<PAGE>
 
 
                      SECURITIES AND EXCHANGE COMMISSION-
                           Washington, D. C.  20549

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the fiscal year ended September 30, 1996
                          ------------------

                             OR
[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from                        to
                               -----------------------  -------------------
Commission file number 1-10032
                       -------
               
                         PROVIDENCE ENERGY CORPORATION
         -------------------------------------------------------------
            (Exact name of registrant as specified in its charter)
    Rhode Island                                                05-0389170
--------------------------------------------------------------------------------
 (State or other jurisdiction of                             (I. R. S. Employer
  incorporation or organization)                            (Identification No.)
100 Weybosset Street, Providence, Rhode Island                    02903
-------------------------------------------------------------  ----------------
  (Address of principal executive offices)                       (Zip Code)
Registrant's telephone number, including area code 401-272-9191
                                                   ------------    
Securities registered pursuant to Section 12(b) of the Act:
Title of each class                             Name of each exchange on which
-------------------                             ------------------------------
                                                registered
                                                -----------
Common Stock, $1.00 Par Value                          NEW YORK STOCK EXCHANGE
------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:

                                     NONE
------------------------------------------------------------------------------- 
                               (Title of Class)
   Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES  X   NO 
    ---     ---   
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
    State the aggregate market value of the voting stock held by non-affiliates
of the Registrant, as of December 4, 1996: $101,773,388
    Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.

Common Stock, $1.00 Par Value:  5,767,747 shares outstanding at
---------------------------------------------------------------
December 4, 1996.
---------------- 

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------

Portions of the annual report to shareholders for the fiscal year ended
September 30, 1996 are incorporated by reference into Part II.
<PAGE>
 
                               TABLE OF CONTENTS

PART I                                                              PAGE

Item 1 -   Business
            General                                                  I-1
            Operations of the Gas Companies                          I-2
            Nonutility Operations                                    I-9
            Special Factors Affecting the Gas Industry               I-9
            Environmental Regulations                                I-11
            Other Standards                                          I-12
 
 Item 2 -  Properties                                                I-13
 
 Item 3 -  Legal Proceedings                                         I-13
 
 Item 4 -  Submission of Matters to a Vote of Security Holders       I-13
 
PART II

 Item 5 -  Market for Registrant's Common Equity and Related
           Stockholders' Matters                                    II-1

 Item 6 -  Selected Financial Data                                  II-1
 
 Item 7 -  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                      II-1
 
 Item 8 -  Financial Statements and Supplementary Data              II-1
 
 Item 9 -  Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure                      II-1
 
PART III
 
Item 10 -  Directors and Executive Officers of the Registrant      III-1
 
Item 11 -  Executive Compensation                                  III-5
 
Item 12 -  Security Ownership of Certain Beneficial Owners
           and Management                                          III-5
 
Item 13 -  Certain Relationships and Related Transactions          III-5

PART IV

Item 14 -  Exhibits, Financial Statement Schedules and Reports
           on Form 8-K                                              IV-1

Experts Consent                                                     IV-6

Supplemental Schedule                                               IV-7

Signatures                                                          IV-11
<PAGE>
 
PART I
------
ITEM 1. BUSINESS
----------------

  Providence Energy Corporation (the Registrant or the Company) and its
subsidiaries and their representatives may from time to time make written or
oral statements, including statements contained in the Registrant's filings with
the Securities and Exchange Commission (SEC) and in its reports to shareholders,
including this Form 10-K and annual report to shareholders, which constitute or
contain "forward-looking" information as that term is defined in the Private
Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations
and releases.

  All statements other than statements of historical facts included in this Form
10-K and annual report regarding the Registrant's financial position and
strategic initiatives and addressing industry developments are forward-looking
statements.  Where, in any forward-looking statement, the Registrant, or its
management, expresses an expectation or belief as to future results, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished.  The following
are factors which could cause actual results to differ materially from those
anticipated, and include but are not limited to:  general economic, financial
and business conditions; competition in the energy services sector; regional
weather conditions; the availability and cost of natural gas; development and
operating costs; the success and costs of advertising and promotional efforts;
the availability and terms of capital; the business abilities and judgment of
personnel; unanticipated environmental liabilities; changes in, or the failure
to comply with, government regulations; the costs and effects of unanticipated
legal proceedings; the impacts of unusual items resulting from ongoing
evaluations of business strategies and asset valuations; and changes in business
strategy.

General
-------

  The Registrant was organized in 1981 as a Rhode Island business corporation.
As of December 4, 1996, the Registrant's outstanding common shares are listed on
the New York Stock Exchange.  Prior to that date, these shares were listed on
the American Stock Exchange.

  The Registrant is the parent of two wholly-owned natural gas distribution
utilities, The Providence Gas Company (ProvGas) and North Attleboro Gas Company
(North Attleboro Gas), together referred to as the Gas Companies.  In August
1996, the Registrant incorporated Providence Energy Services, Inc. to market
natural gas and energy services.  The Registrant also conducts its nonutility
operations through a wholly-owned nonutility subsidiary, Newport America
Corporation (Newport America)-see nonutility operations.

  ProvGas, Rhode Island's largest natural gas distributor, was founded in 1847
and serves approximately 163,000 customers in Providence, Newport and 23 other
cities and towns in Rhode Island.  North Attleboro Gas serves over 3,000
customers in North Attleboro and Plainville, Massachusetts, towns adjacent to
the northeastern Rhode Island border. The total natural gas service territory of
the Gas Companies encompasses 410 square miles and has a population of
approximately 850,000.

                                      I-1
<PAGE>
 
  The corporate offices of the Registrant are located at 100 Weybosset Street,
Providence, Rhode Island 02903 (Telephone 401-272-9191).

Operations of the Gas Companies
-------------------------------

  Customers.  The Gas Companies had an average annual number of customers of
  ----------                                                                
approximately 166,000 for the twelve months ended September 30, 1996, of which
approximately 90% were residential and 10% were commercial and industrial.

  The net increase in the average annual number of customers during fiscal 1996
over fiscal 1995 was approximately 1,700 or 1.0%.  This moderate increase was
the result of new housing construction and conversions from other energy sources
offset by shut-offs for non-payments and housing vacancies due to the stagnant
economy.

  Gas Service.  The gas services provided by the Gas Companies can be grouped
  ------------                                                               
into three categories -- firm, interruptible and transportation service.  Firm
service is provided to those residential, commercial and industrial customers
that use natural gas throughout the year.  Interruptible service is provided to
those commercial and industrial customers that do not require assured gas
service because they can utilize an alternative fuel or otherwise operate
without gas service.  Transportation service is a service where the Gas
Companies transport to certain large customers gas owned by those customers or
by third parties selling gas to those customers.

  The following table shows the distribution of gas to various customer classes,
and the total gas sold and transported by year since 1992:

                       1996     1995      1994     1993     1992
                       ----     ----      ----     ----     ----
Firm                   85.8%    76.4%     81.9%    83.9%    73.9%
Interruptible           9.3     17.6      15.8     14.7     23.1
Transportation          4.9      6.0       2.3      1.4      3.0
                      -----    -----     -----    -----    -----
                      100.0%   100.0%    100.0%   100.0%   100.0%
                      =====    =====     =====    =====    =====   

Total Gas Sold and Transported
------------------------------

 BCF(*)                28.1     28.1      28.7     27.1     29.1
                      =====    =====     =====    =====    =====     

(*) Gas sales are denominated in billions of cubic feet (Bcf) of natural gas.
Total gas sales include gas sold and transported by the Gas Companies.

