Document:

<PAGE>

                                                                      Boston Gas
                                                                    Exhibit 10.5

                                SERVICE AGREEMENT
                             FOR RATE SCHEDULE MN365
                             -----------------------

     This Service Agreement is made and entered into as of the 4th day of
January 1999, by and between Maritimes & Northeast Pipeline, L.L.C. (herein
called "Pipeline") and Boston Gas Company (herein called "Customer," whether one
or more).

                              W I T N E S S E T H:

     WHEREAS, Pipeline and its Canadian pipeline affiliate, Maritimes &
Northeast Pipeline Limited Partnership ("Maritimes-Canada"), are developing and
propose to construct and operate a natural gas pipeline project ("Maritimes
Project"), extending from the railgate of a processing plant to be located near
Goldboro, Nova Scotia, to the Canadian-United States border and through the
states of Maine and New Hampshire into Massachusetts; and

     WHEREAS, Customer desires firm transportationservice on the United States
portion of the Maritimes Project facilities and Pipeline desires to provide
Customer with such service; and

     WHEREAS, the parties hereto, along with Maritimes-Canada, entered into an
agreement dated December 16, 1997 (the "Precedent Agreement"), which bound them
to enter into contracts for service on the United States and Canadian portions
of the Maritimes Project substantially upon the terms and conditions hereinafter
described.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree as
follows:

                                    ARTICLE I
                               SCOPE OF AGREEMENT

     Subject to the terms, conditions and limitations hereof, of Pipeline's Rate
Schedule MN365, of the General Terms and Conditions of Pipeline's Gas Tariff on
file with the Federal Energy Regulatory Commission ("GT&C"), and to the
precedent agreements contained in Pipeline's certificate application on file
with the Federal Energy Regulatory Commission ("FERC" or "Commission") in Docket
No. CP96-809, transportationservice hereunder will be firm and Pipeline agrees
to deliver for Customer's account quantities of natural gas up to the following
quantity:

             Maximum Daily Transportation Quantity (MDTQ) 43-200 Dth
           Maximum Annual Transportation Quantity (MATQ)15,768,00 Dth

     Pipeline will receive for Customer's account for transportation hereunder
daily quantities of gas up to Customer's MDTQ, plus Fuel Retainage Quantity, at
Point(s) of Receipt as specified in Article IV herein. Pipeline will transport
and deliver for Customer's account such daily quantities

<PAGE>

tendered up to such Customer's MDTQ (and, on a cumulative basis, the MATQ) at
Point(s) of Delivery as specified in Article IV herein.

     On any given Day (as defined is the GT&C), Pipeline shall not be obligated
to, but may at its sole discretion, receive at Point(s) of Receipt quantities of
gas in excess of Pipeline's Maximum Daily Receipt Obligation (MDRO), plus Fuel
Retainage Quantity, but shall not receive in the aggregate at all Points of
Receipt on any Day a quantity of gas in excess of the applicable MDTQ, plus Fuel
Retainage Quantity. On any given Day, Pipeline shall not be obligated to, but
may at its sole discretion, deliver at Point(s) of Delivery quantities of gas in
excess of Pipeline's Maximum Daily Delivery Obligation (MDDO), but shall not
deliver in the aggregate at all Points of Delivery on any Day quantities of gas
in excess of the applicable MDTQ.

                                   ARTICLE II
                                TERM OF AGREEMENT

     This Service Agreement shall become effective as of the date first set
forth above and service under this Service Agreement shall commence on the
"Service Commencement Date" which shall be the latest to occur of (i) November
1, 1999; (ii) the date on which the Phase II facilities, as those facilities are
more fully described in the application of Pipeline on file with the Commission
in Docket No. CP96-809, as may be amended from time to time, are commissioned,
tested, and placed in service: and (iii) the date on which the pipeline
facilities of Maritimes-Canada, as those facilities were more fully described in
the December 1997 order of the National Energy Board of Canada ("NEB") in
Hearing Order No. GH-6-96, are commissioned, tested, and placed in service. This
Service Agreement shall continue in effect for a term that begins on the first
day of the first full month following the Service Commencement Date and
continues through October 31, 2002 ("Primary Term"); provided, however, Customer
shall have the option, to be exercised in writing at least nine (9) months prior
to the end of the Primary Term, to extend the term of the Service Agreement with
Pipeline through March 31, 2007. Notwithstanding the foregoing, this Service
Agreement shall remain in force from year to year after October 31, 2002, or
March 3l, 2007, as applicable unless terminated by either Party by written
notice at least one (1) year prior to the end of such applicable date or any
successive term thereafter. Pipeline and Customer may terminate this Service
Agreement at any time pursuant to the provisions of Sections 4 and 16 of the
GT&C and such provisions are incorporated herein by reference.

          THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM
     OR IF CUSTOMER PROVIDES A TERMINATION NOTICE TRIGGERS PREGRANTED
     ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
     OF THE TERMINATION. IF PIPELINE PROVIDES A TERMINATION NOTICE, SUCH
     TERMINATION TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 4.2 0F
     THE GT&C ON THE EFFECTIVE DATE OF THE TERMINATION.

                                       -2-

<PAGE>

     Any portion of (Illegible) Service Agreement necessary to (Illegible) or
                    -----------                                -----------
cash-out imbalances or to make payment under this Service Agreement as required
by the GT&C will survive the other parts of this Service Agreement until such
time as such balancing or payment has been accomplished.

     Notwithstanding any other provision of this Service Agreement, the
commencement of service under this Service Agreement and the rights and
obligations of the parties hereunder are expressly made subject to the following
conditions precedent: (1) An Affirmative Construction Vote, as defined in that
certain Limited Liability Company Agreement of Maritimes & Northeast Pipeline,
L.L.C. dated January 31, 1996 ("LLC Agreement"), of Pipeline's Management
Committee, as defined in the LLC Agreement, to proceed with the construction of
Pipeline's Phase II facilities, as more fully described in FERC Docket Nos.
CP96-178, CP96-809, and CP97-238, pursuant to Section 7.02(d) of the LLC
Agreement; and (2) An Affirmative Construction Vote as defined in that certain
Unanimous Shareholder Agreement of Maritimes & Northeast Pipeline Management
Ltd. dated July 25, 1996 ("Shareholder Agreement"), of the Management committee,
as defined is the Shareholder Agreement, of Maritimes-Canada to proceed with
construction of the Canadian portion of the Maritimes Project pursuant to
Section 7.01(d) of the Shareholder Agreement.

                                   ARTICLE III
                                  RATE SCHEDULE

     For the entire period when this Service Agreement is in effect, this
Service Agreement will be subject to all applicable provisions of Rate Schedule
MN365 or any superseding rate schedule and the GT&C of Pipeline's Tariff on file
with the Federal Energy Regulatory Commission, all of which are by this
reference made a part hereof.

     Commencing on the Service Commencement Date. Customer agrees to and will
pay Pipeline all Reservation, Usage and other charges and fees provided for in
Rate Schedule MN365, as effective from time to time, for service under this
Service Agreement, unless such payments are excused by the provisions of Rate
Schedule MN365 or the GT&C.

