PROVIDENCE ENERGY CORPORATION

FORM 10-Q

DECEMBER 31, 1995

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

(Mark One)

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

For the quarterly period ended        December 31, 1995                

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 incorporation      (I.R.S. Employer
           or organization)                       Identification No.)

            100 Weybosset Street, Providence, Rhode Island  02903      
                       (Address of principal executive offices)
                                       (Zip Code)

                                   401-272-9191                       
               Registrant's telephone number, including area code 

                                                                       
(Former name, former address and former fiscal year, if changed since last
 report).

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes  X  No    .
                    APPLICABLE ONLY TO CORPORATE ISSUERS:

Common stock, $1.00 par value, 5,691,825 shares outstanding at 
February 15, 1996.





PART I:          FINANCIAL INFORMATION                            PAGE


Item 1           Financial Statements

                 Consolidated Statements of Income for the 
                 three and twelve months ended
                 December 31, 1995 and 1994                        I-1

                 Consolidated Balance Sheets as of
                 December 31, 1995, December 31, 1994 and
                 September 30, 1995                                I-2

                 Consolidated Statements of Cash Flows for the
                 three months ended December 31, 1995 and 1994     I-3

                 Consolidated Statements of Capitalization as of
                 December 31, 1995, December 31, 1994 and
                 September 30, 1995                                I-4

                 Notes to Consolidated Financial Statements        I-5

Item 2           Management's Discussion and Analysis of  
                 Financial Conditions and Results of Operations    I-8

PART II:         OTHER INFORMATION

Item 6           Exhibits and Reports on Form 8-K                  II-1

                 Signature                                         II-2






















	PAGE i


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
	
	PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF INCOME
	FOR THE PERIODS ENDED DECEMBER 31
	(Unaudited)

                                     THREE MONTHS          TWELVE MONTHS  
                                     1995    1994          1995     1994  
                                     (thousands, except per share amounts)

Operating revenues                $ 58,406   $ 49,302   $193,096  $209,123
Cost of gas sold                    31,521     26,126    106,339   122,456
  Operating margin                  26,885     23,176     86,757    86,667

Operating expenses:
  Operation and maintenance         11,732     10,901     45,200    45,810
  Depreciation and amortization      2,883      2,600     10,752     9,834
  Taxes - 
    State gross receipts             1,611      1,293      5,323     5,756
    Local property and other         1,668      1,635      6,797     6,231
    Federal income                   2,425      1,725      3,804     4,284
Total operating expenses            20,319     18,154     71,876    71,915

Operating income                     6,566      5,022     14,881    14,752

Other income, net                      639        159      1,345       170
                                  
Income before interest expense       7,205      5,181     16,226    14,922
Interest expense:
  Long-term debt                     1,313      1,283      5,116     5,151
  Other                                608        451      2,594     1,545
  Interest capitalized                 (13)       (34)      (123)     (152)
                                     1,908      1,700      7,587     6,544
Income before preferred stock 
  dividends of subsidiary            5,297      3,481      8,639     8,378

Preferred dividends of subsidiary     (174)      (174)      (696)     (696)

Net income                        $  5,123   $  3,307   $  7,943  $  7,682
                                  ========   ========   ========  ========
Earnings per common share         $    .90   $    .59   $   1.41  $   1.38
                                  ========   ========   ========  ========
Dividends paid per common share   $    .27   $    .27   $   1.08  $   1.07
                                  ========   ========   ========  ========
Weighted average common shares
  outstanding                      5,680.1    5,591.4    5,646.3   5,557.5
                                  ========   ========   ========= ========




















	PAGE I-1



                 PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                                  (thousands)
                                  December 31,   December 31,   September 30,
                                     1995            1994           1995     
ASSETS
Gas plant, at original cost           $266,283      $244,117      $257,264
  Less - Accumulated depreciation and
    utility plant acquisition
      adjustments                       94,995        83,084        87,363
                                       171,288       161,033       169,901
Nonutility property, net                 1,937         2,012         1,958

Current assets:
  Cash and temporary cash investments    2,979         3,446         1,278
  Accounts receivable, less allowance of
    $2,540 at 12/31/95, $2,560 at
    12/31/94 and $2,412 at 9/30/95      29,032        29,849        14,031
  Unbilled revenues                     13,925        11,397         2,655
  Deferred gas costs                         -         5,803         1,193
  Inventories, at average cost - 
    Liquefied natural gas, propane and 
      underground storage                8,643        10,893        10,116
    Materials and supplies               1,584         1,545         1,540
  Prepaid and refundable taxes           3,631         2,872         5,933
  Prepayments                              783           869         1,366
                                        60,577        66,674        38,112
Deferred charges and other assets       14,516        16,220        17,156
Total assets                          $248,318      $245,939      $227,127
                                      ========      ========      ========    
CAPITALIZATION AND LIABILITIES
Capitalization
  (See accompanying statement)        $163,265      $145,649      $161,006

Current liabilities:
  Notes payable                         23,240        36,250         7,337
  Current portion of long-term debt      1,983         2,091         1,950
  Accounts payable                      18,146        20,568        14,102
  Accrued taxes                          3,633         7,801         6,059
  Accrued vacation                       1,657         1,602         1,679
  Customer deposits                      4,041         3,622         3,981
  Refundable gas costs                     446             -             -
  Other                                  4,084         3,671         3,947
                                        57,230        75,605        39,055
Deferred credits and reserves:
  Accumulated deferred Federal
    income taxes                        19,070        15,728        18,734
  Unamortized investment tax credits     2,652         2,812         2,691
  Other                                  6,101         6,145         5,641
                                        27,823        24,685        27,066
Total capitalization and liabilities  $248,318      $245,939      $227,127
                                      ========      ========      ========











                                         PAGE I-2

                    PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE THREE MONTHS ENDED DECEMBER 31

	               (Unaudited)
                                                    1995        1994   
                                                      (thousands)
Cash provided by (used for)
Operating Activities:
    Income after interest expense                $ 5,297     $ 3,481
    Items not requiring cash:
        Depreciation and amortization-
          plant and nonutility                     2,889       2,666
        Changes as a result of regulatory actions (1,453)          -
        Amortization of deferred charges and other   342         321
        Deferred Federal income taxes                340         222
        Amortization of investment tax credits       (39)        (39)
        Changes in assets and liabilities
           which provided (used) cash:
          Accounts receivable                    (15,018)    (11,957)
          Unbilled revenues                      (11,270)     (8,502)
          Deferred gas costs                       1,639      10,016 
          Inventories                              1,429         496 
          Prepaid and refundable taxes             2,298       1,158
          Prepayments                                583         630
          Accounts payable                         4,044       2,244
          Accrued taxes                            1,632       1,577
          Accrued vacation, customer deposits
            and other                                242         (80)
          Deferred charges and other                 641        (744)
        Net cash provided by (used for)
          operations                              (6,404)      1,489
Investing Activities:
    Expenditures for property, plant
      and equipment, net                          (4,793)     (4,677)
Financing Activities:
    Issuance of common stock                         391         339
    Issuance of mortgage bonds                    15,000           -
    Payments on long-term debt                    (1,692)     (1,720)
    Increase in notes payable, net                   903       8,550 
    Cash dividends on preferred shares              (174)       (174)
    Cash dividends on common shares               (1,530)     (1,506)
        Total                                     12,898       5,489
Increase in cash and cash equivalents              1,701       2,301
Cash and cash equivalents at beginning
  of period                                        1,278       1,145
Cash and cash equivalents at end of period       $ 2,979    $  3,446
                                                 =======    ========
Supplemental disclosure of cashflow information:
  Cash paid during period for-
    Interest (net of amount capitalized)         $ 1,478    $  1,221
    Income taxes (net of refunds)                $    92    $    200 




















	PAGE I-3

           PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CAPITALIZATION
                                (Unaudited)
                                (Thousands)

                                     December 31,  December 31,   September 30,
                                       1995           1994           1995     


Common stockholders' investment:

  Common stock, $1 par
    Authorized - 20,000 shares
    Outstanding - 5,692 at 12/31/95,
                   5,602 at 12/31/94
                   and 5,668 at
                   9/30/95             $  5,692   $   5,602      $   5,668
  Amount paid in excess of par           54,625      53,360         54,258
  Retained earnings                      22,191      20,334         18,598
Total common equity                      82,508      79,296         78,524

Cumulative preferred stock of subsidiary:

  Providence Gas Company - 
    Redeemable 8.7% Series, $100 par
    Authorized - 80 shares
    Outstanding - 80 shares as of
      12/31/95, 12/31/94 and 9/30/95      8,000       8,000          8,000

Long-term debt:

  First Mortgage Bonds                   72,800      59,400         74,400
  Capital Leases                          1,940       1,044          2,032

Total long-term debt                     74,740      60,444         76,432

Less current portion                      1,983       2,091          1,950
        
Long-term debt, net                      72,757      58,353         74,482

Total capitalization                   $163,265   $ 145,649      $ 161,006
                                       ========   =========      =========


























                                  PAGE I-4


PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements



Accounting Policies

     It is the Registrant's opinion that the financial information contained in
this report reflects all normal, recurring adjustments necessary to a fair
statement of the results for the periods reported; however, such results are
not necessarily indicative of results to be expected for the year, due to the
seasonal nature of the Registrant's operations.  Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principl

Reclassifications
    Certain prior period amounts have been reclassified for consistent
presentation with the current year.

Environmental Matters

 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 December 31, 1995, 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 PRPs.  With respect
 to one of the Plympton sites, the Registrant has joined with other PRPs in
 entering into an Administrative Consent Order with the Massachusetts Department
of Environmental Protection.  The costs to be borne by the Registrant, in
conneciton with both Plympton sites, are not anticipated to be material to
the financial condition of the Registrant.