  Firm Service.  In recent years, the distribution of the Gas Companies' firm
  -------------                                                              
sales has been approximately 60% to residential and 40% to commercial and
industrial customers.  Firm sales represent the highest percentage of operating
margin and represent the core of the Gas Companies' business.

  Interruptible Service.  Interruptible customers consist of two types: seasonal
  ----------------------                                                        
customers that typically use gas only during the nonwinter months and dual-fuel
customers that contract for gas service on a year round basis, but agree to
service interruption during certain peak periods.  By retaining the right to
interrupt service to the dual-fuel customers, the Gas Companies can balance
daily demand from firm customers

                                      I-2
<PAGE>
 
with available gas supply and pipeline capacity.  Interruptible customers may
interrupt their gas service, as well, when it is more economical to utilize an
alternative fuel.  Accordingly, the amount of the Gas Companies' interruptible
sales fluctuates depending upon the relative price of natural gas to alternative
fuels.

  Interruptible sales produce substantially less margin to the Gas Companies
than firm sales due to the more competitive nature of interruptible sales.
Service rates charged to dual-fuel customers are based on the price that the
customer would otherwise pay for its alternative fuel.  Total margin, however,
is not impacted by nonfirm sales due to the fact that the Rhode Island Public
Utilities Commission (RIPUC) requires the Registrant to return any margins
earned from these non-firm customers to firm customers through the Gas Charge
Clause (GCC) during the term of the Integrated Resource Plan - see Rates and
Regulation and Competition and Marketing.

  Transportation Service.  The Registrant provides both firm and nonfirm
  -----------------------                                               
transportation of gas.  Margin from the firm transportation of gas purchased by
certain large customers from third parties is likely to represent an increasing
percentage of the Gas Companies' future total margin due to the continuing
regulatory developments affecting the natural gas industry - see Special Factors
Affecting the Natural Gas Industry.  In general, these developments now allow
customers to buy gas directly from the producer-supplier rather than solely from
the local gas distribution company.  Customer-owned gas is transported to the
customer's premises through a combination of the interstate pipelines and the
Gas Companies' distribution systems.

  For a given quantity of gas, the Gas Companies' margin from firm
transportation service is the same as the margin from firm sales.  Margin from
nonfirm transportation service is less than the margin from firm sales, but is
generally comparable to the margin from interruptible sales, depending on the
price of alternative fuels.  To the extent that the Gas Companies' existing
customers buy gas directly from producer-suppliers, the Gas Companies' revenue
will decrease although firm margin will not be impacted.  Total margin is not
impacted by nonfirm transportation due to the fact that the RIPUC requires the
Registrant to return any margins earned from these nonfirm customers to firm
customers through the GCC during the term of the Integrated Resource Plan - see
Rates and Regulation.

  Gas Supply.  During 1996, the Registrant purchased 84% of its gas supply in
  -----------                                                                
the production area with transportation to market and storage provided by firm
pipeline contracts.  Liquefied natural gas (LNG) provided 5% of supply
requirements.  The remaining 11% was purchased in the market area, generally on
an interruptible basis.  The Registrant maintains contracts sufficient to meet
100% of its firm winter demand using firm storage and firm pipeline
transportation.

  When not using capacity for its own sales, the Registrant released the
capacity or used it to make off-system sales.  In fiscal 1996, the Registrant
received $5.7 million in revenue from released capacity, a 10.5% increase over
the $5.1 million of revenue generated in fiscal 1995. The revenues reduced the
firm customer's gas cost, making the Registrant more competitive.

 

                                      I-3
<PAGE>
 
In addition to managing its pipeline capacity, the Registrant has focused its
attention on restructuring its supply portfolio to closely match its market
requirements.  A sophisticated planning model is used to support all major
supply decisions and to identify specific areas in the supply and transportation
portfolio where savings can be gained without jeopardizing the obligation to
serve firm customers.  During fiscal 1996, a number of supply contracts were
renegotiated or terminated to reduce fixed fees.  The most significant change
was an increase in storage capacity for an expiring supply contract.

  Although the Registrant has significantly increased its storage capacities
since the implementation of Federal Energy Regulatory Commission (FERC) Order
636, it continues to explore opportunities to add additional storage to its
portfolio as a replacement for higher cost supplies as contracts expire.  New
storage will enhance the Registrant's ability to provide the flexibility needed
to meet rapid shifts in temperature, manage market swings and stay competitive
in the post FERC Order 636 environment.

  Rates and Regulation.  ProvGas is subject to the regulatory jurisdiction of
  ---------------------                                                      
the RIPUC with respect to rates and charges, standards of service, accounting
and other matters.  North Attleboro Gas Company is subject to similar regulatory
jurisdiction by the Massachusetts Department of Public Utilities (MDPU). The
standards set by these regulatory bodies affect all aspects of the Gas
Companies' businesses, including their ability to market to new customers and to
meet competition from other fuel suppliers -- see Competition and Marketing.

  In February 1996, the Company received approval of a three-year Settlement
Agreement between itself and the Rhode Island Division of Public Utilities and
Carriers (Division) regarding the Integrated Resource Plan (IRP), which was
filed with the RIPUC in July 1994.  The purpose of the IRP is to optimize the
utilization of production transmission and distribution resources so that
customers receive high quality services at the lowest possible costs.

  The Settlement Agreement provides for:  (1)  funding associated with Demand
Side Management programs of $500,000, which are designed to provide equipment
rebates for specific load building programs; (2)  funding associated with a low
income weatherization program of $200,000, which is designed to assist low
income customers through the installation of conservation measures; and (3)  a
performance-based ratemaking mechanism.  The Settlement Agreement also contains
a general agreement that the Company's strategy and steps included in its supply
plan are reasonable.

  The Settlement Agreement also provides for a one-time funding of up to
$800,000 for a Low Income Assistance Program (LIAP) through a portion of the
Company's share of the performance-based ratemaking mechanism. The LIAP was
developed in response to the Company's anticipated loss of approximately
$900,000 in Federal funding for the low income heat assistance program
administered by the State of Rhode Island for 1996.

  The funding of these programs is generated through annual gas cost savings
beginning in July 1995.  The Company has performed an analysis of gas cost
savings since July 1995 and has achieved sufficient savings as of June 30, 1996
to provide funding for these programs without incurring

                                      I-4
<PAGE>
 
a charge to income.  Accordingly, in 1996, the Company recorded its annual share
of the performance-based ratemaking mechanism under this agreement which
resulted in a $1.5 million increase to operating margin.

  Prior to the IRP, the cost of gas adjustment (CGA) clause contained a
provision that enabled the Registrant to retain margins associated with nonfirm
sales and transportation.  Specifically, nonfirm margins above a threshold were
shared at the ratio 66 2/3% to firm customers and 33 1/3% to the Registrant.
This provision is suspended during the term of the IRP.

  In February 1995, ProvGas filed for rate relief requesting an approximate 8%
general rate increase.  The major factors contributing to the rate request were
an increase in depreciation due to capital spending, an increase in working
capital needs, and an increase in capital expenditures.