     Customer agrees that Pipeline shall have the unilateral right to file with
the appropriate regulatory authority and make changes effective in: (i) the
rates and charges applicable to service pursuant to Pipeline's Rate Schedule
MN365 and under this FERC Gas Tariffs (ii) Pipeline's Rate Schedule MN365;
and/or (iii) any provision of the GT&C under Pipeline's Tariff. Customer shall
have the right to take any position before the appropriate regulatory authority
in response to any filing contemplated in this paragraph.

                                   ARTICLE IV
                  POINT(S) OF RECEIPT, DELIVERY AND MEASUREMENT

     The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall
receive and deliver gas, respectively, shall be specified in Exhibit(s) A and B
of this effective Service Agreement. The Point(s) of Measurement shall be
specified in Exhibit A of this effective Service Agreement.

                                       -3-

<PAGE>

     Exhibit(s) A and B are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth herein
at length.

                                    ARTICLE V
                                     QUALITY

     All natural gas tendered to Pipeline for Customer's account shall conform
to the quality specifications set forth in Section 12 of Pipeline's GT&C.
Customer agrees that if Customer tenders gas for service hereunder and Pipeline
accepts such gas which does not comply with Pipline's quality specifications,
Customer will pay all reasonable costs associated with processing of such gas as
necessary to comply with such quality specifications: provided, however, that
Pipline shall provide Customer with notice of a failure to comply with
Pipeline's quality specifications within a reasonable time after Pipeline
becomes aware of such failure to comply.

                                   ARTICLE VI
                                    ADDRESSES

     Except as herein otherwise provided of as provided in the GT&C any notice,
request, demand, statement, invoice or payment provided for in this Service
Agreement, or any notice which any party desires to give to the other, must be
in writing and will be considered as duly delivered when mailed by registered,
certified, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:

          (a) pipeline:  Maritimes & Northeast Pipeline, L.L.C.
                         Attn: President
                         1284 Soldiers Field Road
                         Boston, Massachusetts 02135
                         Phone: (617) 560-1386
                         Facsimile: (617) 560-1386

          (b) Customer:  Boston Gas Company
                         Attn: Vice President, Gas Resources
                         One Beacon Street
                         Boston, Massachusetts 02108
                         Phone: (617) 742-8400
                         Facsimile: (617) 742-8564

or such other address as either party designates by formal written notice.

                                       -4-

<PAGE>

                                   ARTICLE VII
                                   ASSIGNMENTS

     Any company which succeeds by purchase, merger, or consolidation to the
assets, substantially as an entirely, of Customer or of Pipeline will be
entitled to the rights and will be subject to the obligations of its predecessor
in title under this Service Agreement. Either Customer or Pipeline may assign or
pledge this Service Agreement under the provisions of any mortgage, deed of
trust, indenture; bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter. Except as set forth
above, neither Customer nor Pipeline shall assign or permanently release under
Section 9 of the GT&C any of its rights hereunder without the prior written
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that neither Customer nor Pipeline shall be released from its
obligations hereunder without the consent of the other, which consent shall not
be unreasonably withheld.

                                  ARTICLE VIII
                               AGENCY ARRANGEMENT

     Customer shall have the right to designate in writing an agent or person to
provide nomination and scheduling information, to receive invoices and make
payments, to take actions necessary to release capacity and to handle imbalance
resolutions for Customer on Customer's behalf. Customer must provide Pipeline
with seven (7) business days advance written notice of its agent and the
effective date after which Pipeline is to act in accordance with the directions
of the agent; provided, however, that Customer may terminate agent immediately
upon written notice to Pipeline. At Customer's request, Pipeline shall use
reasonable efforts to effectuate any such notice in less than seven (7) business
days. Pipeline shall be entitled to rely on the representation, actions, and
other directions of the agent on behalf of Customer and will be fully protected
in relying upon such agent. Customer indemnifies and holds Pipeline harmless
with respect to actions taken by Pipeline in reliance on Customer's agent.

                                   ARTICLE IX
                            NONRECOURSE OBLIGATION OF
                           LIMITED LIABILITY COMPANY,
                          MANAGING MEMBER AND OPERATOR

     Customer acknowledges and agrees that (a) Pipeline is a Delaware limited
liability company; (b) Customer shall have no recourse against any member of
Pipeline or against Maritimes & Northeast Pipeline Limited Parntership or a
member of thereof with respect to Pipeline's obligations under this Service
Agreement and that its sole recourse shall be against the assets and revenues of
Pipeline, irrespective of any failure to comply with applicable law of any
provision of this Service Agreement; (c) no claims shall be made against any
member of Pipeline or against Maritimes & Northeast Pipeline Limited Partnership
or a member thereof under or in connection with this Service Agreement; (d) no
claims shall be made against the Operator, its officers, employees, and agents
under or in connection with this Service Agreement and the performance of
(Illegible) as Operator (provided that this shall not bar claims resulting from
-----------
the gross negligence, undue discrimination or willful misconduct of the
Operator) and, unless Customer self insures, Customer shall provide the

                                       -5-

<PAGE>

Operator with a waiver interogation of Customers's insurance company for all
such claims, and (e) this representation is made expressly for the benefit of
the members in Pipeline the Managing Member, Operator, Maritimes & Northeast
Pipeline Limited Partnership and its members.

                                    ARTICLE X
                                 INTERPRETATION

     The parties hereto agree that the interpretation and performance of this
Service Agreement must be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.

     This Service Agreement and the obligations of the parties are subject to
all applicable present and future valid laws with respect to the subject matter,
State and Federal and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.

                                   ARTICLE XI
                        CANCELLATION OF PRIOR CONTRACT(S)

     Pipeline and Customer agree that, as of the Service Commencement Date, the
Precedent Agreement will have no further force and effect as between Pipeline
and Customer.

                                       -6-

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be executed by their respective duly authorized officers and attested by
their respective Secretaries or Assistant Secretaries, the day and year first
above written.

                                          MARITIMES & NORTHEAST PIPELINE, L.L.C.

                                          by: M&N Management Company,
                                              its Managing Member

                                          By: /s/ Illegible
                                              ----------------------------------

     ATTEST:

     /s/ Illegible
     ----------------------

                                          BOSTON GAS COMPANY

                                          By: /s/ Illegible
                                              ----------------------------------
                                              Vice President

     ATTEST:

     /s/ Illegible
     ----------------------

                                       -7-

<PAGE>

                                    EXHIBIT A

                                       to

                             SERVICE AGREEMENT UNDER
                               RATE SCHEDULE MN365
                                     BETWEEN
                     MARITIMES & NORTHEAST PIPELINE, L.L.C.
                                       AND
                         BOSTON GAS COMPANY ("CUSTOMER")

                                DATED JAN 4, 1999

                               FIRM RECEIPT POINTS

RECEIPT                                         RECEIPT PRESSURE
POINT                      MDRO                 LIMITATIONS
-----                      ----                 -----------
(plus applicable fuel
retainage
quantities)

U.S. Canadian Border       43,200 dth/ day
near Calais, Maine

MEASUREMENT                                     PRESSURE LIMITATION
POINT                                           -------------------
-----