     During 1995, the Registrant voluntarily began a study at its primary gas
 distribution facility located in Providence.  In accordance with state laws,
 such a voluntary study is monitored by the Rhode Island Department of
 Environmental Management. The purpose of this study is to determine 
the extent of environmental contamination at the site, if any.  The study is
 continuing, and although results are not conclusive, preliminary findings
 indicate that clean-up may be required.  The level of clean-up is likely to
 vary significantly depending upon the proposed future use of the site.  In
 fact, if the site remains in its present use, only minimal clean-up may be
 required.  As of December 31, 1995, the Registrant cannot estimate the
 future cost of investigation and clean-up as a result of the uncertanties
discussed.  As of December 31, 1995, approximately $720,000 had been spent
 on studies at this site.

 The Registrant recently became aware of the possibility of contamination from
 an abandoned underground oil storage tank located at its Westerly, Rhode
 Island operations center.  The Registrant is currently conducting tests at
 this site to confirm the existence of and extent of any contamination.  Due to
 the early stages of investigation, management is unable to offer any
 conclusions regarding this site.

     In its rate case filed in February 1995, the Registrant 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 $980,000 have been charged to the accumulated
 depreciation reserve at December 31, 1995. Management believes that this
 rate recovery mechanism is appropriate for recovery of future costs.  

     In addition to rate recovery, management has a program to ascertain the
 possibility of recovery under prior insurance coverage.  Also, management has
 begun discussions with other parties who may assist the Registrant in paying
 future costs at the above sites.  Management believes that its program for
 managing environmental issues combined with rate recovery, possible
 insurance recovery and financial contributions from others, will likely
 avoid any material adverse effect on its results of operations or

Gas Supply Restructuring

     Federal Energy Regulatory Commission (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 successfully 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 pipeline's customers, including the
 Registrant.  Based upon current information, the Registrant anticipates its
 transition costs to net between $17 million and $19 million of which $13.4
 million has been included in the Cost of Gas Adjustment Clause(CGA) and is
 currently being collected from customers.  The remaining minimum 
obligation of $3.6 million has been recorded in the accompanying consolidated
 balance sheet along with a regulatory asset anticipating future recovery
 through the CGA.

PAGE I-6

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

Rate Case

     In February 1995, the Registrant filed for rate relief requesting an
 approximate 8 percent 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 the Registrant.  In its decision, the RIPUC authorized
 the Registrant to increase its rates to recover additional annual revenues in
the amount of $3,990,000.  Susequent to the issuance of the rate decision,
the RIPUC approved the Registrant's 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, the Registrant 
recorded several adjustments to its first quarter 1996 financial
statements.  Specifically:

a) The Registrant 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, the Registrant was required to estimate two year's
 increase in expense.  As a result, the Registrant reduced its regulatory
 liability for one year's property tax expense resulting in a one time gain
 of approximately $4.1 million before tax.

b) The Registrant wrote-off and will not recover approximately $1.6 million,
 before tax, of restructuring costs previously deferred.  The RIPUC had
 previously allowed the Registrant recovery of similar costs, but determined
 that the costs of the 1994 reorganization should not be recovered in rates.

c) The Registrant wrote-off approximately $440,000, before tax, of previously
 deferred rate case expenses.

d) The Registrant 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 Federal Energy Regulatory Commission 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.

New Accounting Pronouncements

     Management continues to analyze the new accounting statement, Statement of
 Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting for the
 Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
 .  Based on the current regulatory environment, management does not believe
 adoption of SFAS No. 121 will have a material impact on the financial
 position or results of operations of the regulated business.  Management
 continues to analyze the effect of the adoption of SFAS No. 12
PAGE I-7


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITIONS AND RESULTS OF OPERATIONS

     For the current quarter, the Registrant's current operating revenues,
 operating margin and net income have increased over the comparable period
 presented, as shown in the table below:

(thousands where applicable)
                                        
                                                         Percent
                       1995       1994      Change       Change

Operating revenues     $58,406  $49,302     $9,104       18.5
                       =======  =======     ======       ====

Operating margin       $26,885  $23,176     $3,709       16.0
                       =======  =======     ======       ====

Net income             $ 5,123  $ 3,307     $1,816       54.9
                       =======  =======     ======       ====

Operating Revenues and Operating Margin

     During the latest quarter, the Registrant experienced colder than
 normal weather averaging 25.8 percent colder than the same quarter last
 year.  The increase in heating load due to the colder temperatures
 represents approximately $2.8 million in increased operating margin.

     Additionally, the Rhode Island Public Utilities Commission (RIPUC)
 approved a rate increase of approximately $4.2 million effective
 December 17, 1995.  Operating margin for the quarter increased by
 approximately $600,000 as a result of the rate increase.

Operating and Maintenance Expenses

     Overall, other operating and maintenance expenses increased
 approximately $830,000 or 7.6 percent.  This increase is attributable to a
 higher uncollectible revenue provision due to an increase in operating
 revenues and colder weather, normal wage increases granted due to
 negotiated union contract terms and employee merit raises, an increase in
 pension expense due to an anticipated increase in pension contributions and
 a moderate increase in the general liability claim reserve.

Taxes

     Taxes for the current quarter versus last year increased approximately
 $1.1 million or 22.6 percent.  The increase in taxes, mainly Federal income
 and state gross receipts tax, was the result of higher pretax income and
 higher operating revenues, respectively.

Other Income

     Other income increased approximately $480,000 in the first quarter. 
 This increase is due to regulatory adjustments including a one-time gain
 for the regulatory change in accounting for property taxes which was offset
 by the write-offs of previously deferred reorganization and other costs for
 which recovery was not allowed as part of the rate award received from the
 RIPUC on November 17, 1995.
(See notes to consolidated financial statements.)
PAGE I-8


Interest Expense

     Interest expense increased approximately $210,000 or 12.2 percent.
A slight increase in short-term interest rates and an increase in weighted
 average short-term borrowings caused short-term interest expense to increase.

Future Outlook

     The Registrant currently owns and operates North Attleboro Gas Company
 (North Attleboro Gas), a small gas distribution company with over 3,000
 customers located in Massachusetts.  The Registrant continues to assess
 the long-term strategic fit of North Attleboro Gas. Our assessment of this
 operation is part of our periodic evaluation of the strategic fit and
 financial performance of all our major assets.  The Registrant is
 considering various options for North Attleboro Gas, including a
 restructuring of operations, a request for a rate increase or the possible
 sale of North Attleboro Gas to another party.  No decision has been made
 with respect to this matter and any decision will not likely result in a
 material change in the results of operations or the financial position of
 the Registrant.

     The Financial Accounting Standards Board (FASB) recently released
 Statement of Financial Accounting Standards No. 121 (SFAS No. 121),
 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
 Assets to be Disposed of", which will be effective for the Registrant in
 fiscal 1997.  Based on the current regulatory environment, management does
 not believe adoption of SFAS No. 121 will have a material impact on the
 financial position or results of operations of the regulated business.
  Management continues to analyze the effect of the adoption of SFAS No. 121
 on its non-regulated business and has not yet concluded on the effect the
 adoption of SFAS No. 121 will have.  The FASB has also released Statement
 of Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for
 Stock-Based Compensation".  Although this Statement will increase footnote
 disclosures regarding the Registrant's stock plans, management does not
 believe SFAS No. 123 will have an impact on the Registrant's results

 of operations or financial position.

LIQUIDITY AND CAPITAL RESOURCES

    The Registrant meets seasonal cash requirements and finances its capital
 expenditures program on an interim basis through short-term borrowings. 
 For example, during the latest quarter, the Registrant's accounts
 receivable and unbilled revenue have increased $26.3 million. These
 fluctuations are the result of higher monthly sales during the latest
 quarter and a moratorium on residential shut-offs during the heating season.
  Because of these increases, which negatively impact cashflow, the
 Registrant must borrow to maintain an appropriate level of liquidity.Management
believes its available financings are sufficient to meet these seasonal
needs.
     The Registrant experienced a sharp decrease in its net cash provided by
 operations during the latest quarter as compared to last year, primarily
 as the result of gas cost collections.  Last year, the net cash provided by
 operations increased as a result of the collection of gas costs from a
 substantial underrecovery which previously existed.

     In December 1995, the Registrant received proceeds of $15 million
 related to an issuance of First Mortgage Bonds, Series R (7.5%), which will
 mature in December 2025.  The net proceeds received from the issuance were
 used to pay down short-term debt.

     Capital expenditures for the latest quarter of $4.8 million were stable
 when compared to $4.7 million last year.  Capital expenditures for the
 remainder of the fiscal year are expected to be approximately $16.2 million.
  Anticipated capital expenditures for the next three years are expected to
 total between $55 million to $65 million.

PAGE I-9


     In February 1995, the Registrant filed for rate relief requesting an
 approximate eight percent general rate increase.  In November 1995, the
 RIPUC authorized the Registrant 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 the Registrant's motion to reconsider
 a revenue adjustment of $171,572.  That approval increases the overall rate
 increase to $4,161,572.  As part of this award, the Registrant is allowed
to earn a 10.9 percent return on common equity.  As previously discussed,
the rate award also resulted in several accounting adjustments, which had no
impact on the Registrant's cash flow in the current quarter. 

     On October 3, 1991, the Massachusetts Department of Public Utilities
 (MDPU) approved a settlement order reached between the Massachusetts
 Attorney General's Office and North Attleboro Gas Company.  Due to the
 magnitude of the award (32 percent), the MDPU ordered North Attleboro Gas
 to phase-in the award over a five year period effective November 1, 1991. 
 As a result of this award, the final revenue increase of $94,445 was
 phased-in on November 1, 1995.

     In November 1995, the Registrant filed a three-year Settlement Agreement
 between itself and the 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, which are designed to provide equipment
 rebates for specific load building programs; (2) funding associated with a
 low income weatherization program, 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 Registrant's strategy and steps
 prepared in its supply plan are reasonable.

