    10,231      $     9,485
WATER SALES - Millions of Gallons (mg)
  General Customers                                     23,999          23,551        23,883           22,062           22,659
  Other Water Systems                                   15,569          15,691        15,109           14,118           13,811
  Industrial Wholesale                                   3,673           3,568         3,213            3,145            3,155
  System Use and Unaccounted For                         6,402           6,570         5,453            5,843            6,368
  Total Water Sales                                     49,643          49,380        47,658           45,168           45,993
SYSTEM DELIVERY BY SOURCE - mg
  Surface                                               42,646          42,534        40,742           38,558           39,222
  Wells                                                  6,764           6,690         6,776            6,480            6,658
  Purchased                                                233             156           140              130              113
  Total System Delivery                                 49,643          49,380        47,658           45,168           45,993
MILLIONS OF GALLONS PUMPED:
  Average Day                                              136             135           131              123              126
  Maximum Day                                              183             182           191              159              169
GENERAL INFORMATION
  Meters in Service                                    195,375         191,622       188,677          185,028          182,019
  Miles of Main                                          2,869           2,828         2,800            2,738            2,694
  Fire Hydrants Served                                  15,650          15,291        14,909           14,400           13,987
  Total Employees                                          398             386           384              379              374
<FN>
(1) Includes long-term debt, notes payable and long-term debt-current portion. 
</TABLE> 


STOCK PRICE AND DIVIDEND DATA - E'town's Common Stock is
traded on the New York Stock Exchange under the symbol ETW.

                                1995
----------------------------------------------------
QUARTER             1ST      2ND      3RD      4TH
CLOSING PRICE
LOW:              $24.87   $25.37   $25.62   $27.00
HIGH:             $26.37   $27.25   $27.00   $30.12
DIVIDEND PAID        .51      .51      .51      .51
----------------------------------------------------

                                1994
----------------------------------------------------
QUARTER             1ST      2ND      3RD      4TH
CLOSING PRICE
LOW:              $29.63   $26.13   $26.00   $23.50
HIGH:             $32.00   $30.00   $27.75   $27.13
DIVIDEND PAID        .51      .51      .51      .51
----------------------------------------------------
<PAGE>