As defined in the GT&C

Signed for Indentification

Pipeline: /s/ Illegible
          ----------------------------

Customer: /s/ Illegible
          ----------------------------

Supersedes Exhibit A Dated
                           -----------

<PAGE>

                                    EXHIBIT B

                                       to

                             SERVICE AGREEMENT UNDER
                               RATE SCHEDULE MN365
                                     BETWEEN
                     MARITIMES & NORTHEAST PIPELINE, L.L.C.
                                       AND
                         BOSTON GAS COMPANY ("CUSTOMER")

                                DATED JAN 4, 1999

                              FIRM DELIVERY POINTS

DELIVERY                                                   DELIVERY PRESSURE
POINT                                  MDDO                LIMITATIONS
-----                                  ----                -----------

Tonnessec Interconnect                 43,200 dth/day
at Dracut Massachusetts
or other mutually agreeable points

Signed for identification

Pipeline: /s/ Illegible
          ----------------------------

Customer: /s/ Illegible
          ----------------------------

Supersedes Exhibit B Dated:
                           -----------

<PAGE>

[LOGO] KEYSPAN                                 KeySpan Energy Delivery
                                               201 Rivermoor Street
                                               West Roxbury, Massachusetts 02132
                                               Tel 617 723-5512

December 13, 2001

Colonel MacLeod
Marketing Manager
Maritimes & Northeast Pipeline
1801 Hollis Street, Suite 1600
Halifax, Nova Scotia
Canada B3J 3N4

Dear Colonel:

As a follow-up to our telephone conversation, I am forwarding this letter to
formally notify you of Boston Gas Company's intentions with respect to its
transportation agreement on Maritimes & Northeast Pipeline/Canada ("MNP").

Per Article II of the Agreement, "Customer shall have the one-time option to be
exercised in writing at least nine (9) months prior to the end of the Primary
Term, to extend the term of this Agreement through March 31, 2007". Boston Gas
Company hereby notifies MNP of its desire to exercise this option, and extend
the term of the agreement through March 31, 2007.

I look forward to working with you over the term of the Agreement. Should you
have any questions, please don't hesitate to give me a call at (617) 723-5512,
x4730.

Sincerely,

/s/ Elizabeth Danehy
----------------------------------
Elizabeth Danehy
Director - Customer Choice and Gas
Resource Management

<PAGE>

Stamp page 58 missing

<PAGE>

[LOGO] Maritimes & Northeast Pipeline, LLC.

                                October 24, 2000

Mr. William Luthern
Vice President, Gas Resources
Boston Gas Company
One Beacon Street
Boston, MA 02108

          Re:  Service Agreement By and Between Boston Gas Company and
               Maritimes & Northeast Pipeline, L.L.C. Under Rate Schedule
               MN365, dated January 4, 1999

Dear Mr. Luthern:

          Reference is made to the captioned agreement between Boston Gas
Company ("Boston Gas") and Maritimes & Northeast Pipeline, L.L.C. ("Maritimes").
Boston Gas has filed various protests and other pleadings addressing Maritimes'
applications for a certificate and amended certificate of public convenience and
necessity authorizing the construction and operation of pipeline facilities from
the U.S. Canada border to Dracut, Massachusetts in Federal Energy Regulatory
Commission ("FERC") Docket Nos, CP96-809, et al.; CP96-810, et al.; CP96-178, et
al.; and CP97.238, et al. (referred to hereinafter as "Boston Gas Pleadings").
Among other things, Boston Gas has previously filed for rehearing of FERC orders
addressing Maritimes & application, which rehearing requests have been denied by
the FERC, and currently has pending a further request for rehearing and for
reopening of the record in Maritimes&Northeast Pipeline, L.L.C., Docket Nos.
CP96-809, et al. (referred to hereinafter collectively as "Boston Gas Rehearing
Requests"). Also, there is an appeal pending in the United States Court of
Appeals for the District of Columbia Circuit in Boston Gas Company v, FERC Case
No. 98-1620 ("Boston Gas Appeal") in which Boston Gas has challenged, inter
alia, certain aspects of FERC orders approving Maritimes' initial rates. In
order to resolve in their entirety the issues associated with and raised in the
Boston Gas Pleadings, Boston Gas Rehearing Requests, and the Boston Gas Appeal,
Boston Gas and Maritimes, in consideration of the premises and intending to be
legally bound, agree as follows:

1.   Boston Gas hereby exercises its option under Article II of the captioned
     agreement to extend the term of the Service Agreement through March 31,
     2007, subject to the remaining provisions of Article II.

2.   Boston Gas hereby grants to Maritimes an exclusive option ("Option") to
     obtain certain land rights and interests in a parcel of land owned by
     Boston Gas in the vicinity of John Street in Reading, Massachusetts, as
     such parcel is further described in Schedule A (the "Premises"). The
     Option, if exercised, shall require Boston Gas to grant the following
     rights and interests to Maritimes in the Premises, subject to the
     conditions specified herein:

     (a)  the lease of the Premises in its entirety for a period not to exceed 2
          years for the purpose of storing equipment and material relating to
          the construction of the proposed extension of the

1284 Soldiers Field Road
Boston, MA 02135
(617) 254-4050
Facsimile: (617) 560-1392

<PAGE>

Page Two (2)

          Maritimes pipeline from Methuen to Beverly, Massachusetts (the
          "Maritimes Project") currently on file with the FERC at Docket No.
          CP01-004.

     (b)  In consideration of the foregoing, Boston Gas agrees not to protest or
          oppose the Maritimes project.

     (c)  Boston Gas, in granting such Option, makes no representation express
          or implied as to the suitability of the Premises for Maritimes'
          proposed purposes.

     The specific terms of such lease (the "Grant") shall be negotiated by the
     parties prior to the exercise of the Option, and shall reflect such
     operational and other considerations as Boston Gas deems necessary. The
     consideration for the Grant shall reflect fair market value for such rights
     and interests and shall be in addition to the consideration for the Option
     set forth herein. Boston Gas agrees to negotiate the terms and
     consideration of the Grant in good faith and with due diligence. In the
     event the parties are unable to agree on the terms or consideration for the
     Grant after conducting good faith negotiations, Maritimes reserves the
     right to exercise any right of eminent domain it may possess. In
     consideration, Maritimes agrees to pay Boston Gas, in three installments
     subject to the further terms and conditions contained herein, a total
     amount of $1,900,000. The first installment shall be $300,000 and shall be
     paid by Maritimes within ten calendar (10) days following both parties
     execution of this Agreement. The second and third installments shall each
     be $800,000 and shall be paid on or before December 1, 2001 and December 1,
     2002, respectively, provided however, Maritimes agrees to the pay the final
     installment on December 1, 2002 or thirty (30) days after the issuance of a
     final and non-appealable order that is in Maritimes' favor with respect to
     the issues raised in the Boston Gas Pleadings, Boston Gas Rehearing
     Requests and the Boston Gas Appeals, whichever is earlier but in any event
     not before December 1, 2001. During the term of this Option, in the event
     Boston Gas sells the Premises, or offers to sell, mortgage, encumber or
     otherwise transfer or dispose of, use or alter the Premises in a manner
     that would adversely affect Maritimes use of the Premises as contemplated
     herein, without the prior written consent of Maritimes, Boston Gas agrees
     to negotiate in good faith with Maritimes to provide a suitable substitute
     for the Premises. This Option shall remain in effect until 11:59 p.m. on
     December 31, 2002. Maritimes has the right to exercise the rights and
     interests contemplated herein in whole or in part at any time during the
     term of this Option. If Maritimes does not exercise this Option within the
     period provided herein, then this Option shall be void and of no further
     force or effect.