     In February 1996, the Registrant and the Division filed an amendment to
 the Settlement Agreement which provides for a one-time funding of $800,000
 for a Low Income Assistance Program (LIAP) through a portion of the
 Registrant's share of the performance-based ratemaking mechanism.  The LIAP
 was developed in response to the Registrant's anticipated decrease of
 approximately $1.5 million in Federal funding of the low income heat
 assistance program administered by the State of Rhode Island.

     The reduction in available funds combined with a colder than normal
 winter in the Northeast may translate into higher uncollectible revenues;
 although the increase is not expected to be dollar for dollar.  However,
 as a result of the colder than normal weather, the Federal government
 could release emergency heating assistance funds.  The Registrant will
 continue to aggressively pursue ways to mitigate the impact of reductions
 in Federal funding on low income customers through involvement with state
 government, the RIPUC and other interested parties.









PAGE I-10




	PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES




PART II.  OTHER INFORMATION

Item 6 (a).  Exhibits

4.6  Eighteenth Supplemental Indenture of the Providence Gas Company
     dated as of December 1, 1995.

Item 6 (b).  Reports on Form 8-K


On November 22, 1995, the Registrant filed a report on Form 8-K regarding
 the rate award received by the Registrant which did not allow for the
 recovery of $1.6 million net of tax for costs associated with previously
 deferred reorganization and other costs.  Consolidated income statements
 for the three month period and for the fiscal year ended September 30, 1995
 were also filed.









































	PAGE II-1



PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES


It is the opinion of management that the financial information contained in
 this report reflects all adjustments necessary for a fair statement of
 results for the period reported, but such results are not necessarily
 indicative of results to be expected for the year due to the seasonal
 nature of the Registrant's gas operations. All accounting policies and
 practices have been applied in a manner consistent with prior periods.



SIGNATURE

Pursuant to the requirements 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
                         (Registrant)




                         BY:/s/  Gary S. Gillheeney     
                                 GARY S. GILLHEENEY  
                                 Vice President, Financial
                                 and Information Services,
                                 Treasurer and Assistant
                                 Secretary


Dated:  February 15, 1996






















	PAGE II - 2








PROVIDENCE ENERGY CORPORATION AND SUBSIDIARIES



It is the opinion of management that the financial information contained in
 this report reflects all adjustments necessary for a fair statement of
 results for the period reported, but such results are not necessarily
 indicative of results to be expected for the year due to the seasonal
 nature of the Registrant's gas operations.  All accounting policies and
 practices have been applied in a manner consistent with prior periods.






SIGNATURE

Pursuant to the requirements 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
                             (Registrant)




                             BY:                         
                                 GARY S. GILLHEENEY  
                                 Vice President, Financial
                                 and Information Services,
                                 Treasurer and Assistant
                                 Secretary



Dated:  February 15, 1996



















	PAGE II - 2


Exhibit A (to Bond Purchase Agreement)
DRAFT OF TUESDAY, DECEMBER 12, 1995


                              
                              
                 THE PROVIDENCE GAS COMPANY
                              
                              
                             TO
                              
                              
            STATE STREET BANK AND TRUST COMPANY,
                              
                       AS SUCCESSOR TO
                              
                              
            RHODE ISLAND HOSPITAL TRUST COMPANY,
                              
                           TRUSTEE

                              
                              
                              
                              
                              
              EIGHTEENTH SUPPLEMENTAL INDENTURE
                              
                              
                              
                              
                              
                DATED AS OF DECEMBER 1, 1995






     


                      Table of Contents

SECTION                         HEADING                 PAGE

Parties                                                    1

FORM OF SERIES R BOND                                      2

ARTICLE FIRST.  SERIES R BONDS                             7
   Section 1.01                                           7
   Section 1.02                                           8
   Section 1.03                                           8
   Section 1.04                                          11

ARTICLE SECOND. ISSUANCE OF $15,000,000 OF SERIES R
                BONDS AND CLOSING OF SUCH SERIES AT
                THAT AMOUNT                              12
   Section 2.01                                          12
   Section 2.02                                          12

ARTICLE THIRD.  ADDITIONAL PROVISIONS                    12
   Section 3.01                                          12
   Section 3.02                                          12
   Section 3.03                                          13
   Section 3.04                                          13
   Section 3.05                                          13
   Section 3.06                                          13
   Section 3.07                                          13
   Section 3.08                                          13
   Section 3.09                                          15
   Section 3.10                                          15
   Section 3.11                                          15
   Section 3.12                                          15
   Section 3.13                                          15
   Section 3.14                                          15
   Section 3.15                                          16
   Section 3.16                                          16

Signatures                                                17


Attachments to Eighteenth Supplemental Indenture:

SCHEDULE I  -   Schedule of Property and Interests
                Therein
SCHEDULE II -   Schedule of Released Property
     
     PARTIESTHIS EIGHTEENTH SUPPLEMENTAL INDENTURE, dated as
of  December 1, 1995, between THE PROVIDENCE GAS COMPANY,  a
corporation  created by Special Act of the General  Assembly
of  the  State of Rhode Island (hereinafter sometimes called
the  "Company"), party of the first part, and  STATE  STREET
BANK  AND  TRUST  COMPANY,  a  Massachusetts  Trust  Company
(successor  to  Rhode Island Hospital Trust  National  Bank,
which  succeeded  Rhode Island Hospital Trust  Company),  as
Trustee  under  the  Company's  First  Mortgage  hereinbelow
mentioned  (hereinafter  sometimes  called  the  "Trustee"),
party of the second part:
     
     WHEREAS  the  Company  by  an Indenture,  dated  as  of
January  1,  1922,  as supplemented by a First  Supplemental
Indenture,   dated  as  of  February  6,  1933,   a   Second
Supplemental  Indenture, dated as of June 1, 1944,  a  Third
Supplemental Indenture, dated as of April 1, 1948, a  Fourth
Supplemental Indenture, dated as of January 1, 1958, a Fifth
Supplemental  Indenture, dated as of July 1, 1960,  a  Sixth
Supplemental  Indenture, dated as of September  l,  1963,  a
Seventh  Supplemental Indenture, dated  as  of  November  l,
1971, an Eighth Supplemental Indenture, dated as of July  1,
1972, a Ninth Supplemental Indenture, dated as of October 1,
1975,  a Tenth Supplemental Indenture, dated as of April  1,
1976,  an  Eleventh  Supplemental  Indenture,  dated  as  of
September  1, 1978, a Twelfth Supplemental Indenture,  dated
as of September 1, 1983, a Thirteenth Supplemental Indenture
dated as of May 1, 1986, a Fourteenth Supplemental Indenture
dated  as  of  August  1,  1988,  a  Fifteenth  Supplemental
Indenture dated as of June 1, 1990, a Sixteenth Supplemental
Indenture,  dated as of September 1, 1992 and a  Seventeenth
Supplemental  Indenture dated as of November 1,  1993  (said
instruments    being    hereinafter    sometimes     called,
respectively,   the   "Original   Indenture",   the   "First
Supplemental    Indenture",   the    "Second    Supplemental
Indenture", the "Third Supplemental Indenture", the  "Fourth
Supplemental Indenture", the "Fifth Supplemental Indenture",
the    "Sixth   Supplemental   Indenture",   the    "Seventh
Supplemental    Indenture",   the    "Eighth    Supplemental
Indenture", the "Ninth Supplemental Indenture",  the  "Tenth
Supplemental    Indenture",   the   "Eleventh   Supplemental
Indenture",   the  "Twelfth  Supplemental  Indenture",   the
"Thirteenth   Supplemental   Indenture",   the   "Fourteenth
Supplemental   Indenture",   the   "Fifteenth   Supplemental
Indenture," the "Sixteenth Supplemental Indenture," and  the
"Seventeenth  Supplemental  Indenture,"  and  the   Original
Indenture   as   supplemented  by  whatsoever   supplements,
including,  if apt, this Eighteenth Supplemental  Indenture,
as  have  been or shall have been executed and delivered  at
the  pertinent  time,  being hereinafter  sometimes  called,
collectively, the "Indenture"), mortgaged its  property  and
franchises,    including   after-acquired    property    and
franchises,  to  the  Trustee to secure its  First  Mortgage
Bonds issued and to be issued thereunder in accordance  with
the   provisions  of  said  Indenture,  and  there  are  now
outstanding thereunder $10,000,000 principal amount of First
Mortgage  Bonds, Series M, 10.25% due July 31,  2008,  being
all of an original issue of $10,000,000 principal amount  of
bonds  of  said  Series M, $10,000,000 principal  amount  of
First  Mortgage  Bonds, Series N, 9.63% due  May  30,  2020,
being  all  of  an  original issue of $10,000,000  principal
amount  of  bonds  of  said Series N, $12,500,000  principal
amount  of  First  Mortgage  Bonds,  Series  O,  8.46%   due
September  30,  2022,  being all of  an  original  issue  of
$12,500,000  principal amount of bonds  of  said  Series  O,
$12,500,000 principal amount of First Mortgage Bonds, Series
P,  8.09%  due September 30, 2022, being all of an  original
issue  of  $12,500,000 principal amount  of  bonds  of  said
Series P, and $12,800,000 principal amount of First Mortgage
Bonds,  Series  Q,  5.62% due November  30,  2003,  being  a
portion of an original issue of $16,000,000 principal amount
of bonds of said Series Q; and
     
     WHEREAS  the  Company has determined, by due  corporate
action,  to  provide for the immediate issuance,  execution,
authentication  and  delivery of  $15,000,000  in  aggregate
principal  amount  of  its fully registered  First  Mortgage
Bonds in the principal amount of $15,000,000 to be known  as
the   Company's  First  Mortgage  Bonds,  Series  R,   7.50%
(hereinafter sometimes called "bonds of Series R" or "Series
R bonds") due December 15, 2025; and
     