  On November 17, 1995, the RIPUC issued its decision on the rate request made
by ProvGas.  In its decision, the RIPUC authorized ProvGas to increase its rates
to recover additional annual revenues in the amount of $3,990,000.   Subsequent
to the issuance of the rate decision, the RIPUC approved ProvGas' motion to
reconsider a revenue adjustment of $171,572.  That approval increases the
overall rate increase to $4,161,572.  Additionally, as a result of the order,
ProvGas recorded several adjustments to its 1996 financial statements.
Specifically:

a) ProvGas began calculating property tax expense for rate purposes based on the
current year's expense plus an estimate of one year's increase in expense.
Previously, ProvGas was required to estimate two year's increase in expense.  As
a result, ProvGas reduced its regulatory liability for one year's property tax
expense resulting in a one time gain of approximately $4,100,000, before tax.

b) ProvGas wrote-off the $1,600,000, before tax, of restructuring costs
previously deferred.  (See Footnote 9 in the Notes to the Consolidated Financial
Statements contained in the Registrant's Annual Report to Shareholders filed
herewith as Exhibit 13.)  The RIPUC had previously allowed ProvGas recovery of
similar costs, but determined that the costs of the 1994 reorganization should
not be recovered in rates.

c) ProvGas wrote-off approximately $440,000, before tax, of previously deferred
rate case expenses.  (See Footnote 1 in the Notes to the Consolidated Financial
Statements contained in the Registrant's Annual Report to Shareholders filed
herewith as Exhibit 13.)

d) ProvGas wrote-off approximately $470,000, before tax, of construction
expenditures previously capitalized.  These costs were capitalized in accordance
with generally accepted accounting principles and were based on FERC guidance on
accounting for such costs.  The RIPUC agreed that such costs could be
capitalized beginning in 1996, but did not allow recovery of previously
capitalized costs.

The net effect of the above adjustments did not result in a material gain or
loss.

  The following table sets forth the results of ProvGas' applications
before the RIPUC for revenue increases since 1981.

                                      I-5
<PAGE>
 
<TABLE>
<CAPTION>
 
                        Annualized                              Annualized     Authorized
  Date of           Revenue Increase           Date Rates   Revenue Increase   Return on
Application             Requested               Effective      Allowed  (*)  Common Equity
-------------  ----------------------------  ----------------  ------------  --------------
<S>            <C>                           <C>               <C>           <C>
 
 5/17/90              $15,800,000                03/15/91        $9,176,000            12.8%
 1/15/93                9,100,000 (**)           11/14/93           694,000            11.2
 2/16/95               14,880,000 (***)          12/17/95         4,161,572 (****)     10.9
</TABLE>

(*)   Although the RIPUC reviews and approves all changes in gas costs billed to
customers through the GCC, such changes are not part of the general rate filings
described above.  See Footnotes 1 and 10 in the Notes to the Consolidated
Financial Statements contained in the Registrant's 1996 Annual Report to
Shareholders filed herewith as Exhibit 13.

(**)  Rate increase requested on January 15, 1993 of $9.1 million was
recalculated to $6,970,000 on September 14, 1993 due to cost of service
adjustments reflecting cost savings.

(***) Rate increase requested on February 16, 1995 of $14.9 million was revised
to $13,222,000 on July 18, 1995 due to lower projected costs.

(****) The allowed annualized revenue increase of $4,161,572 is comprised of an
initial award of $3,990,000 plus a revenue adjustment of $171,572 due to a
reconsideration motion.

  The Registrant has been working closely with the RIPUC to develop a new rate
structure that will allow the Registrant to offer unbundled services designed to
meet the needs of its largest customers, such that those customers would have
the option to purchase natural gas directly from suppliers and use the
Registrant to transport the gas.  The Registrant believes that this rate
structure will foster a more competitive and flexible gas market in Rhode Island
and allow it to remain competitive by offering commercial/industrial businesses
value-added services at competitive prices.

  In May 1996, the RIPUC approved a Rate Design Settlement Agreement among the
Company, the Division, The Energy Council of Rhode Island (TEC-RI) and a
consortium of oil heat organizations.  The Agreement begins a process of
unbundling natural gas service in Rhode Island enabling customers to choose
their gas suppliers.

  The Agreement went into effect June 2, 1996.  While this initial program is
available to approximately 120 of the largest commercial and industrial
customers, the Company is required to make an additional filing in March 1997
that would expand the eligibility of unbundled services to other customers.  The
Company does not know the number of customers that would be impacted by the
March 1997 filing at this time.

  The Agreement also included changes to ProvGas' gas cost recovery mechanism.
Specifically, the Agreement replaced the previous CGA with the GCC effective
June 2, 1996.  In addition to the commodity and related pipeline transportation
costs historically included in the CGA, the GCC provides for the recovery of:
(1) inventory financing costs; (2) working capital associated with gas supply
purchases; (3) bad debt expenses associated with the gas revenue portion of
customer bills; and (4) a substantial portion of LNG operating and maintenance
expenses, all

                                      I-6
<PAGE>
 
of which were previously recovered in base rates.  Similar to the former CGA,
the GCC provides for reconciliation of total gas costs billed with the actual
cost of gas incurred.  Any excess or deficiency in amounts billed as compared to
costs incurred is deferred and either refunded to, or recovered from, customers
over a subsequent period.

  On October 8, 1996, the RIPUC approved a one year Pilot Hedging Program
Agreement between the Company and the Division.  The objective of the pilot
program is to mitigate the impact of natural gas price escalation through
utilization of Financial Risk Management (FRM) tools, to develop a more balanced
gas supply cost approach and finally, to study in more detail some of the
benefits and costs associated with the program.  The FRM tools will be limited
to the use of options, including calls, puts, and collars, under the pilot
program.  The total expenditures for the purchase and exercise of the FRM tools
and the net proceeds from the sale of FRM tools will be flowed through the
Variable Gas Cost component of the GCC and cannot exceed $800,000.

  In October 1995, North Attleboro Gas received approval of its fifth and final
rate increase under the qualified five year phase-in plan.  Under the terms of
the agreement, a 32 percent increase was phased-in over five years effective
November 1, 1991.  See Footnote 10 in the Notes to the Consolidated Financial
Statements contained in the Registrant's Annual Report to Shareholders filed
herewith as Exhibit 13.

  Competition and Marketing.  The Registrant experienced modest customer growth
  --------------------------                                                   
in both the residential and commercial/industrial markets.  In all, the average
annual number of customers rose one percent to 166,276.  This customer growth
was achieved in an underperforming local economy, one that is now showing signs
of improvement.  The Providence Place Mall is scheduled to begin construction in
early 1997 and bring an estimated 3,000 construction jobs and more than 2,800
permanent jobs in sales, management and maintenance.  The Fixed Income Group of
Fidelity Investments will bring to Rhode Island 2,500 new jobs and a $75 million
state-of-the art facility, the direct result of a creative package of land,
lease and tax incentives offered by the State of Rhode Island.  Also, the newly
expanded T.F. Green Airport, and the arrival of Southwest Airlines, will
significantly improve the competitiveness of transportation options.

  In 1997, the Registrant's core marketing efforts will continue to focus on
adding profitable new load and building loyalty with existing customers.  The
Registrant will continue joint marketing with the local network of heating
contractors to promote heating conversions of customers on existing gas mains.
In addition, the Registrant will extend its coupon rebate program for high
efficiency heating equipment offered in combination with participating
manufacturers and local distributors.

  In 1996, ProvGas instituted a Demand Side Management (DSM) Program, which
furnishes rebates to customers installing new technologies such as gas-fired air
conditioning, cogeneration and gas motors.  These technologies use
proportionately more natural gas during the summer months, when the distribution
system has available capacity.  The DSM program also allows for the improved
utilization of existing resources, such as mains, services, and year-round
supply contracts.

  As a result of the Rate Design Settlement Agreement approved in May

                                      I-7
<PAGE>
 
1996, ProvGas has been allowed to offer unbundled services to approximately 120
of its largest customers.  These customers are now able to purchase natural gas
directly from suppliers and use ProvGas to transport the gas.  ProvGas will make
an additional filing in March 1997 that would expand the eligibility of
unbundled services to other customers.  The Registrant believes that this rate
structure will foster a more competitive and flexible gas market in Rhode Island
and allow it to remain competitive by offering commercial/industrial businesses
value-added services at competitive prices.

