[EXHIBIT 10xx TO COLONIAL GAS COMPANY
                FORM 10-K FOR YEAR ENDED 12/31/94]

                                                Page:  1 


                                               Date:  01/01/95                

      
 COLONIAL GAS COMPANY                       
POLICY AND PROCEDURE                   
(90-085.700) ALL DIVISIONS
RATE INCREASE DEFERRAL INCENTIVE POLICY

PURPOSE

The purpose of this policy is to establish an incentive 
compensation program to reward individuals who have direct 
control over budgetary expenditures for each year that Colonial 
is able to defer a rate increase.

SCOPE

This policy applies to regular, full-time management personnel 
who hold the position of President, Corporate Vice President, 
Divisional Vice President, Director or Manager who have budgetary 
responsibility.  This policy also applies to individuals who have 
budgetary control and similar responsibilities as the positions 
mentioned above but who may not have the specific title.

POLICY

The Company will pay a bonus to the individuals who are eligible 
for this program in accordance with the guidelines listed below 
for each year that Colonial does not file for a rate increase.  
Bonuses will not be paid until the decision has been made for the 
applicable fiscal year.

Guidelines for administration of this policy:

To be eligible to be considered as a participant in a category, 
an individual must have been in their position for a minimum of 
eight (8) months during the previous calendar year.

Anyone who has been in his/her current position for less than 
eight (8) months, will be slotted in the previous bonus category.  
In the event that this change results in a job category that is 
not part of this program, the individual will not be eligible for 
consideration during the current year.

To be eligible to receive a bonus, the individual must have received 
a performance rating of at least competent (3) in his/her current 
position.  In the event that an individual had changed his/her
position during the previous year, has been in his/her current
position for less than eight (8)


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_____ Revised				  F.L. Putnam, III
			          Title:  President						
 
months and for purposes of this policy has been slotted in 
his/her previous category, if applicable, and it is determined 
that he/she would have received at least a competent rating had 
he/she not changed positions, then that individual will also be 
eligible to receive a bonus.

Bonus Amounts:        
                Year Rate 
		Increase				   Year 5
Category	Requested  Year 1  Year 2  Year 3  Year 4  and on

President and	   $0	     $0	   $3,000  $5,000  $7,500 $10,000
Corporate V.P.s

Directors and	   $0	     $0	   $2,000  $3,000  $5,000  $7,500
Divisional V.P.s

Managers	   $0	     $0	   $1,000  $2,000  $3,000  $5,000

PROCEDURES

Each year a committee consisting of the President and corporate 
officers from the Human Resources, Operations, Finance, and Gas 
Supply Departments will meet to review the criteria and eligible 
participants under this Policy.

Once a definitive decision has been made that Colonial will not be 
filing for a rate increase during the applicable calendar year, a 
request will be sent to payroll to issue checks in accordance with 
the bonus schedule listed above for those who meet the guidelines 
established in this Policy.  These bonuses will be paid under the 
earnings code RDI.


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						Title:  President

This Policy may be modified or rescinded at the discretion of management.


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_____ Revised						F.L. Putnam, III
						Title:  President

                [END OF EXHIBIT 10xx TO COLONIAL GAS COMPANY
                     FORM 10-K FOR YEAR ENDED 12/31/94]