[EXHIBIT 5.1 TO COLONIAL ENERGY'S
               REGISTRATION STATEMENT ON FORM S-4]


                       Palmer & Dodge LLP
            One Beacon Street, Boston, MA  02108-3190

                                        Telephone: (617) 573-0100
                                        Facsimile: (617) 227-4420



                                   March 5, 1998

Colonial Energy
40 Market Street
Lowell, Massachusetts  01852

     Re:  Issuance of Shares of Beneficial Interest in
          Connection with the Formation of a Holding 
          Company Structure for Colonial Gas Company

Ladies and Gentlemen:

     At your request, we have examined the Registration Statement
on Form S-4 (the "Registration Statement") in the form being
filed by Colonial Energy, a Massachusetts business trust with the
Securities and Exchange Commission relating to the registration
under the Securities Act of 1933, as amended, of up to 8,707,497
shares of beneficial interest of Colonial Energy, $3.33 par value
per share (the "Colonial Energy Common Shares"), in connection
with a merger that will cause Colonial Energy to become the
parent holding company of Colonial Gas Company, a Massachusetts
corporation.

     We have acted as counsel for Colonial Energy in connection
with the proposed issue and sale of the Colonial Energy Common
Shares.  We are familiar with the proceedings taken by Colonial
Energy in respect thereof and have examined originals or
certified or attested copies of such certificates, records and
documents as we have deemed necessary for the purposes of this
opinion.

     Based on the foregoing, we are of the opinion that:

     1.   Colonial Energy is a business trust validly organized
and existing under the laws of the Commonwealth of Massachusetts
and has the power to carry on the business which it is now
conducting.

     2.   The Colonial Energy Common Shares have been duly
authorized for issuance by appropriate action under Colonial
Energy's Declaration of Trust and, upon approval of the Merger by
the stockholders of each constituent corporation as described in
the Agreement and Plan of Merger contained in Appendix B to the
Proxy Statement/Prospectus which is included in the Registration
Statement and approval of the Merger by the Massachusetts
Department of Telecommunications and Energy, the Colonial Energy
Common Shares, when issued in accordance with the terms of the
Agreement and Plan of Merger, will be validly issued, fully paid
and nonassessable.

     We express no opinion as to matters of law in jurisdictions
other than the Commonwealth of Massachusetts and the federal law
of the United States, and express no opinion as to the
applicability of the so-called "blue sky" or securities laws of
the several states, including Massachusetts.

     We understand that this opinion is to be used in connection
with the above-referenced Registration Statement and consent to
the filing of this opinion with and as part of said Registration
Statement and the use of our name therein and in the related
Proxy Statement/Prospectus under the caption "Legal Opinions".


                                   Very truly yours,



                               /s/ Palmer & Dodge LLP


            [END OF EXHIBIT 5.1 TO COLONIAL ENERGY'S
               REGISTRATION STATEMENT ON FORM S-4]