3.   Boston Gas will file with the appropriate governmental authorities within
     seven (7) calender days following both parties' execution of this Agreement
     to withdraw with prejudice the Boston Gas Rehearing Requests pending before
     the FERC and the Boston Gas Appeal pending before the United States Court
     of Appeals for the District of Columbia Circuit. Boston Gas further agrees
     that it will not file to reinstate or otherwise raise in other proceedings
     the Boston Gas Pleadings, the Boston Gas Rehearing Requests or the Boston
     Gas Appeal or any issues raised therein.

4.   The agreement set forth herein shall resolve all issues raised in the
     Boston Gas Pleadings. Boston Gas Rehearing Requests and the Boston Gas
     Appeal. Further, Boston Gas agrees that it will not challenge Maritimes
     design capacity or rates or tariff or service agreements, including the
     service agreement with Boston Gas; provided, however, this Agreement is
     without prejudice to issues

<PAGE>

Page Three (3)

     including the aforementioned which Boston Gas may desire to raise after
     November 1, 2002, or upon any Section 4 or Limited Section 4 rate filing
     made by Maritimes, which increases Boston Gas' rates, whichever is earlier,
     on a prospective basis only.

5.   If not withstanding the withdrawal of the Boston Gas Pleadings, Boston Gas
     Rehearing Requests and the Boston Gas Appeal, the FERC should act on or
     before December 1, 2001 upon those matters and rule in favor of Boston Gas,
     then any payment not yet due under this Agreement may be withheld by
     Maritimes.

6.   Each Party to this Agreement agrees that it will keep strictly confidential
     (and that it shall cause each of its affiliates, as applicable, to keep
     strictly confidential) the contents of this Agreement, to the extent that
     such contents have not been made by the other party or that disclosure is
     required by a governmental authority with competent jurisdiction.

7.   Neither Boston Gas nor Maritimes shall assign this Agreement to any party,
     including an affiliate, without the prior written consent of the other.

     If the foregoing represents your understanding of the agreement between the
parties, please sign in the signature space provided below,

                                          Very truly yours

                                          Maritimes & Northeast Pipeline, L.L.C.

                                          By:    M&N Management Company,
                                                 Its Managing Member

                                          /s/ Thomas C.O'Connor
                                          --------------------------------
                                          By:    Thomas C.O'Connor
                                          Title: President

ACCEPTED AND AGREED TO
THIS 10TH DAY OF November ,2000

Boston Gas Company

/s/ William R. Luthern
-----------------------------
By:    William R. Luthern
Title: Vice President

<PAGE>

                          AGREEMENT DATA AND APPROVALS    AGREEMENT NO. 7777
                          ----------------------------
DATE: November 19, 1999                                   (check) NEW
                                                                     ----------
                                                              RENEWAL
                                                                     ----------

AGREEMENT MADE BETWEEN BOSTON GAS COMPANY AND MARITIMES & NORTHEAST PIPELINE
SYSTEM

--------------------------------------------------------------------------------

DESCRIPTION OF AGREEMENT                   TERM OF AGREEMENT 11/1/99 to 10/31/0X
------------------------                                                       -

          Transportation of gas

BIDDING*: Competitive bidding employed - Yes [ ], No [ ], Low bidder chosen -
--------
Yes [ ], No [ ]

*If either No block is checked, attach written explanation to this form approved
by V.P. concerned.

FOR LEGAL SERVICES DEPT. USE
----------------------------
1.   Does the Walsh-Healey or David Bacon Act apply to this agreement?  No

2.   Should agreement be filed with the D.P.U.?  No

3.   Is approval required by the D.P.U.?                  Date app'd.
                                        -----------------            -----------
4.   Is approval required by the Executive Committee?     Date app'd.
                                                     -----           -----------
5.   Is approval required by the Board of Directors?      Date app'd.
                                                    -----           ------------
6.   Is approval required by the Stockholders?            Date app'd.
                                              -----------            -----------
7.   Is approval required by any other Federal or State Authority?
                                                                   -------------
     If yes, which Federal or State Authority?            Date app'd.
                                              -----------           ------------
8.   Is approval required under any Govt. Regulation or Order?
                                                               -----------------

<TABLE>
<CAPTION>
APPROVED BY (Route in order listed)   INITIALS      DATE
-----------                           --------      ----
<S>  <C>                              <C>         <C>
 1.   Negotiating Officer or Emp.
                                      ----------  ---------
 2.   Purchasing
                --------------------------------  ---------
 3.   Mgr., Legal Services Dept.     (Illegible)   12/9/99
                                      ---------

 4.   Vice President (Concerned)     (Illegible)   9 DEC 99
                                      ---------

 5.   Other (Specify)
                     ---------------------------  ---------
 6.
      ------------------------------------------  ---------
 7.
      ------------------------------------------  ---------

 8.   Treasurer                      (Illegible)   12/10/99
                                      ---------

 9.   Ins. Dept.
                --------------------------------  ---------
10.   President
               ---------------------------------  ---------

</TABLE>

ATTENTION AUDITOR                                         YES        NO
-----------------                                         ---        --

Should this data be microfilmed for protective purposes?
                                                          ---        ---
Microfilmed, Date:
                  ----------

COMMENTS - (Explain any changes or renewals or special information on new
--------
contracts)

CONTRACT TO BE SIGNED BY            PER            CONTRACT MAILED
                        ------------   ------------               -------------
                                                                      (DATE)
DISTRIBUTION OF COPIES MADE ON (Date)
                                      ------------
      Contractor, Document File (original), General Accounting, Insurance
-----
Department,      other (Specify)
           -----                 -----------------------------------------------

<PAGE>

[LOGO] KEYSPAN                                 KeySpan Energy Delivery
                                               201 Rivermoor Street
                                               West Roxbury, Massachusetts 02132
                                               Tel 617 723-5512

December 13, 2001

Colonel MacLeod
Marketing Manager
Maritimes & Northeast Pipeline
1801 Hollis Street, Suite 1600
Halifax, Nova Scotia
Canada B3J 3N4

Dear Colonel:

As a follow-up to our telephone conversation, I am forwarding this letter to
formally notify you of Boston Gas Company's intentions with respect to its
transportation agreement on Maritimes & Northeast Pipeline/Canada ("MNP").

Per Article II of the Agreement, "Customer shall have the one-time option to be
exercised in writing at least nine (9) months prior to the end of the Primary
Term, to extend the term of this Agreement through March 31, 2007". Boston Gas
Company hereby notifies MNP of its desire to exercise this option, and extend
the term of the agreement through March 31, 2007.

I look forward to working with you over the term of the Agreement. Should you
have any questions, please don't hesitate to give me a call at (617) 723-5512,
x4730.