     WHEREAS  each  of the bonds to be issued hereunder  and
the  certificate of the Trustee to be endorsed on the  bonds
of  such  series  are to be substantially in  the  following
forms, respectively, to wit:
                              
                              
                   [FORM OF SERIES R BOND]

No. R-                                                        $__________
                                                            
                                             PPN 743753 D@ 1
                              
                              
                 THE PROVIDENCE GAS COMPANY
                              
                              
            FIRST MORTGAGE BOND, SERIES R, 7.50%
                              
                              
                    DUE DECEMBER 15, 2025
     
     THE  PROVIDENCE GAS COMPANY, a corporation  created  by
Special  Act of the General Assembly of the State  of  Rhode
Island   (hereinafter  called  the  "Company"),  for   value
received,        hereby        promises        to        pay
______________________________ or registered assigns, on the
fifteenth  day  of  December, 2025,  the  principal  sum  of
_________________________ Dollars ($__________), and to  pay
interest  thereon (unless this bond shall have  been  called
for  previous redemption and payment duly provided therefor)
at  the  rate of seven and fifty hundredths per cent (7.50%)
per  annum,  payable semi-annually on the fifteenth  day  of
June and December in each year, commencing the fifteenth day
of  June,  1996, until said principal sum shall have  become
due.   The  Company promises to pay, on demand, interest  on
any  overdue principal (including any overdue prepayment  of
principal) and premium, if any, and (to the extent permitted
by  applicable law) on any overdue installment of  interest,
at  the  rate of eight and fifty hundredths per cent (8.50%)
per annum.  Interest shall be computed on the basis of a 360-
day year of twelve 30-day months, except that this means  of
computation shall not operate to deprive the holder of  this
bond  of  interest  for any day or days when  applied  to  a
period of less than six calendar months.  The principal  of,
interest on and premium, if any, on this bond shall, subject
to   the  provisions  of  Section  3.07  of  the  Eighteenth
Supplemental Indenture hereinafter described, be payable  at
the  office  of  State  Street Bank and  Trust  Company,  in
Boston,  Massachusetts (or at the office  of  its  successor
trustee  in  the  trust  to which reference  is  hereinafter
made),  in  such  coin or currency of the United  States  of
America  as shall be legal tender for the payment of  public
and private debts at the time of payment.
     
     This  bond is one of a duly authorized issue  of  First
Mortgage  Bonds  of the Company, unlimited as  to  aggregate
principal  amount  except  as set  forth  in  the  Indenture
hereinafter mentioned, issuable in series and is  one  of  a
series  known as First Mortgage Bonds, Series R, 7.50%,  all
bonds of all series being issued and to be issued under  and
pursuant  to and all equally secured (except as any  sinking
or  other analogous fund, established in accordance with the
provisions  of  the  Indenture  hereinafter  mentioned,  may
afford  additional security for the bonds of any  particular
series)  by  an Indenture, dated as of January 1,  1922,  as
supplemented by a First Supplemental Indenture, dated as  of
February 6, 1933, a Second Supplemental Indenture, dated  as
of June 1, 1944, a Third Supplemental Indenture, dated as of
April 1, 1948, a Fourth Supplemental Indenture, dated as  of
January 1, 1958, a Fifth Supplemental Indenture, dated as of
July  1, 1960, a Sixth Supplemental Indenture, dated  as  of
September  1, 1963, a Seventh Supplemental Indenture,  dated
as  of  November 1, 1971, an Eighth Supplemental  Indenture,
dated  as  of July 1, 1972, a Ninth Supplemental  Indenture,
dated as of October l, 1975, a Tenth Supplemental Indenture,
dated   as  of  April  l,  1976,  an  Eleventh  Supplemental
Indenture,  dated  as  of  September  1,  1978,  a   Twelfth
Supplemental  Indenture, dated as of September  l,  1983,  a
Thirteenth Supplemental Indenture, dated as of May 1,  1986,
a  Fourteenth Supplemental Indenture, dated as of August  1,
1988, a Fifteenth Supplemental Indenture dated as of June 1,
1990,  a  Sixteenth  Supplemental  Indenture  dated  as   of
September  1,  1992,  a Seventeenth Supplemental  Indenture,
dated  as of November 1, 1993 and an Eighteenth Supplemental
Indenture  dated  as  of  December 1,  1995  (said  nineteen
instruments  being  hereinafter  called,  collectively,  the
"Indenture"), all duly executed and delivered by the Company
to   State  Street  Bank  and  Trust  Company,  in   Boston,
Massachusetts,  as successor to Rhode Island Hospital  Trust
National  Bank, which succeeded Rhode Island Hospital  Trust
Company  (hereinafter called the "Trustee"), as trustee,  to
which  Indenture and to all indentures supplemental  thereto
reference  is hereby made for a description of the  property
transferred, assigned and mortgaged thereunder,  the  nature
and  extent  of the security, the terms and conditions  upon
which  the  bonds are secured and additional  bonds  may  be
issued  and  secured,  and  the rights  of  the  holders  or
registered owners of said bonds, of the Trustee and  of  the
Company  in respect of such security.  Subsequent series  of
said  bonds may vary as to date, date of maturity,  rate  of
interest  and in other ways as in the Indenture provided  or
permitted.
     
     Notwithstanding   any  provisions  of   the   Indenture
(including,  without  limitation, Section  41  thereof)  the
bonds of Series R shall be subject to redemption only in the
manner  and  to the extent provided in Section 1.03  of  the
Eighteenth Supplemental Indenture.
     
     This  bond  is  transferable by  the  registered  owner
hereof,  in person or by duly authorized attorney, on  books
to be kept for that purpose in the office of the Company, in
Providence,  Rhode Island, upon surrender  thereof  at  said
office  for cancellation and upon presentation of a  written
instrument  of  transfer duly executed,  and  thereupon  the
Company  shall  issue  in  the name  of  the  transferee  or
transferees, and the Trustee shall authenticate and deliver,
a  new  registered bond or bonds, of like  form  and  in  an
authorized  denomination or in authorized denominations  and
of the same series, for the same aggregate principal amount.
Bonds of this series, upon surrender thereof at said office,
may be exchanged for the same aggregate principal amount  of
bonds  of this series of another authorized denomination  or
other  authorized  denominations, all upon  payment  of  the
charges,  if  any, and subject to the terms  and  conditions
specified in the Indenture.
     
     In  case of default by the Company, as set forth in the
Indenture, the principal of all the bonds of each and  every
series issued and outstanding thereunder may be declared  or
may become due and payable in the manner and with the effect
provided in the Indenture.
     
     No recourse shall be had for the payment of any part of
either  the principal or interest of this bond, or  for  any
claim  based hereon, or otherwise in any manner  in  respect
hereof  or  in respect of the Indenture, to or  against  any
stockholder, officer or director, past, present  or  future,
of  the  Company, by virtue of any statute or  provision  or
rule  of  law,  or by the enforcement of any  assessment  or
penalty,  all  such  liability being  expressly  waived  and
released by the acceptance of this bond.
     
     This  bond shall not become obligatory for any  purpose
until  authenticated by the execution by the Trustee of  the
certificate endorsed hereon.
     
     IN  WITNESS  WHEREOF, THE PROVIDENCE  GAS  COMPANY  HAS
CAUSED ITS CORPORATE SEAL TO BE HERETO AFFixed and this bond
to  be  signed  by its President or Vice President  and  its
Treasurer   or  Assistant  Treasurer,  the  _____   day   of
________________________.
                                    
                                    THE PROVIDENCE GAS
                                       COMPANY
                                    
                                    
                                    By_____________________
                                       President
[CORPORATE SEAL]
                                    
                                    and
                                       by__________________
                                       _
                                       Treasurer
                              
                              
               [FORM OF TRUSTEE'S CERTIFICATE]
     
     This  is  one  of the bonds of Series R  of  the  issue
described in the Indenture within mentioned.
                                    
                                    STATE STREET BANK AND
                                       TRUST COMPANY, as
                                       Successor to Rhode
                                       Island Hospital
                                       Trust Company,
                                       Trustee
                                    
                                    
                                    By_____________________
                            Authorized Signature
     
     WHEREAS the Company also desires to confirm the lien of
the   Indenture  upon  property  (intended  to  be   thereby
mortgaged)  acquired by the Company since the  execution  of
the Seventeenth Supplemental Indenture;
     
     NOW,  THEREFORE, THIS EIGHTEENTH SUPPLEMENTAL INDENTURE
WITNESSETH:   That The Providence Gas Company,  pursuant  to
and  in execution of the powers, authorities and obligations
conferred,  imposed and reserved in the Original  Indenture,
as  heretofore  supplemented by the  First,  Second,  Third,
Fourth,   Fifth,  Sixth,  Seventh,  Eighth,  Ninth,   Tenth,
Eleventh,   Twelfth,   Thirteenth,  Fourteenth,   Fifteenth,
Sixteenth and Seventeenth Supplemental Indentures, and every
other  power,  authority and obligation thereto appertaining
or  enabling, in consideration of the premises  and  of  the
authentication,  purchase and acceptance  of  the  Series  R
bonds, of $10 duly paid to the Company by the Trustee and of
other  good and valuable considerations, receipt whereof  is
hereby  acknowledged, and for the purpose of confirming  the
Original  Indenture and said First, Second,  Third,  Fourth,
Fifth,  Sixth,  Seventh,  Eighth,  Ninth,  Tenth,  Eleventh,
Twelfth,  Thirteenth, Fourteenth, Fifteenth,  Sixteenth  and
Seventeenth Supplemental Indentures, as hereby supplemented,
and in order to secure, equally and ratably, the payment  of
the principal of and the interest on all of the bonds at any
time  outstanding  under the Indenture  according  to  their
tenor,  purport  and  effect and  in  order  to  secure  the
faithful  performance and observance of all of the covenants
and   conditions  set  forth  herein  and  in  the  Original
Indenture, as heretofore supplemented by the First,  Second,
Third,  Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh,   Twelfth,   Thirteenth,  Fourteenth,   Fifteenth,
Sixteenth and Seventeenth Supplemental Indentures, by  these
presents  hereby  confirms (except for property  hereinafter
expressly  reserved  and  excluded  from  the  lien  of  the
Indenture) the mortgage, conveyance, pledge, assignment  and
transfer   of   the  properties,  franchises,   rights   and
privileges set forth and described in the Original Indenture
and  said  Second,  Third, Fourth,  Fifth,  Sixth,  Seventh,
Eighth,  Ninth,  Eleventh, Twelfth, Thirteenth,  Fourteenth,
Fifteenth,    Sixteenth    and   Seventeenth    Supplemental
Indentures,  and does hereby grant, bargain, sell,  release,
convey, mortgage, confirm, assign, transfer, pledge and  set
over unto the Trustee, and its successors in the trust,  and
its  and their assigns, upon the trusts established  by  the
Indenture, all and singular:
     
           A.    The  "Schedule  of Property  and  Interests
     Therein" hereto attached as Schedule I and made a  part
     hereof.
     
