U-1

                                          File No. 70-           


                SECURITIES AND EXCHANGE COMMISSION
                       Washington, DC 20549



                             FORM U-1


                     APPLICATION/DECLARATION


                              UNDER


          THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935





                   NEW ENGLAND ELECTRIC SYSTEM

                               and

               NEW ENGLAND ELECTRIC RESOURCES, INC.

             (Name of company filing this statement)



       25 Research Drive, Westborough, Massachusetts 01582

             (Address of principal executive offices)




                   NEW ENGLAND ELECTRIC SYSTEM

    (Name of top registered holding company parent in system)






Michael E. Jesanis                      Kirk L. Ramsauer
Treasurer                               Associate General Counsel
25 Research Drive                            25 Research Drive
Westborough, Massachusetts 01582   Westborough, Massachusetts 01582


           (Names and addresses of agents for service)


  New England Electric Resources, Inc. ("NEERI"), a wholly-owned, non-
utility subsidiary of New England Electric System ("NEES"), was organized for
the purpose of pursuing new business opportunities. 

  NEES is a registered holding company under the Public Utility Holding
Company Act of 1935 (the "Act") whose subsidiaries include New England Power
Service Company ("NEPSCO") a service company subsidiary, collectively, the
"System".

Item 1.  Description of Proposed Transactions:
- ---------------------------------------------

  The Commission, by its Order dated September 4, 1992, HCAR No. 35-25621,
authorized NEERI to perform consulting services on electrical utility matters
for non-affiliates.  By its Order dated April 1, 1994, HCAR No. 35-26017, the
Commission authorized NEERI to perform electrical related services for non-
affiliates, including designing, engineering, installing, constructing and/or
procuring electrical related materials.  By this filing NEERI requests
authorization to expand the services it may perform for certain affiliates.   

  NEERI requests authorization to perform the following additional
services (the "Services") for Selected Affiliates (as defined below) in
connection with electric generation, distribution, and/or transmission
projects, equipment, and facilities:

  (1)  Operation and maintenance services, which shall include, without
limitation, staffing, scheduling, procurement, recordkeeping, licensing and
permitting, training, inspection, maintenance and repair of facilities,
systems, buildings, grounds and equipment, contracting with vendors, security,
quality control, safety, and other similar services. 

  (2)  Administrative management services, which shall include, without
limitation, maintaining financial records and books of account, budgeting,
negotiation and administration of contracts, coordination of federal, state,
and local regulatory matters and public affairs, disbursement of funds,
maintenance of insurance and statistical information, supervision of
engineering, financial planning, insurance, tax accounting, operations and
maintenance, and legal service providers, and other similar services.  

  NEERI requests authority to provide some or all of the Services to
certain affiliates ("Selected Affiliates") at market-based rates provided:

  (1) Neither NEERI nor any of its other affiliates, considered together,
exercise majority voting control of the Selected Affiliate; and

  (2) NEERI and any NEERI affiliate having a right to participate in
choosing the provider of the Services recuses itself by not exercising any
vote in decision-making in connection therewith.

  These conditions will help ensure that the price paid by the Selected
Affiliate for such Services is a fair market price.  The removal of NEERI and
its affiliates from the procedure for selecting the service provider will
prevent NEERI or its affiliates' association with the Selected Affiliate from
distorting the decision-making process.  Accordingly, for situations where the
foregoing two conditions are met, NEERI requests an exemption from the
requirements of Section 13(b) of the Act, and the rules and regulations under
such Section, to enable it to provide Services to Selected Affiliates at
market-based rates. 

  No more than 50% of revenues resulting from NEERI's provision of
Services would be derived from work performed outside the New York and New
England service territory.


  Finally, NEERI also requests authority to provide Services to any
affiliated project entity that is an exempt wholesale generator ("EWG"), as
defined in Section 32 of the Act, a foreign utility company ("FUCO"), as
defined in Section 33 of the Act, or a Qualifying Facility ("QF"), as defined
in the Public Utility Regulatory Policies Act of 1978, as amended, 
(collectively, "Exempt Projects") at fair market prices.  This requested
authorization is consistent with other Commission Orders, for example,
Commission's Order dated December 30, 1994, HCAR No. 35-26212.