Sincerely,

/s/ Elizabeth Danehy
----------------------------------
Elizabeth Danehy
Director - Customer Choice and Gas
Resource Management

<PAGE>

[LETTERHEAD] Maritimes & Northeast Pipeline

November 19, 1999

Mr. Bill Luthern
V.P. Gas Resources
Boston Gas Company
1 Beacon Street
Boston, Mass 02108
United States of America

Dear Mr Luthern,

I am pleased to be sending you Boston Gas Company ("Boston Gas") final and
original Firm Service Contract for transportation on the Maritimes & Northeast
Pipeline System. The completion of this contract is another step in the
development of a new natural gas basin which will serve many markets in the
Maritimes and New England.

For future reference your customer number is 0500 and contract number is
0500-FT019.

If you have any farther questions be sure to call.

Sincerely,

/s/ Colonel MacLeod
-----------------------
Colonel MacLeod
Marketing Manager
Maritimes & Northeast Pipeline<PAGE>

                                                                      Boston Gas
                                                                   Exhibit 10.40

                                   AGREEMENTS
                               BETWEEN ALGONQUIN
                                 AND BOSTON GAS

<PAGE>

                                                                 EXHIBIT KEDNE-2

                              PRECEDENT AGREEMENT

     This PRECEDENT AGREEMENT ("Precedent Agreement") is made and entered into
this 13th day of June, 2001, by and between Algonquin Gas Transmission Company,
a Delaware corporation ("Algonquin" or "Pipeline"), and Boston Gas Company,
d/b/a KeySpan Energy Delivery New England, a Massachusetts corporation
("Customer"). Pipeline and Customer are sometimes referred to herein
individually as a ("Party"), or collectively as the ("Parties").

                              W I T N E S S E T H:

     WHEREAS, Pipeline owns and operates an interstate gas transmission system
in the Northeastern United States;

     WHEREAS, on October 10, 2000, in FERC Docket No. CP01-5, Pipeline filed an
application with the Federal Energy Regulatory Commission ("FERC" or
"Commission") for authorization to construct an extension of its mainline from a
point near Weymouth, Massachusetts, to an interconnection with Maritimes &
Northeast Pipeline, L.L.C.'s ("Maritimes") proposed Phase III project facilities
in Beverly, Massachusetts (the "HubLine(SM) Project") (Maritimes' Phase III
project, which is more fully described in FERC Docket No. CP01-4, shall
hereinafter be referred to as the "Phase III Project");

     WHEREAS, Algonquin proposes to construct an expansion of its G system
lateral, pursuant to which Algonquin proposes to increase the capacity of the
lateral by replacing all or a portion of the lateral line pipe with a larger
diameter pipe (the "G System Expansion Project") (the HubLine(SM) Project and
the G System Expansion Project shall collectively be referred to herein as the
"Project");

<PAGE>

     WHEREAS, Customer desires to obtain firm transportation service from
Pipeline as part of the Project for certain quantities of Customer's natural
gas; and

     WHEREAS, subject to the terms and conditions of this Precedent Agreement,
Pipeline is willing to endeavor to construct the Project and provide the firm
transportation service Customer desires;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound, Pipeline and Customer agree
to the following:

     1. Subject to the terms and conditions of this Precedent Agreement,
Pipeline shall proceed with due diligence to obtain from all governmental and
regulatory authorities having competent jurisdiction over the premises
including, but not limited to, the FERC, the authorizations and/or exemptions
Pipeline determines are necessary: (i) for Pipeline to construct, own, operate,
and maintain the Project facilities necessary to provide the firm transportation
service contemplated herein; and (ii) for Pipeline to perform its obligations as
contemplated in this Precedent Agreement. Pipeline reserves the right to file
and prosecute any and all applications for such authorizations and/or
exemptions, any supplements or amendments thereto, and, if necessary, any court
review, which are consistent with this Precedent Agreement in a manner it deems
to be in its best interest. During the term of the Precedent Agreement, Customer
expressly agrees to support and cooperate with, and to not oppose, obstruct or
otherwise interfere with in any manner whatsoever, the efforts of Pipeline to
obtain all authorizations and/or exemptions and supplements and amendments
thereto necessary for Pipeline to

                                       -2-

<PAGE>

construct, own, operate, and maintain the Project facilities and to provide the
firm transportation service contemplated in this Precedent Agreement and to
perform its obligations as contemplated by this Precedent Agreement. Provided,
however, that nothing herein shall prevent Customer from protesting any
regulatory filings contemplated by this Paragraph 1 that may be inconsistent
with this Precedent Agreement.

     2. Within ninety (90) days after execution of this Precedent Agreement,
Customer will advise Pipeline in writing of: (i) any facilities which Customer
must construct, or cause to be constructed, in order for Customer to utilize the
firm transportation service contemplated in this Precedent Agreement; and (ii)
any necessary or desirable governmental, contractual and/or regulatory
authorizations, approvals, certificates, permits and/or exemptions associated
with the facilities identified pursuant to (i) above ("Customer's
Authorizations").

     3. Subject to the terms and conditions of this Precedent Agreement,
Customer shall proceed with due diligence to obtain Customer's Authorizations.
Customer reserves the right to file and prosecute applications for Customer's
Authorizations, and, if necessary, any court review, in a manner it deems to be
in its best interest; provided, however, Customer shall pursue Customer's
Authorizations in a manner designed to implement the firm transportation service
contemplated herein in a timely manner. Pipeline agrees to use reasonable
efforts to assist Customer in obtaining Customer's Authorizations. Customer
agrees to promptly notify Pipeline in writing when each of the required
authorizations, approvals and/or exemptions are

                                       -3-

<PAGE>

received, obtained, rejected or denied. Customer shall also promptly notify
Pipeline in writing as to whether any such authorizations, approvals and/or
exemptions received or obtained are acceptable to Customer.

     4. To effectuate the firm transportation service contemplated herein,
Customer and Pipeline agree that, within thirty (30) days following the date on
which the Commission issues an order granting Pipeline a certificate of public
convenience and necessity to construct the HubLine(SM) Project facilities, they
will execute a firm transportation service agreement under Pipeline's Rate
Schedule AFT-1 ("Service Agreement"), which (i) specifies a Maximum Daily
Transportation Quantity ("MDTQ") of 20,000 dekatherms per day ("Dth/d"),
exclusive of fuel requirements, effective on the Service Commencement Date(as
determined in accordance with Paragraph 5 of this Precedent Agreement) with the
quantity decreasing, at Customer's option, to 10,000 Dth/d effective November 1,
2003, if Customer has provided written notice to Pipeline, no later than October
1, 2003, of Customer's election to so reduce the MDTQ, (ii) specifies a primary
term that extends for ten (10) years from the first day of the first full month
following the Service Commencement Date ("Primary Term"), (iii) specifies a
Primary Point of Receipt at the interconnection between the HubLine(SM) Project
facilities and the Phase III Project facilities in Beverly, Massachusetts (with
an MDRO equal to the MDTQ), (iv) specifies the interconnection between
Pipeline's facilities and Customer's facilities in or near Ponkapoag,
Massachusetts, as the Primary Point of Delivery (with an MDDO equal to the MDTQ)
and a minimum delivery pressure at such point of 270 psig; (v) permits Customer
(aa) to assign, any time prior to the Service Commencement Date, or (bb) to
release, anytime after the Service Commencement

                                       -4-

<PAGE>

Date (under Pipeline's then-effective capacity release provisions in its FERC
Gas Tariff), all or any portion of such Service Agreement to any of its local
gas distribution company affiliates (provided that, Customer shall not be
permanently discharged from its obligations under the Service Agreement, unless
the assignee (or its guarantor) or replacement shipper (or its guarantor), as
applicable, has an investment grade credit rating for its long-term senior
unsecured debt from a recognized rating agency, or Pipeline otherwise
determines, in its reasonable discretion, that the assignee or replacement
shipper, as applicable, is sufficiently creditworthy to satisfy the
assigned/released obligations). Service under the Service Agreement shall be
subject to an NGA Section 7(c) initial rate (unless Pipeline and Customer
mutually agree upon a negotiated or discounted rate), plus fuel retainage and
all applicable surcharges. Service pursuant to the Service Agreement will
commence on the date specified by Pipeline in its written notice to Customer
pursuant to Paragraph 5 of this Precedent Agreement.

