IMPORTANT MATTER CONCERNING YOUR SHARES
                     IN COLONIAL GAS COMPANY
                                
April 20, 1998


Dear Stockholder:

The  annual  meeting of stockholders of Colonial Gas Company  was
convened on April 15, 1998.  At the meeting, stockholders elected
the  four nominated Class II Directors and approved the Executive
Performance  and  Equity Incentive Plan.  The  meeting  was  then
adjourned  and  continued until May 7, 1998 in order  to  provide
stockholders additional time to vote on the proposal to  adopt  a
holding  company structure. It will reconvene at  10:00  A.M.  on
that  date at the Company's offices at 40 Market Street,  Lowell,
Massachusetts.

Although the overwhelming majority of votes received to date have
been FOR the adoption of a holding company structure, we have not
yet  received the required approval of two-thirds of  all  shares
outstanding.  Accordingly, more votes are needed on the  proposed
holding company structure.

The  Board  of  Directors, as set forth in  the  Proxy  Statement
previously sent to you, recommends a vote FOR this proposal.  The
Board of Directors believes that a holding company structure will
help  provide  management with the organizational  and  financial
flexibility to compete more effectively in a deregulated  natural
gas utility industry.

IF  YOU HAVE NOT YET VOTED, WE URGE YOU TO DO SO NOW.  Regardless
of the number of shares you own, it is important that your shares
are represented and voted at the reconvened meeting.

IF  YOU HOLD YOUR SHARES IN STREET NAME, YOUR BROKER CANNOT  VOTE
YOUR  SHARES FOR YOU ON THIS PROPOSAL.  ACCORDINGLY,  PLEASE TAKE
A MOMENT NOW TO VOTE ON THE HOLDING COMPANY (PROPOSAL NUMBER 3 ON
THE  ENCLOSED PROXY CARD), AND THEN SIGN, DATE AND MAIL BACK  THE
CARD IN THE POSTAGE-PAID ENVELOPE INCLUDED FOR YOUR CONVENIENCE.

Thank you for your cooperation.

Sincerely,



F. L. Putnam, Jr.
Chairman and Senior Executive Officer

Enclosures