  Accordingly, NEERI requests an exemption from the requirements of
Section 13(b) of the Act, and the rules and regulations under such Section, in
connection with such transactions in any case in which one or more of the
following conditions are satisfied:

  1.   Such Exempt Project is a FUCO, or is an EWG which derives no part
of its income, directly or indirectly, from the generation, transmission, or
distribution of electric energy for sale within the United States;

  2.   Such Exempt Project is an EWG which sells electricity at market-
based rates which have been approved by the Federal Energy Regulatory
Commission ("FERC") or the appropriate state regulatory commission, provided
that the purchaser of such electricity is not an associate company of NEERI
within the NEES system;

  3.   Such Exempt Project is a QF that sells electricity exclusively 
(i) at rates negotiated at arms-length to one or more industrial or commercial
customers purchasing such electricity for their own use and not for resale,
and/or (ii) to an electric utility company, other than an associate company of
NEERI within the NEES system, at the purchaser's "avoided cost" as determined
in accordance with the regulations under the Public Utilities Regulatory
Policies Act of 1978, as amended; or 

  4.   Such Exempt Project is an EWG or QF that sells electricity at
rates based upon its cost of service, as approved by FERC or any state public
utility commission having jurisdiction, provided that the purchaser of such
electricity is not an associate company of NEERI within the NEES system.

This requested exemption from section 13(b) in connection with the provision
of Services to Exempt Projects is separate from, and in addition to, the
exemption requested above in connection with the provision of Services to
Selected Affiliates.

  NEES and NEERI acknowledge that the Commission's approval for NEERI to
provide Services that are not based on cost to any such Exempt Project shall
not be binding upon FERC or any state public utility commission having
jurisdiction over the rates charged by any such Exempt Project, and represent
and agree that they will not assert or take any position to the contrary in
any administrative or judicial proceeding involving the determination of rates
that may be charged by any such associated Exempt Project.

  NEERI shall not sell any Services to any associate Exempt Project which,
in turn, sells such Services, directly or indirectly, to any other associate
Exempt Project which does not fall within the preceding enumerated categories,
except pursuant to the requirements of the Commission's rules and regulations
under Section 13(b) of the Act or an exemption therefrom obtained in a
separate filling.  No NEES operating utility subsidiary personnel will be
assigned to a NEERI Services project if such assignment would interfere with
the normal operation of the NEES system.  Utility operating subsidiaries of
NEES will at all times have first priority in the use of personnel, including
employees of NEPSCO.  During the course of a calendar year, no more than the
full time equivalent of five percent of the employees of NEES operating
utility subsidiaries and NEPSCO will be assigned to Service projects for
NEERI.

  Neither NEES nor any subsidiary currently has an ownership interest in
an EWG or a FUCO.  Additionally, neither NEES nor any subsidiary is a party
to, or has any rights under, a service, sales, or construction agreement with
an EWG or FUCO.  By its Order dated April 15, 1996 (HCAR 35-26504), the
Commission has authorized EWG and FUCO acquisitions and financings by NEES
and/or NEERI as set forth in their Application/Declaration in File No. 70-
8783.  In the event that the total amount of authority requested in the above-
referenced Application/Declaration (File No. 70-8783) is invested in
connection with EWGs and FUCOs, NEES' 'aggregate investment' (determined in
accordance with Rule 53(a)(1)(i)) in EWGs and FUCOs would not exceed 50% of
NEES' 'consolidated retained earnings' (as defined in Rule 53(a)(1)(ii)) in
compliance with the provisions set forth in Rule 53 under the Act.  NEES and
its subsidiaries shall comply with the requirements of Rules 53 and 54 of the
Act in connection with EWG and FUCO acquisitions and financings. 