     5. Upon satisfaction or waiver of all the conditions precedent set forth in
Paragraph 8 of this Precedent Agreement, Pipeline shall notify Customer of such
fact, and that service under the Service Agreement will commence on a date
certain, which date will be the later of: (i) November 1, 2002; (ii) the date
that all of the conditions precedent set forth in Paragraph 8 of this Precedent
Agreement are satisfied or waived; or (iii) the date on which Maritimes' Phase
III Project is commissioned, tested and made available for service ("Service
Commencement Date"). On and after the date on which Pipeline has notified
Customer that service under the Service Agreement will commence, Pipeline shall
provide firm transportation service for Customer pursuant to

                                       -5-

<PAGE>

the terms of the Service Agreement and Customer will pay Pipeline for all
applicable charges required by the Service Agreement.

     6. Pipeline will undertake the design of the Project facilities and any
other preparatory actions necessary for Pipeline to complete and file its
certificate application(s) with the Commission. Prior to satisfaction of the
conditions precedent set forth in Paragraph 8 of this Precedent Agreement (with
the exception of 8(A)(v)), Pipeline shall have the right, but not the
obligation, to proceed with the necessary design of facilities, acquisition of
materials, supplies, properties, rights-of-way and any other necessary
preparations to implement the firm transportation service under the Service
Agreement as contemplated in this Precedent Agreement.

     7. Upon satisfaction of the conditions precedent set forth in Paragraphs
8(A)(i) through 8(A)(iv), inclusive, and 8(B) of this Precedent Agreement, or
waiver of the same by Pipeline or Customer, as applicable, Pipeline shall
proceed (subject to the continuing commitments of all customers executing
precedent agreements and service agreements for service utilizing the firm
transportation capacity to be made available by the Project) with due diligence
to construct the authorized Project facilities and to implement the firm
transportation service contemplated in this Precedent Agreement on November 1,
2002. Notwithstanding Pipeline's due diligence, if Pipeline is unable to
commence the firm transportation service for Customer as contemplated herein on
November 1, 2002, Pipeline will continue to proceed with due diligence to
complete arrangements for such firm transportation service, and commence the
firm transportation service for Customer at the earliest practicable date
thereafter.

                                       -6-

<PAGE>

Pipeline will neither be liable nor will this Precedent Agreement or the Service
Agreement be subject to cancellation if Pipeline is unable to complete the
construction of such authorized Project facilities and commence the firm
transportation service contemplated herein by November 1, 2002.

     8. Commencement of service under the Service Agreement and Pipeline's and
Customer's rights and obligations under the Service Agreement are expressly made
subject to satisfaction of the following conditions precedent:

     (A) Only Pipeline shall have the right to waive the conditions precedent
set forth in Paragraph 8(A):

          (i)  Pipeline's receipt and acceptance by September 1, 2002, of all
               necessary certificates and authorizations from the Commission to
               construct, own, operate and maintain the Project facilities, as
               described in Pipeline's certificate application as it may be
               amended from time to time, necessary to provide the firm
               transportation service contemplated herein and in the Service
               Agreement and to charge the initial Section 7(c) rates requested,
               as contemplated in this Precedent Agreement;

          (ii) Pipeline's receipt of approval by September 1, 2002, from its
               Board of Directors or similar governing body to expend the
               capital necessary to construct the Project facilities;

                                       -7-

<PAGE>

          (iii)Pipeline's receipt of all necessary governmental authorizations,
               approvals, and permits required to construct the Project
               facilities necessary to provide the firm transportation service
               contemplated herein and in the Service Agreement other than those
               specified in Paragraph 8(A)(i);

          (iv) Pipeline's procurement of all necessary rights-of-way easements
               or permits in form and substance acceptable to Pipeline; and

          (v)  Pipeline's completion of construction of the necessary Project
               facilities required to render firm transportation service for
               Customer pursuant to the Service Agreement and Pipeline being
               ready and able to place such facilities into gas service; and

     (B) Customer's receipt and acceptance by July 1, 2002, of all Customer's
Authorizations (only Customer shall have the right to waive this condition
precedent).

     Unless otherwise provided for herein, the Commission authorization(s) and
approval(s) contemplated in Paragraph 1 of this Precedent Agreement must be
issued in form and substance reasonably satisfactory to both Parties hereto. For
purposes of this Precedent Agreement, such Commission authorization(s) and
approval(s) shall be deemed satisfactory if issued or granted in form and
substance as requested, or if issued in a manner acceptable to Pipeline and such
authorization(s) and approval(s), as issued, will not have, in Customer's sole
and absolute discretion, not to be exercised in an unreasonable manner, a
material adverse effect on Customer. Customer shall notify

                                       -8-

<PAGE>

Pipeline in writing not later than fifteen (15) days after the issuance of the
Commission certificate(s), authorization(s) and approval(s), including any order
issued as a preliminary determination on non-environmental issues, contemplated
in Paragraph 1 of this Precedent Agreement if such certificate(s),
authorization(s) and approval(s) are not satisfactory to Customer. All other
governmental authorizations, approvals, permits and/or exemptions that Pipeline
must obtain must be issued in form and substance reasonably acceptable to
Pipeline. All governmental approvals that Pipeline is required by this Precedent
Agreement to obtain must be duly granted by the Commission or other governmental
agency or authority having jurisdiction, and must be final and no longer subject
to rehearing or appeal; provided, however, Pipeline may waive the requirement
that such authorization(s) and approval(s) be final and no longer subject to
rehearing or appeal.