  There are virtually unlimited opportunities to unbundle services, form
alliances, custom-tailor services for customers, and greatly increase the
Company's ability to compete with other energy suppliers.  To facilitate the
transition to a diversified energy marketer, the Company is planning to form
business alliances outside of its traditional utility business. The Company is
also seeking investment opportunities in non-regulated energy ventures.  The
Company currently has no material acquisitions pending.

  To pursue the opportunities discussed above, the Company on August 1, 1996,
incorporated Providence Energy Services, Inc. to market natural gas and energy
services to customers who are now able to choose their energy suppliers.  The
operating results of this new company did not have a material impact on the
Company's results of operations for 1996.

  The Company has also established a relationship with Encon Systems, Inc.
(Encon), a full-service energy-management company that develops and implements
energy-efficient systems for commercial, industrial and institutional customers,
as well as residential customers.  The Company has established a $350,000 line
of credit as a working capital supply primarily for Encon's PFS (a division of
Pepsico) contract.  In connection with the line of credit, the Company received
a warrant to acquire stock representing 45 percent of the outstanding stock of
Encon, which is exercisable until early 1997, subject to extension under certain
circumstances.

  Additionally, North Attleboro Gas is currently piloting a new set of service
contracts.  North Attleboro Gas' annual service contract for the inspection of
gas heating equipment will now include providing customers with an indoor air
quality screening.  Customers will receive a comprehensive indoor air quality
informational report and will be given the opportunity to purchase carbon
monoxide detectors and radon test kits from North Attleboro Gas.  Once the
results of the pilot program are analyzed, the Company will determine whether
the indoor air quality program will generate additional growth opportunities.

  These and other energy ventures will increasingly be separate from the
distribution utility.  There are strategic long-term planning costs associated
with developing the new energy service offerings. The Company estimates these
costs to be in the range of $400,000 to $600,000, net of tax, in 1997.

  Employees.  As of September 30, 1996, the Gas Companies had 575 full-
  ----------                                                           
time employees.  Approximately 278 distribution and customer service employees
are covered by a collective bargaining agreement with Local 12431 of the United
Steelworkers of America.  A new five year agreement became effective in January
1996.

                                      I-8
<PAGE>
 
  The agreement was developed by a labor-management negotiations committee and
can be reopened for any reason at any time in order to allow for the committee
to deal with new issues as they arise, which results in increased flexibility in
the use of employees.  This will result in increased job security and will
position the Registrant to reduce costs and increase levels of customer service.
The agreement calls for a general wage increase of 3.25% each year from 1997 to
2000.

  Additionally, in March 1996, a thirty-eight month Labor Agreement was ratified
by Local 12431-02 of the United Steelworkers of America, which represents 96
office and clerical employees.  The agreement calls for a total wage increase of
8.44% over 38 months.

  Gas Distribution Systems.  The Gas Companies' distribution systems consist of
  -------------------------                                                    
approximately 2,400 miles of gas mains ranging in size from 2 to 36 inches in
diameter, approximately 142,000 services, (a service is a pipe connecting a gas
main with piping on a customer's premises), and approximately 163,000 active gas
meters together with related facilities and equipment.  The Gas Companies have
regulating and metering facilities at nine points of delivery from Algonquin Gas
Transmission Company (Algonquin) and one point of delivery from Tennessee Gas
Pipeline Company, which the Gas Companies presently believe to be adequate for
receiving gas into their distribution systems.

  Storage Facilities.  The Registrant has contracts with a number of interstate
  -------------------                                                          
pipelines for rights to store natural gas in underground storage facilities
located on or near its systems.  These contracts enable the Registrant to store
up to 4,604 million cubic feet (MMcf), which is available for firm delivery.
Also, additional storage capabilities of 210 MMcf are available on an
interruptible basis.

  The Registrant has an agreement with Algonquin for the storage of up to the
equivalent of 1,200 MMcf of vaporized LNG in a tank owned by Algonquin and
located on land leased to Algonquin by the Registrant. The agreement expires in
September 2001, but the Registrant has an option to extend the agreement for an
additional thirty years. This agreement was renegotiated in 1996 as a result of
Algonquin's filing with the FERC to make major improvements and modifications to
the LNG facility, including the addition of liquefaction capability and the
replacement of existing equipment with state-of-the-art equipment. The
renegotiation of the contract will yield comparable service while reducing gas
supply and operating costs. The renegotiated contract is contingent upon certain
conditions being met, including FERC approval of the improvements and is
scheduled to become effective November 1, 1998. The Registrant owns and operates
an LNG storage and vaporization facility which has the capacity to store the
equivalent of 200 MMcf of vaporized LNG.

Nonutility Operations
---------------------

  As described earlier, the Registrant conducts its nonutility operations
through a wholly-owned subsidiary, Newport America.  These operations total less
than two percent of the Registrant's consolidated assets and consolidated
revenues.

Special Factors Affecting the Natural Gas Industry
--------------------------------------------------

  General.  The natural gas industry is subject to numerous legislative
  --------                                                             

                                      I-9
<PAGE>
 
and regulatory requirements, standards and restrictions that are subject to
change and that affect the Gas Companies to varying degrees.  Significant
industry factors that have affected or may affect the Gas Companies from time to
time include:  lack of assurance that rate increases can be obtained from
regulatory authorities in adequate amounts on a timely basis; changes in the
regulations governing the Gas Companies' operations; reductions in the prices of
oil and propane, which can make those fuels less costly than natural gas in some
markets; increases in the price of natural gas; and competition with other gas
suppliers for industrial customers, including potential attempts to bypass the
Gas Companies' facilities.

  FERC Regulations.  In recent years FERC has been attempting to increase
  -----------------                                                      
competition with regard to the transportation and sale of natural gas in
interstate commerce.  Beginning in late 1985, FERC began promulgating orders
that allow all industry participants access to pipeline transportation on an
open, nondiscriminatory basis to the extent of available capacity.

  Recent FERC orders are in furtherance of its policy to make gas transportation
and alternate supply sources more accessible to all parties, including local
distribution companies and their customers.  Such open access allows the Gas
Companies to obtain its supply through a more competitive national gas pipeline
system, where and when capacity is available.

  FERC Order 636 and other related orders (the Orders) have significantly
changed the structure and types of services offered by pipeline transportation
companies.  The most significant components of the restructuring occurred in
November 1993.  In response to these changes, the Registrant has negotiated new
pipeline transportation and gas storage contracts.

  At the same time, a number of contracts with gas suppliers have been
negotiated to complement the transportation and storage contracts.  The
portfolio of supply contracts is designed to be market responsive and is
diversified with respect to contract lengths, source location, and other
contract terms.  On a periodic basis, the Registrant reviews all of its
contracts to ensure a diverse, secure, flexible and economical supply portfolio
is maintained.

  To meet the requirements of the Orders, the pipelines have incurred
significant costs, collectively known as transition costs.  The majority of
these costs will be reimbursed by the pipelines' customers including the
Registrant. Based upon current information, the Registrant anticipates its
transition costs to net between $21 million and $22 million of which $15.8
million has been included in the GCC and is currently being collected from
customers. The remaining minimum obligation of $5.2 million has been recorded in
the accompanying consolidated balance sheets of the Registrant's 1996 Annual
Report to Shareholders filed herewith as Exhibit 13 along with a regulatory
asset anticipating future recovery through the GCC.  To the extent that refunds
are received based on FERC settlements, these refunds are returned to the
customers through the GCC.