           B.   The Company's gasworks, plant and machinery,
     purifiers,   generators,  service  and   other   pipes,
     holders,   mains,  meters,  shops,  tools,  implements,
     fixtures,  appurtenances,  and  (except  for   property
     hereinafter  expressly reserved and excluded  from  the
     lien  of  the  Indenture) all other real  and  tangible
     personal property now owned or which shall hereafter be
     acquired   by   the  Company,  or  its   successor   or
     successors, and used or useful in connection  with  its
     business   of  making,  distributing,  purchasing   and
     selling gas, and with any other business authorized  or
     permitted  by  the Company's charter, and  all  of  the
     Company's  leasehold interests in any of such  property
     now  or  hereafter leased by the Company as lessee  and
     all  corporate and other franchises of the Company, and
     all   permits,   ordinances,   easements,   privileges,
     immunities  and licenses, all rights to lay, construct,
     maintain  and operate systems for the distribution  and
     transmission of gas and other agencies for  the  supply
     to  itself or others of light, heat and power, and  all
     rights  of  way, grants and consents which the  Company
     now  owns  or  which  it may hereafter  acquire,  being
     intended to include, among other things covered by  the
     Indenture,  the entire existing and future light,  heat
     and  power  business  of the Company  and  all  of  its
     existing  and  all  of  its future rights,  franchises,
     permits,  ordinances  and  licenses  to  transact   and
     conduct  the  same,  and each and  every  part  thereof
     (except  as  hereinafter  noted)  as  provided  in  the
     Original  Indenture  and  said Second,  Third,  Fourth,
     Fifth,   Sixth,   Seventh,  Eighth,  Ninth,   Eleventh,
     Twelfth,  Thirteenth, Fourteenth, Fifteenth,  Sixteenth
     and  Seventeenth  Supplemental  Indentures,  which  are
     hereby made a part hereof, to the same extent as if set
     forth  herein at length, excepting, however, and  there
     is expressly reserved and excluded from the lien of the
     Indenture:
          
               (1)    Such  of said properties or  interests
          therein heretofore conveyed to the Trustee as  may
          have  been  released  by the Trustee  or  sold  or
          otherwise   disposed  of  as  permitted   by   the
          provisions of the Indenture; and
          
               (2)    All right, title and interest  of  the
          Company now owned or hereafter acquired in and to
               
                    (a)    all cash, bonds, shares of stock,
               obligations   and   other   securities    not
               deposited   with   the  Trustee   under   the
               provisions of the Indenture;
               
                    (b)    all accounts and bills receivable
               (other than for the recovery of real property
               or  establishing a lien or charge thereon  or
               right  therein)  and  choses  in  action  not
               specifically  assigned  to  the  Trustee  and
               pledged with the Trustee hereunder;
               
                    (c)    all  goods,  wares,  merchandise,
               products and by-products held for sale in the
               ordinary course of business;
               
                   (d)   all materials and supplies held for
               consumption in operation;
               
                     (e)    all  conversion  burners,  water
               heaters,  stoves and refrigerators rented  to
               customers or held for rental;
               
                   (f)   all motor vehicles; and
          
               (3)    The  last day of each of  the  demised
          terms  created by any lease of property now leased
          to  the  Company and the last day of  any  demised
          term under each and every lease hereafter made  or
          acquired by the Company and, under each and  every
          renewal  of  any lease the last day  of  each  and
          every  such  demised term being  hereby  expressly
          reserved to and by the Company;

until  and  unless a default shall be made in  one  or  more
obligations  of  the  Company under the Indenture  and  such
default shall have continued beyond the period of grace,  if
any,  applicable in respect thereof, and the Trustee or  any
receiver  or  other  official  shall  take  control  of  the
mortgaged properties, in which event the Indenture shall (to
the  extent permitted by law) become and be a lien upon  all
of  the classes of property set forth in 2 above (subject to
any  liens or encumbrances then existing thereon),  and  the
Trustee,  receiver or other official shall  (to  the  extent
permitted by law) be entitled to possess, use and dispose of
the  same  in  carrying on the operation  of  the  Company's
enterprise  and to include the same in any sale under  power
of sale conferred by the Indenture or by law.
     
     TO  HAVE  AND  TO  HOLD  ALL OF  SAID  PROPERTy,  real,
personal   and  mixed,  now  owned  or  hereafter  acquired,
mortgaged  and  conveyed  by the Company  as  aforesaid,  or
intended  so to be, unto the Trustee, and its successors  in
said trust, and to them and to their assigns forever.
     
     IN  TRUST,  NEVERTHELESS, FOR THE  PURPOSES,  WITH  THE
POWERS   AND  SUBJECt  to  the  agreements,  covenants   and
conditions   set  forth  and  expressed  in   the   Original
Indenture,  as  supplemented  and  modified  by  the   First
Supplemental Indenture, Second Supplemental Indenture, Third
Supplemental Indenture, Fourth Supplemental Indenture, Fifth
Supplemental   Indenture,   Sixth  Supplemental   Indenture,
Seventh    Supplemental   Indenture,   Eighth   Supplemental
Indenture,  Ninth Supplemental Indenture, Tenth Supplemental
Indenture,   Eleventh   Supplemental   Indenture,    Twelfth
Supplemental  Indenture, Thirteenth Supplemental  Indenture,
Fourteenth  Supplemental Indenture,  Fifteenth  Supplemental
Indenture,  Sixteenth  Supplemental  Indenture,  Seventeenth
Supplemental Indenture and this instrument, it being  agreed
as follows, to wit:
                              
                              
                ARTICLE FIRST. SERIES R BONDS
                        ARTICLE FIRST
                       SERIES R BONDS

Section 1.01.   There shall be and is hereby created  a  new
series  of  bonds entitled "First Mortgage Bonds, Series  R,
7.50%"  (herein  sometimes called the "Series  R  bonds"  or
"bonds of Series R"), limited in aggregate principal amount,
except  as noted in Section 2.02 hereof, to Fifteen  Million
Dollars  ($15,000,000), and to be issued  as  prescribed  in
Section  2.01  hereof.   Series  R  bonds  shall  be   fully
registered bonds of the denomination of One Thousand Dollars
($1,000)  and multiples thereof.  All Series R  bonds  shall
mature December 15, 2025 and shall bear interest at the rate
and  payable at the times specified in the form of Series  R
bond  set forth herein.  The principal of, interest  on  and
premium, if any, on bonds of Series R shall, subject to  the
provisions of Section 3.07, be payable at the office of  the
Trustee  in  such coin or currency of the United  States  of
America  as shall be legal tender for the payment of  public
and private debts.
     
     Bonds   of  Series  R  shall  be  numbered  "R-1"   and
consecutively upwards.

Section 1.02.   Bonds of Series R shall be exchangeable  for
a like aggregate principal amount of bonds of such series of
another   authorized   denomination  or   other   authorized
denominations.

Section  1.03.    Notwithstanding  any  provisions  of   the
Indenture   (including,  without  limitation,   Section   41
thereof)  the  bonds  of  Series  R  shall  be  subject   to
redemption only in the manner and to the extent provided  in
this Section 1.03.
     
         (a)   Mandatory Redemption.  As and for, or in lieu
     of,  a  sinking  fund for Series R bonds,  the  Company
     covenants  and  agrees that, so long as  any  Series  R
     bonds  are  outstanding hereunder,  it  will  call  for
     redemption  and redeem, on December 15  in  each  year,
     commencing  December 15, 2006 and ending  December  15,
     2024,  both  inclusive,  $750,000  aggregate  principal
     amount  of Series R bonds; provided, however, that  the
     Company may deliver to the Trustee for cancellation, on
     or  before any and each such December 15th, in lieu  of
     the redemption of all or any part of the Series R bonds
     otherwise  required  to  be  so  redeemed,   an   equal
     aggregate  principal  amount of Series  R  bonds.   Any
     optional redemption of Series R bonds shall be  applied
     to  the principal payments due on the Series R bonds in
     inverse order of scheduled maturities.
          
          Series   R   bonds,  redeemed  pursuant   to   the
     provisions of this Section 1.03(a), shall be  redeemed,
     without premium, at their principal amount and interest
     accrued to the date fixed for redemption.
          
          All  Series  R  bonds, redeemed  pursuant  to  the
     provisions of this Section 1.03(a) or delivered to  the
     Trustee pursuant to such provisions, shall be cancelled
     by  the  Trustee and shall be delivered to or upon  the
     order of the Company and shall not be reissued.
     