     9. If Customer: (i) terminates this Precedent Agreement for any reason;
(ii) otherwise fails to perform, in whole or in part, its material duties and
obligations hereunder; or (iii) during the term of this Precedent Agreement,
interferes with or obstructs the receipt by Pipeline of the authorizations
and/or exemptions contemplated by and consistent with this Precedent Agreement
as requested by Pipeline and, as a result of such actions by Customer, Pipeline
does not receive the authorizations and/or exemptions in form and substance as
requested by Pipeline or does not receive such authorizations and/or exemptions
at all, then Customer shall, at the option and election of Pipeline, reimburse
Pipeline for Customer's proportionate share (as prorated based on initial MDTQs
among all customers taking actions described in this Paragraph 9) of Pipeline's
costs incurred, accrued, allocated to, or for which Pipeline is contractually

                                       -9-

<PAGE>

obligated to pay in conjunction with its efforts to satisfy its obligations
under this Precedent Agreement ("Pre-service Costs"). Pre-service Costs will
include, but will not be limited to, those expenditures and/or costs incurred,
accrued, allocated to, or for which Pipeline is contractually obligated to pay
associated with engineering, construction, materials and equipment,
environmental, regulatory, and/or legal activities, and internal overhead and
administration and any other costs related to the firm service contemplated in
this Precedent Agreement incurred in furtherance of Pipeline's efforts to
satisfy its obligations under this Precedent Agreement. Customer's obligation to
pay Pre-service Costs hereunder shall be limited to a maximum amount of $
500,000.00. Notwithstanding the foregoing, Customer acknowledges and agrees that
Pipeline shall in no way be precluded from seeking recovery of additional
amounts from Customer for losses or damages related to breach of contract. For
breaches of contract that occur prior to thirty (30) days following the date on
which the Commission issues an order granting Pipeline a certificate of public
convenience and necessity to construct the HubLine(SM) Project facilities,
neither Party shall be liable to the other Party for incidental, consequential
or punitive damages arising out of or in any way related to this Precedent
Agreement.

     10. If the conditions precedent set forth in Paragraph 8 of this Precedent
Agreement, excluding the condition precedent set forth in Paragraph 8 (A)(v),
have not been fully satisfied, or waived by Pipeline, by the earlier of the
applicable dates specified therein or March 1, 2004, and this Precedent
Agreement has not been terminated pursuant to Paragraphs 11 or 12 of this
Precedent Agreement, then either Pipeline or Customer may thereafter terminate
this Precedent Agreement and the

                                      -10-

<PAGE>

Service Agreement by giving ninety (90) days prior written notice of its
intention to terminate to the non-terminating Party; provided, however, if the
conditions precedent are satisfied, or waived by Pipeline or Customer, as
applicable, within such ninety (90) day notice period, then termination of such
agreements will not be effective.

     11. In addition to the provisions of Paragraph 10 of the Precedent
Agreement, Pipeline may terminate this Precedent Agreement at any time upon
fifteen (15) days prior written notice to the other Party hereto, if Pipeline,
in its sole discretion, determines for any reason that the Project contemplated
herein is no longer economically viable or if substantially all of the other
precedent agreements, service agreements or other contractual arrangements for
the firm service to be made available by the Project are terminated, other than
by reason of commencement of service.

     12. If this Precedent Agreement is not terminated pursuant to Paragraphs 10
or 11 of this Precedent Agreement, then this Precedent Agreement will terminate
by its express terms on the Service Commencement Date under the Service
Agreement (as such date is described in Paragraph 5 of this Precedent
Agreement), and thereafter Pipeline's and Customer's rights and obligations
related to the transportation transaction contemplated herein shall be
determined pursuant to the terms and conditions of such Service Agreement and
Pipeline's FERC Gas Tariff, as effective from time to time.

     13. Customer commits that it can and will, promptly upon request by
Pipeline, satisfy one of the following creditworthiness requirements:

                                      -11-

<PAGE>

     (A) Customer (or any entity that guarantees Customer's obligations under
the Service Agreement) has an investment grade rating for its long-term senior
unsecured debt from Moody's Investors Service, Inc. of Baa3 or higher or from
Standard & Poor's of BBB- or higher. In the event that Customer meets the
requirement contained in the immediately preceding sentence initially, but is
later downgraded below such investment grade rating, Customer will be required
to meet one of the requirements in Paragraph 13(B).

     (B) At any time and from time to time that Customer does not meet the
requirements set forth in the first sentence of Paragraph 13(A), Customer will
be accepted as creditworthy by Pipeline if (i) Pipeline determines that,
notwithstanding the absence of an acceptable credit rating, the financial
position of Customer (or an entity that guarantees Customer's obligations under
the Service Agreement) is acceptable to Pipeline and its lenders, or (ii)
Customer provides an irrevocable letter of credit or other security in such
amounts and with such other terms and conditions as shall be acceptable to
Pipeline and its lenders.

     (C) This Paragraph 13 shall survive the termination of the Precedent
Agreement and shall remain in effect until the Service Agreement terminates in
accordance with its terms.

     14. This Precedent Agreement may not be modified or amended unless the
Parties execute written agreements to that effect.

                                      -12-

<PAGE>

     15. (A) Any company which succeeds by purchase, merger, or consolidation of
title to the properties, substantially as an entirety, of Pipeline or Customer,
will be entitled to the rights and will be subject to the obligations of its
predecessor in title under this Precedent Agreement. Otherwise, except with
respect to Paragraph 15(B), neither Customer nor Pipeline may assign any of its
rights or obligations under this Precedent Agreement without the prior written
consent of the other Party hereto.

     (B) Customer acknowledges and agrees that Pipeline shall have the right to
assign, mortgage, or pledge all or any of its rights, interests, and benefits
under this Precedent Agreement and/or the Service Agreement to secure payment of
any indebtedness incurred or to be incurred in connection with the development
and construction of the Project facilities.

     16. Except as expressly provided for in this Precedent Agreement, nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any person not a Party hereto any rights, remedies or obligations under
or by reason of this Precedent Agreement.

     17. Each and every provision of this Precedent Agreement shall be
considered as prepared through the joint efforts of the Parties and shall not be
construed against either Party as a result of the preparation or drafting
thereof. It is expressly agreed that no consideration shall be given or
presumption made on the basis of who drafted this Precedent Agreement or any
specific provision hereof.

                                      -13-

<PAGE>

     18. The recitals and representations appearing first above are hereby
incorporated in and made a part of this Precedent Agreement.

     19. This Precedent Agreement shall be governed by, construed, interpreted,
and performed in accordance with the laws of the Commonwealth of Massachusetts,
without recourse to any laws governing the conflict of laws.

     20. Except as herein otherwise provided, any notice, request, demand,
statement, or bill provided for in this Precedent Agreement, or any notice which
either Party desires to give to the other, must be in writing and will be
considered duly delivered when mailed by registered or certified mail to the
other Party's Post Office address set forth below:

          Pineline:       1284 Soldiers Field Road
                          Boston, Massachusetts 02135
                          Attn: Vice President, Marketing

          Customer:       201 Rivermoor Street
                          West Roxbury, Massachusetts 02108
                          Attn: Director of Customer Choice and Gas Resource
                                --------------------------------------------
                          Management
                          ----------

or at such other address as either Party designates by written notice. Routine
communications, including monthly statements, will be considered duly delivered
when mailed by either registered, certified, or ordinary mail.

     21. When used in this Precedent Agreement, and unless otherwise defined
herein, capitalized terms shall have the meanings set forth in Pipeline's FERC
Gas Tariff on file with the Commission, as amended from time to time.

                                      -14-

<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have caused this Precedent Agreement
to be duly executed by their duly authorized officers as of the day and year
first above written.