  The Registrant's ultimate liability may differ from the above estimates based
on FERC settlements with the Registrant's pipeline

                                      I-10
<PAGE>
 
transportation suppliers.  FERC has approved settlements with three of its
pipelines, which account for the bulk of the Registrant's transition costs.
Negotiations are continuing on one additional pipeline, and based on the
information available, the Registrant believes that its current range for
transition costs is reasonable.

Environmental Regulations
-------------------------

Federal, state and local laws and regulations establishing standards and
requirements for the protection of the environment have increased in number and
in scope within recent years.  The Registrant cannot predict the future impact
of such standards and requirements, which are subject to change and can take
effect retroactively.  The Registrant continues to monitor the status of these
laws and regulations.  Such monitoring involves the review of past activities
and current operations, and may include expending funds to investigate or clean-
up certain sites.  To the best of its knowledge, subject to the following, the
Registrant believes it is in substantial compliance with such laws and
regulations.

At September 30, 1996, the Registrant was aware of four sites at which future
costs may be incurred.

The Registrant has been designated as a potentially responsible party (PRP)
under the Comprehensive Environmental Response Compensation and Liability Act of
1980 at two sites at Plympton, Massachusetts on which waste material is alleged
to have been deposited by disposal contractors employed in the past either
directly or indirectly by the Registrant and other PRP's.  With respect to one
of the Plympton sites, the Registrant has joined with other PRP's in entering
into an Administrative Consent Order with the Massachusetts Department of
Environmental Protection.  The costs to be borne by the Registrant, in
connection with both Plympton sites, are not anticipated to be material to the
financial condition of the Registrant.

During 1995, the Company voluntarily began a study at its primary gas
distribution facility located in Providence, Rhode Island.  This site formerly
contained a manufactured gas plant operated by the Company.  As of September 30,
1996, approximately $1.5 million has been spent primarily on studies at this
site.  In accordance with state laws, such a voluntary study is monitored by the
Rhode Island Department of Environmental Management (DEM).  The purpose of this
study was to determine the extent of environmental contamination at the site.
The Company has completed the study which indicates that remediation will be
required.  The Company has several remediation options for the site and is
currently negotiating with DEM and contractors to arrive at the best
alternative.  At September 30, 1996, the Company has compiled a preliminary
range of costs based on remediation alternatives, ranging from $1.3 million to
in excess of $5.0 million.  Based on the proposals for remediation work, the
Company has accrued $1.3 million at September 30, 1996, for anticipated future
remediation costs at this site.  Also, the Company has negotiated an agreement,
which is subject to Federal regulatory approval, with a third party which
provides for reimbursement of up to $2.5 million of certain remediation costs to
be incurred at this site.

Tests conducted following the discovery of an abandoned underground oil storage
tank at the Company's Westerly, Rhode Island operations center

                                      I-11
<PAGE>
 
confirm the existence of contaminants at this site. The Company is currently
conducting tests at this site, the costs of which are being shared equally with
the prior owner, to determine the nature and extent of the contamination.  Due
to the fact that the testing is in its early stages, management cannot conclude
as to whether any remediation will be required at this site.

In prior rate cases filed, the Company requested that environmental
investigation and remediation costs be recovered by inclusion in its
depreciation factors consistent with the rate recovery treatment for all types
of cost of removal.  Accordingly, environmental investigation costs of
approximately $1.8 million and an estimated $1.3 for environmental remediation
costs have been charged to the accumulated depreciation reserve at September 30,
1996.  Of the environmental investigation costs incurred, approximately $1.0
million and $600,000 were recorded in the years ended September 30, 1996 and
1995, respectively, while the remainder were incurred in prior years.
Management believes that this rate recovery mechanism is appropriate for
recovery of future costs. Additionally, it is the Company's practice to consult
with the RIPUC on a periodic basis when, in management's opinion, significant
amounts might be expended for environmental related costs.  Should future
developments warrant additional rate recovery mechanisms, management intends to
seek such recovery.

Management has begun discussions with other parties who may assist the Company
in paying future costs at the above sites.  Management believes that its program
for managing environmental issues combined with rate recovery and financial
contributions from others, will likely avoid any material adverse effect on its
results of operations or its financial condition as a result of the ultimate
resolution of the above sites.

Other Standards
---------------

The Gas Companies are also subject to standards prescribed by the Secretary of
Transportation under the Natural Gas Pipeline Safety Act of 1968 with respect to
the design, installation, testing, construction and maintenance of pipeline
facilities.  The enforcement of these standards has been delegated to the RIPUC
and MDPU and management believes that the Gas Companies are in substantial
compliance with all present requirements imposed by these agencies.

                                      I-12
<PAGE>
 
ITEM 2. PROPERTIES
------------------

  In addition to the Registrant's gas distribution system and storage
facilities, which constitute the principal properties of the Registrant, the
Registrant owns several buildings and other facilities in Newport, Providence
and Westerly that house its offices and provide floor space for its distribution
and maintenance facilities.

  Substantially all the foregoing properties are mortgaged as collateral for the
outstanding First Mortgage bonds of ProvGas.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

The Registrant is involved in legal and administrative proceedings in the normal
course of business, including certain proceedings involving material amounts in
which claims have been or may be made.  However, management believes, after
review of insurance coverage and consultation with legal counsel, that the
ultimate resolution of the legal proceedings to which it is or can at the
present time be reasonably expected to be a party, will not have a materially
adverse effect on the Registrant's results of operations or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
  Not Applicable

                                      I-13
<PAGE>
 
                                    PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
--------------------------------------------------------------------
        HOLDERS' MATTERS
        ----------------

        The Registrant's common stock is listed on the New York Stock Exchange
        and trades under the symbol "PVY". Prior to December 4, 1996, the
        Registrant's common stock was listed and traded on the American Stock
        Exchange under the same symbol. As of December 4, 1996, there were 6,052
        holders of record of the Registrant's outstanding common stock. For the
        balance of the information called for by this item, reference is made to
        the materials under 'Dividends' and 'Common stock information' in the
        Registrant's Annual Report to Shareholders for the fiscal year ended
        September 30, 1996, which is filed herewith under Part IV as Exhibit 13.

ITEM 6. SELECTED FINANCIAL DATA
-------------------------------

        For the information called for by this item, reference is made to page
        20 of the Registrant's Annual Report to shareholders (pages 22 through
        25 of this Form 10-K) for the fiscal year ended September 30, 1996,
        which is filed herewith under Part IV as Exhibit 13.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-------------------------------------------------------------------
        AND RESULTS OF OPERATIONS
        -------------------------

        Regarding the information that relates to this item, reference is made
        to pages 14 through 18, of the Registrant's Annual Report to
        Shareholders (pages 14 through 21 of this Form 10-K) for the fiscal year
        ended September 30, 1996, which is filed herewith under Part IV as
        Exhibit 13.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------

        For the information called for by this item, reference is made to pages
        21 through 33 of the Registrant's Annual Report to Shareholders (pages
        26 through 46 of this Form 10-K) for the fiscal year ended September 30,
        1996, which is filed herewith under Part IV as Exhibit 13.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-------------------------------------------------------------------
        AND FINANCIAL DISCLOSURE
        ------------------------

        Not applicable

                                      II-1
<PAGE>
 
                                   PART III
                                   --------

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
  The following information is furnished with respect to the executive officers
of the Registrant:
<TABLE>
<CAPTION>
 
                                                   Year                 Office
Name and Age                                      Office              First Held
-------------------------------        -----------------------------  ----------
<S>                              <C>   <C>                            <C>
 
James H. Dodge                   (56)  Chairman, President and Chief
                                       Executive Officer                    1992
 
James DeMetro                    (48)  Senior Vice President                1996
 
Gary S. Gillheeney               (41)  Senior Vice President, Chief
                                       Financial Officer, Treasurer
                                       and Assistant Secretary              1996
 
Robert W. Owens                  (48)  Senior Vice President                1996
 
Alycia L. Goody                  (44)  General Counsel and Secretary        1994
 
Gerald A. Yurkevicz              (39)  Vice President, Marketing            1996
 
</TABLE>

  Mr. Dodge was elected President and Chief Executive Officer of the Registrant
and ProvGas in August 1990 after the retirement of Louis R. Hampton.  Mr. Dodge
subsequently became Chairman of the Board in January 1992.  Prior to his
employment with the Registrant, he was President and Chief Executive Officer of
Vermont Gas Systems, Inc. Vermont Gas Systems, Inc. is a regulated public
utility which sells natural gas to a portion of the population of the State of
Vermont.

