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

			March 28, 1994


Gary A. Edinger
Senior Vice President-Gas Supply
New Jersey Natural Gas Company
1415 Wyckoff Road
P.O. Box 1464
Wall, NJ 07719


John P. Harrington
Vice President-Gas Supply
Colonial Gas Company
40 Market Street
P.O. Box 3064
Lowell, MA 01853-3064

RE:  Letter Agreement Regarding Transfer of 
     Transportation Entitlements

Gentlemen:

	This letter agreement is entered into this 
28th day of March, 1994, between Algonquin Gas 
Transmission Company ("Algonquin"), New Jersey 
Natural Gas Company ("NJN"), and Colonial Gas 
Company ("Colonial"), (collectively "the Parties").

	1. In consideration of the mutual promises 
           and considerations contained in the offer 
           of settlement filed in FERC Docket No. 
	   RP93-14-000 et al. on March 1, 1994 
           (the "S&A"), and the mutual promises 
           and considerations set forth below,
           the Parties agree to support prompt 
           FERC approval of the S&A without modification 
           or condition.

	2. NJN agrees to release its entire right and 
           entitlement under Algonquin contract nos. 93009E 
           (6106 MMBtu/d, Rate Schedule AFT-E(F-1)) and 
           9W007E (1221 MMBtu/d, Rate Schedule AFT-E(WS-1)),
 	   as well as the entirety of its entitlements and 
           obligations on Algonquin and Texas Eastern created 
           as a result of Article III, Sections 7 and 8 of 
           the S&A, for purposes of permanent reassignment
	   to Colonial.  The release and permanent reassignment 
           of contract nos. 93009E and 9W007E shall be effective 
           November 1, 1994. The release of the Article III, 
           Sections 7 and 8 entitlements shall be effective on 
           the Effective Date of the S&A. These transfers of 
           entitlements shall be effected as prearranged
	   permanent releases for the remaining terms of the 
           agreements with no right of recall and with a 
           transfer to Colonial of all rights of first refusal 
           for the avoidance of pregranted abandonment pursuant 
	   to Section 14 of the General Terms and Conditions of 
           Algonquin's tariff and Section 3.14 of the General
	   Terms and Conditions of the tariff of Texas Eastern 
           Transmission Corporation.  These releases shall be 
           at the maximum applicable rate.

	3. Colonial agrees to accept, as a permanent release at 
	   the maximum applicable rate (AFT-E(F-1) and 
           AFT-E(WS-1)), assignment of the entitlements 
           listed in Section 2 above, with all of the rights
	   and obligations associated therewith.

	4. Algonquin agrees to release NJN from its residual 
           liability under the agreements listed in Section 2 
           above for periods subsequent to the effective date 
           of the respective agreements without prejudice to 
           Algonquin's rights pertaining to periods prior to 
           the effectiveness of any release, including the 
           right to obtain payment of charges pertaining to 
           such period and without prejudice to NJN's rights 
           to receive refunds attributable to payments to
	   Algonquin for services rendered during such prior 
           periods.  Algonquin further agrees to extend the 
           primary term of contract  nos. 93009E and 9W007E 
           for Colonial to November 1, 2006 and  November 16, 
           2006, respectively.  Colonial understands its gate
	   stations are Secondary Points of Delivery under  
           the contract nos. 93009E and 9W007E. If, during 
           the term of these contracts, the FERC takes any 
           action that precludes Colonial from shipping
	   gas under these contracts to its gate stations 
           in a substantially equivalent manner as is currently 
           available to Shippers with Secondary Points of 
           Delivery, Colonial will have the option to terminate 
           these contracts upon 30 days prior written notice to
	   Algonquin.  NJN shall not have any obligation to 
           reclaim any Algonquin or Texas Eastern entitlements 
           should Colonial exercise its option to terminate these 
           contracts.

	5. The parties will execute such other documents and take 
           such further actions as are necessary to effect the 
           terms of this letter agreement.

	Please indicate your consent to this agreement by 
executing it in the space provided below.


				Sincerely,

				

                                John J. Mullaney
                                Vice President, Marketing




Gary Edinger	      			John Harrington
Senior Vice President-Gas Supply    	Vice President-Gas Supply
New Jersey Natural Gas Company     	Colonial Gas Company




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