          (b)    Optional Redemption of Series R Bonds  with
     Premium.   The  Company shall have the option,  at  any
     time   and   from  time  to  time,  of  redeeming   the
     outstanding Series R bonds, either in whole or in  part
     (but  if in part then in units of $100,000), by payment
     of  the  principal amount of the Series R bonds  to  be
     redeemed, and accrued interest thereon to the  date  of
     redemption together with the Yield-Maintenance Premium,
     if any.
          
          As used in this Section 1.03(b):
               
               "Yield-Maintenance Premium" shall mean,  with
          respect  to any Series R bond, a premium equal  to
          the excess, if any, of the Discounted Value of the
          Called  Principal of such Series R bond  over  the
          amount of such Called Principal; provided that the
          Yield-Maintenance Premium shall  in  no  event  be
          less than zero.
               
               "Called  Principal" shall mean, with  respect
          to any Series R bond, the principal of such Series
          R  bond  that  is to be redeemed pursuant  to  the
          foregoing provisions of this Section 1.03(b).
               
               "Discounted  Value" shall mean, with  respect
          to  the Called Principal of any Series R bond, the
          amount  calculated  by discounting  all  Remaining
          Scheduled  Payments with respect  to  such  Called
          Principal  from  their  respective  scheduled  due
          dates  to  the date on which such Called Principal
          is  to  be  redeemed, in accordance with  accepted
          financial  practice  and  at  a  discount   factor
          (applied on a semiannual basis) equal to  the  sum
          of (i) the Reinvestment Yield with respect to such
          Called Principal, plus (ii) 0.25%.
               
               "Reinvestment  Yield" shall  mean  the  yield
          reported,  as  of 10:00 a.m. Boston, Massachusetts
          time  on the fifth Business Day prior to the  date
          of  prepayment  or on the date of acceleration  of
          the Series R bonds on the display designated "USD"
          of the Bloomberg Financial Markets Services Screen
          (or,   if  not  available,  any  other  nationally
          recognized   trading  screen   reporting   on-line
          intraday   trading  in  United  States  government
          securities)  for  actively  traded  U.S.  Treasury
          securities having a maturity corresponding to  the
          Weighted  Average Life to Maturity of  the  Called
          Principal  or if such yield shall not be  reported
          as  of such time or shall not be usable, then  the
          arithmetic mean of the yields for the two  columns
          under  the heading "Week Ending" published in  the
          Statistical  Release under the  caption  "Treasury
          Constant Maturities" for the Weighted Average Life
          to  Maturity  of the Called Principal (rounded  to
          the   nearest  month).   If  no  maturity  exactly
          corresponds to the remaining Weighted Average Life
          to  Maturity of the Called Principal,  yields  for
          the  next  longer  and the next shorter  published
          maturities  shall be calculated  pursuant  to  the
          foregoing  sentence  and  the  Reinvestment  Yield
          shall  be  interpolated  from  such  yields  on  a
          straight-line  basis  (rounding  in  each  of  the
          relevant periods to the nearest month).   For  the
          purposes  of  calculating the Reinvestment  Yield,
          the  most  recent  Statistical  Release  published
          prior  to the date of determination of the  Yield-
          Maintenance Premium shall be used.
               
               "Statistical  Release" shall  mean  the  then
          most   recently   published  statistical   release
          designated    "H.15(519)"   or    any    successor
          publication  which  is  published  weekly  by  the
          Federal   Reserve  System  and  which  establishes
          yields   on   actively  traded   U.S.   Government
          Securities adjusted to constant maturities or,  if
          such  statistical release is not published at  the
          time  of  any determination hereunder,  then  such
          other  reasonably comparable index which shall  be
          designated by the holders of 66-2/3% in  aggregate
          principal  amount  of  the  outstanding  Series  R
          bonds.
               
               "Remaining  Scheduled Payments"  shall  mean,
          with respect to the Called Principal of any Series
          R  bond, all payments of such Called Principal and
          interest thereon that would be due after the  date
          scheduled  for redemption thereof if no redemption
          of  such Called Principal were made prior  to  its
          scheduled due date.
               
               "Business Day", as used in the definition  of
          Reinvestment  Yield, shall mean any day  excluding
          Saturday,  Sunday and any day which shall  be,  in
          Boston, Massachusetts, a legal holiday or a day on
          which  banking institutions are authorized by  law
          to close.
               
               "Weighted  Average Life to Maturity"  of  the
          principal  amount  of  the Series  R  bonds  being
          redeemed  shall  mean,  as  of  the  time  of  any
          determination   thereof,  the  number   of   years
          obtained  by  dividing the then Remaining  Dollar-
          Years of such principal by the aggregate amount of
          such principal.  The term "Remaining Dollar-Years"
          of  such  principal shall mean the amount obtained
          by  (1)  multiplying (i) the remainder of (A)  the
          amount of principal that would have become due  on
          each scheduled payment date if such prepayment had
          not been made, less (B) the amount of principal on
          the Series R bonds scheduled to become due on such
          date  after  giving effect to such prepayment  and
          the  application  thereof in accordance  with  the
          provisions of Section 1.03(a) hereof by  (ii)  the
          number  of  years (calculated to the nearest  one-
          twelfth)  which will elapse between  the  date  of
          determination and such scheduled payment date, and
          (2) totalling the products obtained in (1).
     
          (c)   Optional Redemption of Series R Bonds Out of
     Condemnation Proceeds.  In the event that any  property
     subject  to the lien of the Indenture is (x)  taken  by
     any governmental or other lawful authority pursuant  to
     a Qualified Condemnation, or (y) sold by the Company in
     anticipation of a Qualified Condemnation  for  a  price
     which,  in  the  good faith judgment of  the  Board  of
     Directors  of the Company (as evidenced by a resolution
     thereof)  is deemed to be equal to or greater than  the
     fair  market  value of the property so sold,  then  the
     Company  shall have the option (to be exercised  within
     60  days after such taking or sale), of applying not to
     exceed  a  pro  rata portion of the net  cash  proceeds
     resulting  from such taking or sale (or any portion  of
     such   proceeds  equal  to  $100,000  or  any  integral
     multiple   of  $10,000  in  excess  thereof)   to   the
     redemption of outstanding Series R bonds by payment  of
     the  principal  amount  of the Series  R  bonds  to  be
     redeemed  and accrued interest thereon to the  date  of
     redemption plus, in the case of any event described  in
     clause  (y)  above,  an  amount  equal  to  the  Yield-
     Maintenance  Premium,  if any.  The  pro  rata  portion
     shall  be determined by reference to all bonds  of  all
     series then outstanding under the Indenture.
          
          As   used  in  this  Section  1.03(c),  "Qualified
     Condemnation" shall mean any taking by condemnation  or
     eminent  domain which (i) results in an  award  to  the
     Company which, in the good faith judgment of the  Board
     of  Directors  of  the  Company  (as  evidenced  by   a
     resolution thereof) is deemed to be equal to or greater
     than  the  fair market value of the property so  taken,
     and  (ii)  is  deemed by said Board  of  Directors  (as
     evidenced by a resolution thereof) to be authorized and
     proper  or  which has been contested by the Company  in
     good faith and by appropriate proceedings.
     
          (d)    Miscellaneous.  Except as herein  otherwise
     set  forth,  the provisions of Article  Fourth  of  the
     Original Indenture, with respect to the procedures  for
     call and redemption, prior to maturity, of Series A and
     Series B bonds, shall apply to the call and redemption,
     prior  to maturity, of all bonds of Series R so  to  be
     called  and  redeemed.   All Series  R  bonds  redeemed
     pursuant to the provisions hereof shall be cancelled by
     the Trustee and shall be delivered to or upon the order
     of the Company, and shall not be reissued.
          
          Whenever  any  Series R bonds are to be  redeemed,
     the  Trustee shall allocate to each registered owner  a
     proportion of the Series R bonds to be redeemed, equal,
     as  nearly as practicable, to the proportion  that  the
     principal  amount  of  the bonds of  such  series  then
     outstanding hereunder, registered in the name  of  such
     owner,  bears to the principal amount of all  bonds  of
     such series then outstanding under the Indenture.
          
          Redemption  notices for Series R  bonds  shall  be
     given  to each registered owner by registered mail  and
     not  by  publication.  The redemption notice  given  to
     each  registered owner shall comply with the provisions
     of  Article Fourth of the Original Indenture and  shall
     also  specify (i) the principal amount of such  owner's
     Series  R  bonds  to  be  redeemed,  (ii)  the  accrued
     interest  payable  in connection with such  redemption,
     and   (iii)  the  Company's  estimate  of  the   Yield-
     Maintenance Premium, if any, payable in connection with
     such  redemption.  The Company's final  computation  of
     the amount of any Yield-Maintenance Premium payable  in
     connection with any such redemption shall be  furnished
     to  the registered owners of the Series R bonds  to  be
     prepaid  as  soon  as  practicable after  determination
     thereof  and, in all events, not less than  three  days
     prior  to  the  date of such redemption.   The  Trustee
     shall    have   no   responsibility   for   determining
     independently   the  amount  of  any  Yield-Maintenance
     Premium  payable  in  connection  with  any  redemption
     hereunder.