  Mr. DeMetro was elected Senior Vice President of the Registrant and ProvGas in
February 1996.  For more than three years prior thereto, Mr. DeMetro served the
Registrant and ProvGas as Vice President Energy Services.  For more than five
years prior thereto, Mr. DeMetro served the Brooklyn Union Gas Company, a
regulated natural gas utility, in various management positions, most recently as
Manager, Rates and Regulations.

Mr. Gillheeney was elected Senior Vice President and Chief Financial Officer of
the Registrant and ProvGas in February 1996, and Treasurer and Assistant
Secretary of the Registrant and ProvGas in January 1994.  For more than five
years prior thereto, Mr. Gillheeney served ProvGas in various management
positions, most recently as Assistant Treasurer and Controller.

  Mr. Owens was elected  Senior Vice President of the Registrant and ProvGas in
February 1996.  For more than a year prior thereto, Mr. Owens served the
Registrant and ProvGas as Vice President Operations For more than five years
prior thereto, Mr. Owens served the Registrant and ProvGas in various management
positions, most recently as Vice President, Treasurer and Chief Financial
Officer.

  Ms. Goody was elected General Counsel and Secretary of the

                                     III-1
<PAGE>
 
Registrant in December 1994.  Since 1994, Ms. Goody has also served ProvGas as
Vice President, General Counsel and Secretary.  For two years prior to that, Ms.
Goody served ProvGas as Corporate Counsel.

Mr. Yurkevicz was elected Vice President, Marketing of the Registrant in August
1996.  For ten years prior thereto, Mr. Yurkevicz served as Principal in the
Energy Practice at Mercer Management Consulting.

                                     III-2
<PAGE>
 
DIRECTORS OF THE REGISTRANT
---------------------------

 The following information is furnished with respect to the Directors of the
Registrant:

<TABLE>
<CAPTION>
 
 
Name                      Director Since  Expiration of Term
------------------------  --------------  ------------------
<S>                       <C>             <C>
 
Gilbert R. Bodell, Jr.              1980                1998
 
James H. Dodge                      1991                1997
 
John H. Howland                     1993                1999
 
Douglas H. Johnson                  1993                1999
 
Dorothy G. Kramer                   1976                1997
 
William Kreykes                     1996                1999
 
Paul F. Levy                        1995                1998
 
Romolo A. Marsella                  1993                1999
 
M. Anne Szostak                     1995                1998
 
Kenneth W. Washburn                 1975                1997
 
W. Edward Wood                      1995                1998
</TABLE>
  Gilbert R. Bodell, Jr. is Chairman and former President, Frontier
Manufacturing Company (textiles); former Vice President, Valley Lace Company and
Esten Dyeing and Finishing Company, Inc.

  James H. Dodge has been Chairman since January 1992 and President and Chief
Executive Officer of the Registrant since August 1990; from 1984 through August
1990:  President and Chief Executive Officer of Vermont Gas Systems, Inc. (a
regulated natural gas utility) and affiliated companies.

 John H. Howland is President and Chief Operating Officer, Original Bradford
Soap Works, Inc.

  Douglas H. Johnson is Vice President and Managing Partner, Van Leesten &
Johnson, Inc. (business and urban planning consultants) since October 1991; from
1980 to October 1991:  President and Chief Executive Officer, Peerless
Precision, Inc.  (aerospace manufacturing company).

  Dorothy G. Kramer is a retired Senior Vice President, Treasurer and Corporate
Secretary, Taco, Inc.  (manufacturers of pumping, heat transfer and hydronic
control equipment).

William Kreykes is President and Chief Executive Officer, Lifespan Corporation
since December 1994; from October 1990 to December 1994: President and Chief
Executive Officer, Rhode Island Hospital.

                                     III-3
<PAGE>
 
Paul F. Levy is Adjunct Professor, Massachusetts Institute of Technology.  From
1992 to 1995, Visiting Lecturer; from 1987 to 1992: Executive Director,
Massachusetts Water Resources Authority (a public authority).

  Romolo A. Marsella is President, Marsella Development Corporation (real estate
development).

M. Anne Szostak is Senior Vice President, Fleet Financial Group. From 1991 to
1996:  Chairman of the Board, Fleet Bank of Maine; from 1991 to 1994:  President
and Chief Executive Officer, Fleet Bank of Maine; and from 1988 to 1991:  Vice
President, Fleet Financial Group.

  Kenneth W. Washburn is Chairman and President, Union Wadding Company
(manufacturers of non-woven textiles).

W. Edward Wood is President, BDS Management Group (management and consulting
services to a variety of private businesses); from November 1990 to May 1991:
Chief of Staff to Governor-elect and Governor of Rhode Island; from January to
November 1990:  Chief of Staff, Phoenix Associates III (private investment
group).

                                     III-4
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

  For the information called for by this item, reference is made to pages 5 to
11 of the Registrant's proxy statement filed December 18, 1996 with the
Securities and Exchange Commission for the annual meeting of shareholders to be
held January 16, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
------------------------------------------------------------
         MANAGEMENT
         ----------

   For the information called for by this item, reference is made to page 12 of
the Registrant's proxy statement filed December 18, 1996 with the Securities and
Exchange Commission for the annual meeting of shareholders to be held January
16, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

   For the information called for by this item, reference is made to page 4 of
the Registrant's proxy statement filed December 18, 1996 with the Securities and
Exchange Commission for the annual meeting of shareholders to be held January
16, 1997.

                                     III-5
<PAGE>
 
                                    PART IV
                                    -------

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------

                         PROVIDENCE ENERGY CORPORATION
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


(a) Financial Statements and Schedules
    ----------------------------------

Consolidated Balance Sheets--September 30, 1996 and 1995
Consolidated Statements of Income for the years ended September 30,
  1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended September 30,
  1996, 1995 and 1994
Consolidated Statements of Capitalization--September 30, 1996
  and 1995
Consolidated Statements of Changes in Common Stockholders' Investment for
  the years ended September 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Consent of Independent Public Accountants

The financial statements and related notes listed above are incorporated by
reference to Providence Energy Corporation's Annual Report to Shareholders (see
pages 25 through 46 of this Form 10-K) for the year ended September 30, 1996,
filed herewith as Exhibit 13.

Schedule II.  Reserves for the years ended September 30, 1996, 1995 and 1994.

  Schedules I to XIII not listed above are omitted as not applicable or not
required under Regulation S-X.

(b) Reports on Form 8-K
    -------------------
  No reports were filed on Form 8-K during the latest quarter of the
  Registrant's fiscal year ended September 30, 1996.