Algonquin Gas Transmission Company     Boston Gas Company,
                                       d/b/a KeySpan Energy Delivery
                                       New England

By: /s/ Illegible                      By: /s/ Illegible
   --------------------------             ---------------------------
Title: SVP                             Title: PRESIDENT

                                      -15-

<PAGE>

                                                                 EXHIBIT KEDNE-3

                                  June 13, 2001

Mr. Charles Daverio
Boston Gas Company,
d/b/a KeySpan Energy Delivery New England
201 Rivermoor Street
West Roxbury, Massachusetts 02108

     Re: Negotiated Rate for Firm Transportation Service

Dear Chuck:

     This Agreement is made and entered into this 13th day of June, 2001, by and
between Algonquin Gas Transmission Company ("Pipeline") and Boston Gas Company,
d/b/a KeySpan Energy Delivery New England ("Customer"). Pipeline and Customer
have entered into that certain Precedent Agreement dated as of even date
herewith ("Precedent Agreement"), pursuant to which Pipeline has agreed, subject
to the satisfaction or waiver of certain conditions precedent, to provide firm
transportation service in accordance with the terms of the Service Agreement,
and Customer has agreed, subject to the satisfaction or waiver of certain
conditions precedent, to pay for such transportation service in accordance with
the terms of the Service Agreement. In accordance with the mutual covenants and
agreements contained herein and in the Precedent Agreement, Pipeline and
Customer desire to enter into this Agreement with respect to the rate for
service under the Service Agreement.

     When used in this Agreement, and unless otherwise defined herein,
capitalized terms shall have the meanings set forth in the Precedent Agreement
and/or in Pipeline's FERC Gas Tariff, as amended from time to time.

1.   Subject to the satisfaction or waiver of all conditions precedent set forth
     in the Precedent Agreement, for the Primary Term of the Service Agreement,
     for natural gas received and re-delivered by Pipeline on behalf of Customer
     under the Service Agreement, Pipeline agrees to charge Customer, and
     Customer agrees to pay Pipeline as follows:

          a monthly Reservation Charge of $    per Dth of MDTQ; and
                                           ----

<PAGE>

Mr. Charles Daverio
Page 2
June 13, 2001

          all applicable surcharges and the applicable Fuel Retainage Percentage
          in effect from time to time and applicable to service under the
          Service Agreement.

     The negotiated rates set forth in this Paragraph 1 shall apply only for
     service up to the MDTQ.

2.   In consideration of the rates set forth in Paragraph 1 above, the
     applicable rates for service under the Service Agreement during the Primary
     Term shall remain as stated in Paragraph 1 above. Therefore, pursuant to
     Section 46 of the General Terms and Conditions of Pipeline's FERC Gas
     Tariff, the rates set forth in Paragraph 1 above shall constitute a
     "Negotiated Rate." The otherwise generally applicable maximum recourse
     rate, rate component, charge or credit, which Pipeline and Customer have
     agreed (pursuant to the terms of this Agreement) to replace with the
     Negotiated Rate, shall not apply to or be available to Customer for service
     under the Service Agreement during the Primary Term (to the extent that
     such generally applicable maximum recourse rate, rate component, charge or
     credit is inconsistent with the rates set forth in Paragraph 1 above),
     notwithstanding any adjustments to such generally applicable maximum
     recourse rate, rate component, charge or credit which may become effective
     during the Primary Term.

3.   If, at any time after the Service Commencement Date, Pipeline is collecting
     its effective maximum recourse rates subject to refund under Section 4 of
     the Natural Gas Act, Pipeline shall have no refund obligation to Customer
     even if the final maximum rate is reduced to a level below the Negotiated
     Rate provided herein. Customer's right to receive credits relating to
     Pipeline's penalty revenue or other similar revenue, if any, applicable to
     transportation service on Pipeline's system shall be governed by Pipeline's
     FERC Gas Tariff and any applicable FERC orders and/or regulations. In the
     event that Customer releases its firm transportation rights under the
     Service Agreement, Customer shall continue to be obligated to pay Pipeline
     for the difference, if any, by which the Negotiated Rate herein exceeds the
     release rate.

4.   Customer acknowledges and agrees that all terms and conditions of
     Pipeline's FERC Gas Tariff, as effective from time to time, and applicable
     form of service agreement, including provisions for filing of changes in
     Pipeline's FERC Gas Tariff, which changes may affect this Agreement, are
     applicable to the Service Agreement. In the event of a conflict between
     this Agreement and Pipeline's FERC Gas Tariff and/or the Service Agreement,
     this Agreement shall control.

5.   Subject to Paragraph 6 below, the term of this Agreement shall commence on
     the date first set forth above and shall continue in effect through and
     including the Primary Term; provided, however, that, in the event that the
     Precedent

<PAGE>

Mr. Charles Daverio
Page 3
June 13, 2001

     Agreement terminates in accordance with its terms (except with respect to a
     termination of the Precedent Agreement in accordance with Paragraph 12
     thereof), this Agreement shall immediately terminate and be of no further
     force or effect; provided further that, in the event that the Primary Point
     of Receipt and/or the Primary Point of Delivery, as set forth in Paragraph
     4 of the Precedent Agreement, are/is revised or amended (under the
     Precedent Agreement and/or the Service Agreement) after the date first set
     forth above, this Agreement shall immediately terminate and be of no
     further force or effect.

6.   Pipeline shall file with the FERC to implement the above-referenced
     Negotiated Rate pursuant to the FERC's Statement of Policy Alternatives to
     Traditional Cost of Service Ratemaking for Natural Gas Pipelines and
     Regulation of Negotiated Transportation Service of Natural Gas Pipelines
     issued January 31, 1996, in Docket Nos. RM95-6-000 and RM96-7-000. This
     Agreement shall not become effective unless and until the FERC approves
     such Negotiated Rate filing. If the FERC disallows or modifies any material
     terms of this Agreement, Pipeline or Customer may immediately terminate
     this Agreement and the Precedent Agreement (and the Service Agreement, if
     applicable), with written notice to the other party.

7.   Customer may not assign this Agreement to any other party without the prior
     express written consent of Pipeline, which consent shall not be
     unreasonably withheld. This provision is not intended to prohibit Customer
     from releasing capacity under the Service Agreement pursuant to the
     capacity release provisions contained in Pipeline's FERC Gas Tariff and to
     FERC's capacity release regulations.

8.   This Agreement shall be construed in accordance with and governed by the
     laws of the Commonwealth of Massachusetts, without recourse to the law
     governing the conflict of laws thereof.

9.   This Agreement contains the entire agreement of the parties with regard to
     the matters set forth herein and shall be binding upon and inure to the
     benefits of the successors and permitted assigns of each party.

10.  All notices and communications regarding this Agreement shall be made in
     accordance with the notice provisions of the Precedent Agreement or the
     Service Agreement, as applicable.

<PAGE>

Mr. Charles Daverio
Page 4
June 13, 2001

     If the foregoing accurately sets forth your understanding of the matters
covered herein, please so indicate by having a duly authorized representative
sign in the space provided below and returning an original signed counterpart to
the undersigned.

                                       Sincerely,

                                       ALGONQUIN GAS TRANSMISSION
                                       COMPANY

                                       /s/ Thomas C. O'Conner
                                       ----------------------
                                       Thomas C. O'Conner

ACCEPTED AND AGREED TO:
This 13th day of June, 2001

BOSTON GAS COMPANY, D/B/A
KEYSPAN ENERGY DELIVERY NEW ENGLAND

By: /s/ Illegible
   --------------------
Title: PRESIDENT

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