Section  1.04.   The Company covenants and agrees  that,  so
long  as  any  Series R bonds are outstanding hereunder,  it
will  pay  no dividends and make no distribution  either  in
cash or property (other than dividends payable in its common
stock),  on any class of its capital stock and will purchase
or  redeem none of its stock of any class if the sum of  all
dividends  and all distributions, purchases and  redemptions
on  or  of  its  stock  of any class  paid  or  made  by  it
(including  any  then  proposed to be paid  or  made)  after
September 30, 1994 and any losses incurred after that  date,
charged or properly chargeable against earned surplus, would
exceed  the amount of its net income earned after that  date
plus  Ten  Million Dollars ($10,000,000), provided, however,
that  there  shall  be  excluded in making  the  calculation
aforementioned  so  much of the aggregate  of  expenditures,
including  the  reasonable value of property or  securities,
made  by the Company for the redemption or purchase  of  its
capital  stock  as  does not exceed  the  aggregate  of  all
amounts,  including  the reasonable  value  of  property  or
securities,  received  by  it through  the  disposal,  since
September   30,   1994,   of   additional   capital   stock.
Notwithstanding the foregoing sentence, the Company may make
regular  dividend  payments on, and mandatory  sinking  fund
redemptions of, all shares of its 8.7% Redeemable Cumulative
Preferred  Stock or any class of its preferred  stock  which
may  hereafter  be  issued, to persons  other  than  persons
controlled by, controlling or under common control with  the
Company,  provided that such payments and  redemptions  made
after   September  30,  1994  shall  be  included   in   any
computation under this Section 1.04.  The term "control," as
used  in this paragraph, shall mean ownership of 10% or more
of  the  voting  securities of the  Company  or  such  other
person.   The term "net income," as used in this  paragraph,
shall   mean   the  net  income  available  for   dividends,
determined  in accordance with generally accepted accounting
principles,  after allowance for all taxes and other  income
deductions.   The  term  "common stock",  as  used  in  this
paragraph,  shall  mean stock of the Company  of  the  class
which is now outstanding.
                              
                              
   Article Second.     Issuance of $15,000,000 of Series R
       Bonds and Closing of Such Series at That Amount
                       ARTICLE SECOND
        ISSUANCE OF $15,000,000 OF SERIES R BONDS AND
            CLOSING OF SUCH SERIES AT THAT AMOUNT

Section 2.01.   Upon the execution and delivery hereof,  the
Company  will  execute and deliver to the  Trustee  and  the
Trustee will authenticate and deliver to the Company Fifteen
Million Dollars ($15,000,000) in aggregate principal  amount
of Series R bonds.

Section  2.02.    The issue of Series R bonds  hereunder  is
hereby  limited to the Fifteen Million Dollars ($15,000,000)
in  aggregate principal amount of bonds of such series to be
initially issued as provided in Section 2.01 hereof  and  to
Series  R  bonds  issued  in exchange  or  substitution  for
outstanding  Series  R  bonds under the  provisions  of  the
Indenture, permitting the exchange of bonds for other  bonds
(under the provisions of Section 1.02 hereof), or permitting
the issuance of bonds in lieu of lost, stolen, destroyed  or
mutilated  bonds, or permitting the exchange  of  definitive
bonds for temporary bonds.
                              
                              
            ARTICLE THIRD. ADDITIONAL PROVISIONS
                        ARTICLE THIRD
                    ADDITIONAL PROVISIONS

Section 3.01.   The Company covenants and agrees that it has
good  right  and lawful authority to mortgage the properties
described  in the granting clauses hereof and after-acquired
property  as provided herein and that it is lawfully  seized
and  possessed  of the same (except with respect  to  after-
acquired property).

Section 3.02.   The Company covenants and agrees that  since
the  date of the Seventeenth Supplemental Indenture no  real
estate or interest therein has been taken by exercise of the
right  of  eminent domain or released from the Indenture  or
subjected  to any easement which has not been terminated  of
record  except  as  listed  on  the  "Schedule  of  Released
Property" attached hereto as Schedule II.

Section 3.03.   The Company covenants and agrees that (a) it
will  not  incorporate into its gas distribution system  for
operation  as lessee or otherwise any personal  property  or
fixtures  owned  by  another person or  entity  except  such
property of a type expressly reserved and excluded from  the
lien  of  the  Indenture;  and  (b)  without  limiting   the
generality  of  the foregoing, it will not  enter  into,  as
lessee,  any  leases  of  personal  property,  fixtures   or
improved  real  property if the cost of all  such  items  so
leased less accumulated depreciation taken from time to time
in  accordance with generally accepted accounting principles
would  be in excess of 15% of the principal amount of  bonds
then outstanding under the Indenture.

Section  3.04.    The Company covenants and agrees  that  it
will   promptly   comply  with  all  laws,   ordinances   or
governmental rules and regulations to which it  is  subject,
including  without limitation, the Occupational  Safety  and
Health  Act of 1970, the Employee Retirement Income Security
Act of 1974 and all laws, ordinances, governmental rules and
regulations  relating  to environmental  protection  in  all
applicable  jurisdictions,  the  violation  of  which  would
materially  and  adversely affect the properties,  business,
prospects,  profits  or condition of the  Company  or  would
result  in  any  lien  or charge upon any  property  of  the
Company  which  would  materially and adversely  affect  the
conduct of the Company's operations.

Section  3.05.    The Company covenants and agrees  that  it
will  not permit any employee benefit plan maintained by  it
to  be  terminated  in a manner which would  result  in  the
imposition of a lien on any property of the Company pursuant
to  Section 4068 of the Employee Retirement Income  Security
Act of 1974, as amended.

Section  3.06.   No bonds owned or held by, for the  account
of or for the benefit of the Company or any other obligor on
the bonds (other than bonds pledged to secure an obligation)
shall  be  deemed  entitled  to  share  in  any  payment  or
distribution  provided in Article Sixth  of  the  Indenture,
provided  that the Trustee shall be protected in making  any
such  payment  or distribution unless it shall  have  actual
knowledge that the bonds in respect of which such payment or
distribution is made are so owned or held.

Section 3.07.   Payments of any amounts with respect to  the
Series  R  bonds  shall be made at such place  and  in  such
manner  as  shall  be provided in Section 6.4  of  the  Bond
Purchase Agreement, dated as of December 1, 1995 (the  "Bond
Purchase  Agreement"), between the Company and the  original
purchaser  of  said Series R bonds, or at such other  places
and  in  such  other manners as may, from time to  time,  be
agreed  upon  in writing among the Company, the Trustee  and
the holder of the Series R bond in question.

Section   3.08.    Anything  contained  elsewhere   in   the
Indenture  notwithstanding, and without limiting the  effect
of  Section  3.15 of this Eighteenth Supplemental Indenture,
so   long  as  any  of  the  Series  R  bonds  shall  remain
outstanding,  the Trustee shall be entitled to exercise  any
of  the  remedies  provided  in  the  Indenture  (including,
without  limitation, the remedies provided in  Sections  33,
46, 47, 48 and 49 of the Indenture):
     
          (a)    if the Company shall default in the payment
     of  any interest payable on any Series R bonds and such
     default shall have continued for a period of ten  days,
     or   the  Company  shall  default  in  the  payment  of
     principal  on  any  Series R  bonds  on  any  mandatory
     redemption  date or at final maturity or  at  any  date
     fixed  for the optional redemption thereof pursuant  to
     the  provisions  of  Section 1.03  of  this  Eighteenth
     Supplemental Indenture;
     
          (b)    if  the  Company or any subsidiary  of  the
     Company   shall  fail  to  make  when  due  or  payable
     (including  applicable  grace  periods,  if  any)   any
     payment  required to be made by it in  respect  of  any
     indebtedness,   the  outstanding  aggregate   principal
     amount  of  which indebtedness is at the time  of  such
     failure    in   excess   of   three   million   dollars
     ($3,000,000);
     
          (c)    if the Company shall fail in the observance
     or  performance  of  any other covenant,  condition  or
     agreement  not enumerated in this Section  hereinabove,
     contained  in the Indenture (including this  Eighteenth
     Supplemental   Indenture)  or  in  the  Bond   Purchase
     Agreement, and such failure shall continue for a period
     of  sixty  (60)  days  after such failure  shall  first
     become  known  to the President or the  Financial  Vice
     President of the Company, or to any person charged with
     the responsibilities normally associated with either of
     such offices;
     
         (d)   if any representation or warranty made by the
     Company  herein,  or made by the Company  in  the  Bond
     Purchase  Agreement,  or made by  the  Company  in  any
     statement  or certificate furnished by the  Company  in
     connection  with the consummation of the  issuance  and
     delivery  of  the  Series R bonds or furnished  by  the
     Company  pursuant  hereto  or  pursuant  to  the   Bond
     Purchase  Agreement, is untrue in any material  respect
     as of the date of the issuance or making thereof;
     
          (e)    if  final  judgment or  judgments  for  the
     payment  of money aggregating in excess of $100,000  is
     or  are outstanding against the Company or against  any
     property or assets of the Company and any one  of  such
     judgments  has remained unpaid, unvacated, unbonded  or
     unstayed by appeal or otherwise for a period of 30 days
     from the date of its entry;
     
          (f)    in  the event of the entry of a  decree  or
     order  by  a court having jurisdiction in the  premises
     adjudging  the  Company  a bankrupt  or  insolvent,  or
     approving   as   properly  filed  a  petition   seeking
     reorganization, arrangement, adjustment or  composition
     of,  or  in  respect of, the Company  under  applicable
     Federal  bankruptcy law or any other applicable Federal
     or  State  law,  or appointing a receiver,  liquidator,
     assignee,  trustee,  sequestrator  (or  other   similar
     official) of the Company or of any substantial part  of
     its property, or ordering the winding up or liquidation
     of  its affairs, and the continuance of any such decree
     or  order  unstayed and in effect for a  period  of  60
     consecutive days; or
     
          (g)    in  the  event  of the institution  by  the
     Company of proceedings to be adjudicated a bankrupt  or
     insolvent,  or the consent by it to the institution  of
     bankruptcy or insolvency proceedings against it, or the
     filing by it of a petition or answer or consent seeking
     reorganization  or  relief  under  applicable   Federal
     bankruptcy law or any other similar applicable  Federal
     or State law, or the consent by it to the filing of any
     such   petition  or  the  appointment  of  a  receiver,
     liquidator, assignee, trustee, sequestrator  (or  other
     similar  official) of the Company or of any substantial
     part  of  its  property, or the  making  by  it  of  an
     assignment  for  the  benefit  of  creditors,  or   the
     admission by it in writing of its inability to pay  its
     debts  generally as they become due, or the  taking  of
     corporate action by the Company in furtherance  of  any
     such action.