                                     IV-1
<PAGE>
 
(c) Exhibits
    --------

  The following exhibits are filed as part of this report:

  3.1      Articles of Incorporation, as amended (incorporated by reference to
           Exhibit 4(e) to the Registration Statement of the Registrant on Form
           S-2 (Registration No. 33-24125)).

  3.2      Bylaws (incorporated by reference to Exhibit C to the Proxy
           Statement/Prospectus forming a part of the Registrant's Registration
           Statement on Form S-14 (Registration No. 2-69473), as amended at the
           annual meetings of the shareholders held January 14, 1985 and January
           14, 1991, the text of such amendments being set forth in each case as
           Exhibit A to the proxy statement for such annual meeting, heretofore
           filed with the Securities and Exchange Commission and being
           incorporated herein by this reference).

   4.1     Indenture dated as of August 1, 1981 from The Providence Gas Company
           to St. Louis Union Trust Company, Trustee, filed as Exhibit 4.1 to
           Registration Statement of The Providence Gas Company on Form S-1
           (Registration No. 2-72726), incorporated herein by this reference.

   4.2     First Supplemental Indenture dated as of May 1, 1986 from The
           Providence Gas Company to Centerre Trust Company of St. Louis,
           Trustee (filed as Exhibit 4 (b) to the Registration Statement of The
           Providence Gas Company on Form S-3 (Registration File No. 33-5023),
           incorporated herein by this reference).

   4.2(a)  Thirteenth Supplemental Indenture dated as of May 1, 1986 from The
           Providence Gas Company to Rhode Island Hospital Trust National Bank.

   4.3     First Mortgage Indenture of The Providence Gas Company dated as of
           January 1, 1922, as supplemented by First through Twelfth
           Supplemental Indentures (incorporated by reference to Exhibit 10.10
           to Registration Statement of The Providence Gas Company on Form S-1
           (Registration No. 2-72726)).

   4.4     Fourteenth, Fifteenth and Sixteenth Supplemental Indentures of The
           Providence Gas Company dated as of August 1, 1988, June 1, 1990 and
           November 1, 1992, respectively (incorporated by reference to Exhibit
           4 to the report of the Registrant to the Securities and Exchange
           Commission on Form 10-Q for the quarter ended March 31, 1993).

   4.5     Seventeenth Supplemental Indenture of The Providence Gas Company
           dated as of November 1, 1993. (Filed as Exhibit 4.5 to the report of
           The Registrant in Form 10-K for the year ended September 30, 1993
           incorporated herein by this reference.)

   4.6     Eighteenth Supplemental Indenture of The Providence Gas Company dated
           as of December 1, 1995. (Filed as Exhibit 4.6 to the report of the
           Registrant in Form 10-K for the year ended September 30, 1995
           incorporated herein by this reference.)

                                     IV-2
<PAGE>
 
   4.7     Stock Rights Agreement (Filed as Exhibit 1 to the report of the
           Registrant in Form 8-K  File No. 0-9380 dated August  3,
           1988, incorporated herein by this reference.)

   10.1    Material contracts filed as Exhibit 10 (a) through 10 (ff) to
           Registration Statement of the Registrant on Form S-2 (Registration
           No. 33-24125), incorporated herein by this reference.

   10.2    Management contract dated December 19, 1994 between James H.
           Dodge, Chairman, President and Chief Executive Officer of The
           Providence Gas Company, and the said Company.  (Filed as Exhibit 10.1
           to the report of the The Providence Gas Company in Form 10-Q for the
           quarter ended December 31, 1994, incorporated herein by this
           reference.)

   10.3    1989 Non-Employee Director Stock Option Plan (incorporated by
           reference to Exhibit A to the Registrant's proxy statement for the
           annual meeting of shareholders held January 9, 1989, heretofore filed
           with the Securities and Exchange Commission).

   10.4    1989 Stock Option Plan (incorporated by reference to Exhibit B to the
           Registrant's proxy statement for the annual meeting of shareholders
           held January 9, 1989, heretofore filed with the Securities and
           Exchange Commission).

   10.5    Management contract dated December 19, 1994 between James DeMetro,
           Vice President, Energy Services of The Providence Gas Company, and
           the said Company. (Filed as Exhibit 10.1 to the report of The
           Providence Gas Company in Form 10-Q for the quarter ended December
           31, 1994, incorporated herein by this reference.)

   10.6    Management contract dated December 19, 1994 between Robert W.
           Owens, Vice President, Operations of The Providence Gas Company, and
           the said Company. (Filed as Exhibit 10.1 to the report of The
           Providence Gas Company in Form 10-Q for the quarter ended December
           31, 1994, incorporated herein by this reference.)

   10.7    Management contract dated December 19, 1994 between Gary S.
           Gillheeney, Vice President, Financial and Information Services,
           Treasurer and Assistant Secretary of The Providence Gas Company, and
           the said Company. (Filed as Exhibit 10.1 to the report of The
           Providence Gas Company in Form 10-Q for the quarter ended December
           31, 1994, incorporated herein by this reference.)

   10.8    Management contract dated December 19, 1994 between Alycia L. Goody,
           Vice President, General Counsel and Secretary, of The Providence Gas
           Company, and the said Company. (Filed as Exhibit 10.1 to the report
           of The Providence Gas Company in Form 10-Q for the quarter ended
           December 31, 1994, incorporated herein by this reference.)

   10.9    Management contract dated September 3, 1996 between Gerald A.

                                     IV-3
<PAGE>
 
           Yurkevicz, Vice President, Marketing of the Registrant.

   13      Portions of the Annual Report to shareholders for the fiscal year
           ended September 30, 1996. (Pages 14 through 46)

   22      Subsidiaries of the Registrant.



                                     IV-4
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To The Board of Directors of
Providence Energy Corporation:

  We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in Providence Energy Corporation's
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated November 7, 1996.

  Our audit was made for the purpose of forming an opinion on those statements
taken as a whole.  The schedule listed in the accompanying index to the
financial statements is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.  This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein, in
relation to the basic financial statements taken as a whole.



/s/ Arthur Andersen LLP



Boston, Massachusetts
November 7, 1996



                                     IV-5
<PAGE>
 
                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



To The Board of Directors of
Providence Energy Corporation:


As independent public accountants, we hereby consent to the incorporation by
reference of our report dated November 7, 1996, included in this Form 10-K, into
the Company's previously filed Registration Statements on Forms S-3,
Registration No. 33-62318; S-3 Registration No. 33-70086; S-3, Registration No.
33-31768; S-8 Registration No. 33-31770;  S-8 Registration No. 33-43031; and S-8
Registration No. 33-04209.  It should be noted that we have not audited any
financial statements of the Company subsequent to September 30, 1996, or
performed any audit procedures subsequent to the date of our report.



