REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To  The  Board  of  Directors  of  the  Providence  Gas
Company:

      We  have  audited  the accompanying  consolidated
balance  sheets  and  the  consolidated  statements  of
capitalization  of  PROVIDENCE  GAS  COMPANY  (a  Rhode
Island  corporation  and a wholly owned  subsidiary  of
Providence Energy Corporation) as of September 30, 1995
and  1994,  and the related consolidated statements  of
income, changes in common stockholder's investment  and
cash  flows  for each of the three years in the  period
ended  September 30, 1995.  These financial  statements
and   the   schedule   referred  to   below   are   the
responsibility   of  the  Company's  management.    Our
responsibility  is  to  express  an  opinion  on  these
financial  statements  and the schedule  based  on  our
audits.

       We  conducted  our  audits  in  accordance  with
generally accepted auditing standards.  Those standards
require  that we plan and perform the audit  to  obtain
reasonable   assurance  about  whether  the   financial
statements are free of material misstatement.  An audit
includes   examining,   on  a  test   basis,   evidence
supporting the amounts and disclosures in the financial
statements.   An  audit  also  includes  assessing  the
accounting  principles  used and significant  estimates
made  by  management, as well as evaluating the overall
financial statement presentation.  We believe that  our
audits provide a reasonable basis for our opinion.

       In   our  opinion,  the  consolidated  financial
statements  referred to above present  fairly,  in  all
material respects, the financial position of Providence
Gas  Company as of September 30, 1995 and 1994, and the
results  of its operations and its cash flows for  each
of  the  three years in the period ended September  30,
1995,  in conformity with generally accepted accounting
principles.

      As discussed in Notes 2 and 5 to the accompanying
financial  statements, effective October 1,  1993,  the
Company  changed  its method of accounting  for  income
taxes and post-retirement benefits other than pensions.

     Our audits were made for the purpose of forming an
opinion  on the basic financial statements taken  as  a
whole.  The schedules listed in the accompanying  index
to  the  financial statements is presented for purposes
of   complying   with  the  Securities   and   Exchange
Commission's  rules  and  is  not  part  of  the  basic
financial statements.  This schedule has been subjected
to the auditing procedures applied in the audits of the
basic  financial statements and, in our opinion, fairly
states,  in  all material respects, the financial  data
required  to be set forth therein, in relation  to  the
basic financial statements taken as a whole.

Arthur Andersen LLP
Boston, Massachusetts
November 17, 1995




















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