Section 3.09.   This Eighteenth Supplemental Indenture shall
become void when the Original Indenture shall be void.

Section  3.10.    Dates of supplemental  indentures  and  of
bonds  are  intended as and for dates for the identification
of  such  bonds and such instruments, respectively, and  are
not  intended  to indicate that any such instrument  or  any
bond was and no such instrument or bond has been or is to be
executed  on  a  Sunday or a legal holiday,  the  respective
dates  when supplemental indentures were executed being  the
dates  or  respective  dates of the acknowledgments  of  the
parties thereto.

Section   3.11.    Whenever  reference  is  made   in   this
Eighteenth Supplemental Indenture to a Section or an Article
of  the  Original Indenture and such Section or Article  has
been  amended  by this instrument or any of  the  indentures
supplemental   to   the   Original   Indenture    enumerated
hereinabove,  or  two or more of them, then  such  reference
shall  be to such Section or Article as so amended,  whether
or not herein expressly so stated.

Section  3.12.   The Company, at its own cost  and  expense,
will  forthwith,  upon the execution  and  delivery  by  the
parties  hereto  of this Eighteenth Supplemental  Indenture,
cause the same to be recorded pursuant to law in all offices
for  the recording of mortgages of real or personal property
in  which such recordation is necessary in order to  perfect
and  protect the lien hereof, and, in any event, in all such
offices  in  which it has caused or may cause  the  Original
Indenture to be recorded.

Section  3.13.   Anything in the Series R bonds  or  in  the
Indenture  to the contrary notwithstanding, upon receipt  by
the   Company   or   the  Trustee  of  evidence   reasonably
satisfactory to the Company or the Trustee of the  ownership
of  and loss, theft, destruction or mutilation of any Series
R bond and (a) in the case of loss, theft or destruction, of
indemnity   or  security  reasonably  satisfactory   to   it
(provided, however, that if the holder of such Series R bond
is  an institution having a minimum net worth of $10,000,000
or  more,  its  own affidavit and undertaking  of  indemnity
shall be deemed to be satisfactory evidence, indemnity,  and
security)  or (b) in the case of mutilation, upon  surrender
and  cancellation thereof, the Company at its  expense  will
execute,  and  thereupon the Trustee will  authenticate  and
deliver   in   lieu  thereof,  a  new  bond,  executed   and
authenticated in the same manner as the bond being replaced,
in an aggregate principal amount equal to the unpaid portion
of the principal amount of the bond being replaced.

Section  3.14.   This Eighteenth Supplemental Indenture  may
be  executed  in any number of counterparts, each  of  which
shall  be  deemed  an original; and such counterparts  shall
constitute but one and the same instrument, which shall  for
all  purposes be sufficiently evidenced by any such original
counterpart.

Section  3.15.    For  any default by  the  Company  in  the
covenants,  stipulations,  promises  and  agreements  herein
contained or contained in the bonds of Series R, the Trustee
and the bondholders shall have the same rights and remedies,
subject  to  the  same limitations, as are provided  in  the
Original Indenture.

Section 3.16.   The Company hereby agrees to unconditionally
indemnify,  defend and hold, and covenants not to  sue,  the
Trustee  and each holder of the bonds of Series R from  time
to time, their respective directors, officers, employees and
agents  harmless for or against any loss, liability, damage,
expense  or claim (including, but not limited to, reasonable
fees  of attorneys, experts and professionals and reasonable
environmental consulting sampling and analysis costs all  of
which  are  incurred in investigating such claims, defending
such  claims and prosecuting the Company under the indemnity
provided  by  this Section 3.16, whether arising  under  the
federal  Comprehensive Environmental Response,  Compensation
and  Liability  Act, 42 U.S.C. Sections 9601  et  seq.,  the
federal  Resource Conservation and Recovery Act,  42  U.S.C.
Sections  6901  et  seq.,  or  any  similar  state  law   or
regulation  providing  for liability  for  responding  to  a
release  of hazardous substances (the "Environmental  Laws")
(excepting only those attributable solely and completely  to
the willful misconduct of any holder or holders of the bonds
of Series R) or which may be incurred by or asserted against
any  holder  of the bonds of Series R directly or indirectly
arising  or  resulting  from, or relating  to,  any  of  the
following:   (1)  the  presence of any Hazardous  Substances
(hereinafter defined) on any property previously,  presently
or   hereafter  owned,  possessed,  occupied,  operated   or
utilized  by the Company; (2) the presence of any  Hazardous
Substances  on any real property, not previously,  presently
or  hereafter owned, possessed, occupied or operated by  the
Company,  which  Hazardous Substances were used,  generated,
manufactured,   produced,  stored,  transported,   disposed,
released,  discharged, abandoned or handled by the  Company;
and  (3)  the  violation by the Company of any Environmental
Law.  This indemnity shall continue in full force and effect
after  repayment of the bonds of Series R, and its  duration
shall be forever.
     
     "Hazardous Substance" shall mean any hazardous or toxic
material, substance or waste, pollutant or contaminant which
is  regulated  under  any statute, law, ordinance,  rule  or
regulation   of  any  local,  state,  regional  or   federal
authority  having  jurisdiction over  the  property  of  the
Company  or  its  use,  including but  not  limited  to  any
material,  substance or waste which is:  (a)  defined  as  a
hazardous  substance under Section 311 of the Federal  Water
Pollution  Control Act (33 U.S.C. Section 1317) as  amended;
(b)  regulated  as a hazardous waste under Section  1004  or
Section  3001  of the Federal Solid Waste Disposal  Act,  as
amended  by the Resource Conservation and Recovery  Act  (42
U.S.C. Section 6901 et seq.), as amended; (c) defined  as  a
hazardous  substance under Section 101 of the  Comprehensive
Environmental Response, Compensation and Liability  Act  (42
U.S.C. Section 9601 et seq.), as amended, or (d) defined  or
regulated as a hazardous substance or hazardous waste  under
any  rules  or  regulations promulgated  under  any  of  the
foregoing statutes.
     
     IN  WITNESS  WHEREOF, The Providence  Gas  Company  has
caused  its  corporate seal to be hereto affixed  and  these
presents to be executed, acknowledged and delivered  in  its
name  and on its behalf by its President and Treasurer,  and
said  State  Street Bank and Trust Company, as successor  as
Trustee to Rhode Island Hospital Trust National Bank,  which
succeeded  Rhode Island Hospital Trust Company,  has  caused
its  corporate seal to be hereto affixed and these  presents
to  be  executed and delivered by one of its  officers,  all
hereunto duly authorized, as of the day and year first above
written.
                                    Signatures
                                    THE PROVIDENCE GAS
                                       COMPANY
                                    
                                    
[CORPORATE SEAL]                    By______________________
                                      _____________
                                               James H.
                                      Dodge
                                                           Its President

                                    
                                    By_____________________
                                       _____________
                                              Gary S.
                                       Gillheeney
                                                           Its Treasurer

Signed, sealed and delivered
in the presence of:


                      ________________
                       ______________
                          as to The
                       Providence Gas
                           Company

                                    STATE STREET BANK AND
                                       TRUST COMPANY,
                                       Trustee
                                    
                                    
[CORPORATE SEAL]                    BY______________________
                                      __________
                     Authorized Officer

Signed, sealed and delivered
in the presence of:


                      ________________
                       ______________
                         as to State
                       Street Bank and
                        Trust Company

STATE OF RHODE ISLAND    )
                         ):  SS.:
COUNTY OF PROVIDENCE     )
     
     In  Providence, this _____ day of December, A.D.  1995,
personally  appeared before me James H. Dodge  and  Gary  S.
Gillheeney, to me known and known by me to be the  President
and  Treasurer, respectively, of THE PROVIDENCE GAS COMPANY,
one  of  the parties that executed the foregoing instrument,
and  acknowledged said instrument to be their free  act  and
deed in their said capacities, and the free act and deed  of
said  corporation; and on oath stated that  they  were  duly
authorized  to  execute said instrument and  that  the  seal
affixed thereto is the corporate seal of said corporation.
     
     IN  WITNESS  WHEREOF, I have hereunto set my  hand  and
affixed  my  official  seal, the day and  year  first  above
written.
                                    
                                    
                                    
                                    _______________________
                                    _______________
                        Notary Public
My Commission Expires:
                                    [Notarial Seal]
STATE OF RHODE ISLAND              )
                                   ):  SS.:
COUNTY OF PROVIDENCE               )
     
     In  Providence, this ____ day of December,  A.D.  1995,
personally  appeared before me ____________________,  to  me
known  and  known by me to be ____________ of  STATE  STREET
BANK AND TRUST COMPANY, one of the parties that executed the
foregoing instrument, and acknowledged said instrument to be
such  officer's  free  act and deed in such  officer's  said
capacity, and the free act and deed of said corporation,  as
Trustee;  and  on  oath stated that such  officer  was  duly
authorized  to  execute said instrument and  that  the  seal
affixed thereto is the corporate seal of said corporation.
     
     IN  WITNESS  WHEREOF, I HAVE HEREUNTO SEt my  hand  and
affixed  my  official  seal, the day and  year  first  above
written.
                                    
                                    
                                    
                                    _______________________
                                    _______________
                        Notary Public
My commission expires:  ______________
                                    [Notarial Seal]
         Schedule Of Property And Interests Therein
                              
                            None
                SCHEDULE OF RELEASED PROPERTY
                        AND EASEMENTS
                              
                              
                            None
                              


??