/s/ Arthur Andersen LLP



Boston, Massachusetts
December 19, 1996



                                     IV-6
<PAGE>
 
Supplemental Schedule

                         PROVIDENCE ENERGY CORPORATION               Schedule II
                         -----------------------------     
                         RESERVES FOR THE YEARS ENDED
                         ----------------------------
      SEPTEMBER 30, 1996 SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
     -------------------------------------------------------------
                            (Thousands of Dollars)
<TABLE> 
<CAPTION> 
                                                              Charge
                                                              for
                                                              Which
                                   Additions                  Reserves
                          Balance  Charged       Other        Were      Balance
                          9/30/95  to Operations Add (Deduct) Created   9/30/96
                          -------  ------------- ------------ -------   -------
<S>                       <C>      <C>           <C>          <C>       <C> 
RESERVES DEDUCTED FROM
ASSETS:
Accounts receivable
 Allowance for
  doubtful accounts       $ 1,995     $5,078     $  -         $3,878    $ 3,195
 Allowance for lease
  receivables -
   current                    337          3        -            313         27
   other                       80         17        -             88          9
                          -------     ------     ------       ------    -------
 Total                    $ 2,412     $5,098     $  -         $4,279      3,231
                          =======     ======     ======       ======    =======
Allowance for lease
 receivables -
  long-term               $   651     $1,179     $  -         $1,427    $   403
                          =======     ======     ======       ======    =======

DEFERRED CREDITS AND
RESERVES:
Accumulated deferred
 income taxes             $18,734     $1,943     $   36(C)    $  -      $20,713
                          -------     ------     ------       ------    -------
Unamortized investment
 tax credit                 2,691        -          -            158      2,533
                          -------     ------     ------       ------    -------
Other-
 Liability and
  damage reserve              334        520        -            293        561
 Other                      5,307      1,303      1,742(D)       769      7,583
                          -------     ------     ------       ------    -------
  Total other               5,641      1,823      1,742        1,062      8,144
                          -------     ------     ------       ------    -------
  Total deferred
   credits and
    reserves              $27,066     $3,766     $1,778       $1,220    $31,390
                          =======     ======     ======       ======    =======
</TABLE> 

 
                                     IV-7
 
<PAGE>
 
                                                            Schedule II (cont'd)
<TABLE> 
<CAPTION> 
                                                              Charge
                                                              for
                                                              Which
                                   Additions                  Reserves
                          Balance  Charged       Other        Were      Balance
                          9/30/94  to Operations Add (Deduct) Created   9/30/95
                          -------  ------------- ------------ -------   -------
<S>                       <C>      <C>           <C>          <C>       <C>  
RESERVES DEDUCTED FROM
 ASSETS:
 Accounts receivable
   Allowance for
    doubtful accounts     $ 2,671     $3,169     $   --       $3,845    $ 1,995
   Allowance for lease
     receivables -
      current                 367          4         --           34        337
      other                    80         --         --           --         80
                          -------     ------     ------       ------    -------
  Total                   $ 3,118     $3,173     $   --       $3,879    $ 2,412
                          =======     ======     ======       ======    =======
Allowance for lease
 receivables -
  long-term               $   951     $   --     $ (200)      $  100    $   651
                          =======     ======     ======       ======    =======

DEFERRED CREDITS AND
RESERVES:
Accumulated deferred
 income taxes             $15,506     $2,142     $1,086(C)    $   --    $18,734
                          -------     ------     ------       ------    -------
Unamortized investment
 tax credit                 2,851         --         --          160      2,691
                          -------     ------     ------       ------    -------
Other-
 Liability and
  damage reserve              421        400         --          487        334
 Other                      5,898        623        418(A)     1,632      5,307
                          -------     ------     ------       ------    -------
  Total other               6,319      1,023        418        2,119      5,641
                          -------     ------     ------       ------    -------
  Total deferred
   credits and
    reserves              $24,676     $3,165     $1,504       $2,279    $27,066
                          =======     ======     ======       ======    =======

</TABLE> 
                                     IV-8
<PAGE>
 
                                                            SCHEDULE II (cont'd)

<TABLE> 
<CAPTION> 
                                                              Charge
                                                              for
                                                              Which
                                   Additions                  Reserves
                          Balance  Charged       Other        Were      Balance
                          9/30/93  to Operations Add (Deduct) Created   9/30/94
                          -------  ------------- ------------ -------   -------
<S>                       <C>      <C>           <C>          <C>       <C> 
RESERVES DEDUCTED FROM
ASSETS:
Accounts receivable
 Allowance for
  doubtful accounts       $ 2,026     $4,991     $   --       $4,346    $ 2,671
 Allowance for lease
  receivables -
   current                    390         11         --           34        367
   other                       96         --         --           16         80
                          -------     ------     ------       ------    -------
 Total                    $ 2,512     $5,002     $   --       $4,396    $ 3,118
                          =======     ======     ======       ======    =======
Allowance for lease
 receivables -
  long-term               $   778     $  316     $   --       $  143    $   951
                          =======     ======     ======       ======    =======

DEFERRED CREDITS AND
RESERVES:
Accumulated deferred
 income taxes             $14,018     $1,235     $  253(C)    $   --    $15,506
                          -------     ------     ------       ------    -------
Unamortized investment
 tax credit                 3,010         --         --          159      2,851
                          -------     ------     ------       ------    -------
Other-
 Liability and
  damage reserve              296        145         --           20        421
 Other                      4,395      1,232      1,726(B)     1,455      5,898
                          -------     ------     ------       ------    -------
  Total other               4,691      1,377      1,726        1,475      6,319
                          -------     ------     ------       ------    -------
  Total deferred
   credits and
    reserves              $21,719     $2,612     $1,979       $1,634    $24,676
                          =======     ======     ======       ======    =======
</TABLE> 

(A) Includes adjustments to the regulatory pension liability.
(B) Principally a reserve for restructuring charges which was offset by a
    deferred regulatory asset. Also reported are adjustments to the regulatory
    pension liability.
(C) Represents adjustments to the regulatory asset and liability for FAS No. 109
    activity.
(D) Principally an accrual for environmental investigation and remediation costs
    in addition to adjustment to the regulatory pension liability.



                                     IV-9
<PAGE>
 
INCORPORATION BY REFERENCE INTO REGISTRATION STATEMENTS ON FORM S-8

     For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13,1990) under the Securities Act of 1933, the
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into Part II of Registrant's Registration Statements on Form S-8
Nos. 33-31769, 33-31770, 33-43031 and 33-04209:

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the Securities being registered, the Registrant will, unless in
the opinion of its counsel that matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act,
will be governed by the final adjudication of such issue.



                                     IV-10
<PAGE>
 
                                       SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       PROVIDENCE ENERGY CORPORATION

                                       By /s/ JAMES H. DODGE
                                          --------------------------------------
                                          James H. Dodge, Chairman,
                                          President and CEO

                                       Date December 19, 1996
                                            ------------------------------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
 
         Signature                    Title                   Date
         ---------                    -----                   ----
 
/s/ JAMES H. DODGE           Chairman, President and CEO    12-19-96
---------------------------  (Principal Executive Officer)  --------
James H. Dodge              
 
/s/ GARY S. GILLHEENEY       Senior Vice President, Chief   12-19-96
---------------------------  Financial Officer, Treasurer   --------
Gary S. Gillheeney           and Assistant Secretary
 
/s/ GILBERT R. BODELL, JR.   Director                       12-19-96
---------------------------                                 --------
Gilbert R. Bodell, Jr.
 
/s/ JOHN H. HOWLAND          Director                       12-19-96
---------------------------                                 --------
John H. Howland
 
/s/ DOUGLAS H. JOHNSON       Director                       12-19-96
---------------------------                                 --------
Douglas H. Johnson
 
/s/ DOROTHY G. KRAMER        Director                       12-19-96
---------------------------                                 --------
Dorothy G. Kramer
 
/s/ WILLIAM KREYKES          Director                       12-19-96
---------------------------                                 -------- 
William Kreykes
 
/s/ PAUL F. LEVY             Director                       12-19-96
---------------------------                                 -------- 
Paul F. Levy
 
/s/ ROMOLO A. MARSELLA       Director                       12-19-96
---------------------------                                 --------
Romolo A. Marsella

/s/ M. ANNE SZOSTAK          Director                       12-19-96
-------------------------                                   -------- 
M. Anne Szostak

/s/ KENNETH W. WASHBURN      Director                       12-19-96
-------------------------                                   --------
Kenneth W. Washburn


                                     IV-11