  NEERI will provide the Commission on a quarterly basis within 60 days of
the end of each calendar quarter, a certificate of notification pursuant to
Rule 24 under the Act ("Certificate").  Such Certificate will identify each
Service project undertaken by NEERI during such period, a description of the
types of Services provided, and the nature of the customer.  NEERI will also
break done each project in which it provides Services from the other items on
its financial statements.  Pursuant to Section 22 and Rule 104, NEERI may
request confidential treatment for information contained in Certificates which
is commercially sensitive or proprietary. 

Item 2.  Fees, Commissions and Expenses
- --------------------------------------

  Fees, commissions, and expenses to be incurred in connection with the
transactions contemplated by this Application/Declaration are not expected to
exceed $10,000.  This amount includes a $2,000 filing fee paid by wire
transfer to the Commission at the time of filing this Application/Declaration.

Item 3.  Applicable Statutory Provisions
- ----------------------------------------
  
  The sections of the Act and rules or exemptions thereunder that are
believed to be applicable to the transactions are:  Sections 6(a), 7, 9(a),
10, 12, 13, 32, 33, and Rules 45, 53, 54, 90, and 91, all relating to the
authority requested by NEES and NEERI herein.

Item 4.  Regulatory Approval
- ----------------------------

  No Federal or state commission or regulatory body, other than the
Commission, has jurisdiction over the proposed transactions.

Item 5.  Procedure
- ------------------

  The Applicants request that the Commission take action with respect to
this Application/Declaration without a hearing being held, on or before
September 1, 1996.

  The Applicants (i) do not request a recommended decision by a hearing
officer, (ii) do not request a recommended decision by any other responsible
officer of the Commission, (iii) hereby specify that the Division of
Investment Management may assist in the preparation of the Commission's
decision, and (iv) hereby request that there be no 30-day waiting period
between the date of issuance of the Commission's Order and the date on which
it is to become effective.


Item 6.  Exhibits:
- ------------------

  (a)  Exhibits

       *F      Opinion of Counsel

       *G-1    Financial Data Schedule for NEERI
        
       *G-2    Financial Data Schedule for NEES (Parent Company Only)

       *G-2    Financial Data Schedule for NEES (Consolidated)

        H      Proposed Form of Notice
  
        
  *To be filed by amendment


  (b)  Financial Statements

            (NOT APPLICABLE)

Item 7.  Environmental Effects
- ------------------------------

  The transactions proposed by this Application/Declaration do not involve
a major Federal action significantly affecting the quality of the human
environment.


                            SIGNATURE


  Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Application/
Declaration on Form U-1 to be signed on their behalf, as indicated by the
undersigned officers thereunto duly authorized by such companies.

                            NEW ENGLAND ELECTRIC SYSTEM


                            s/Michael E. Jesanis
                            ___________________________________________
                            Michael E. Jesanis, Treasurer



                            NEW ENGLAND ELECTRIC RESOURCES, INC.


                            s/John G. Cochrane
                            ___________________________________________
                            John G. Cochrane, Treasurer


Dated: August 9, 1996



The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary
of The Commonwealth of Massachusetts.  Any agreement, obligation or liability
made, entered into or incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director, trustee, officer or
agent thereof assumed or shall be held to any liability therefore.

EX-99

                          EXHIBIT INDEX




EXHIBIT NO.       Description                        Page
- -----------       -----------------------------        ------------------

                                                           
F                 Opinion of Counsel                To be filed by
                                                    amendment

G-1               Financial Data Schedule           To be filed by
                  for NEERI                         amendment

G-2               Financial Data Schedule           To be filed by
                  for NEES (Parent Company Only)         amendment

G-3               Financial Data Schedule           To be filed by
                  for NEES (Consolidated)           amendment

H                 Proposed Form of Notice           Filed herewith






                   FINANCIAL STATEMENT INDEX

                        (NOT APPLICABLE)

EX-99

                                                  EXHIBIT H

                     PROPOSED FORM OF NOTICE

   The Commission, by its Order dated September 4, 1992, HCAR No. 35-25621,
authorized NEERI to perform consulting services on electrical utility matters
for non-affiliates.  By its Order dated April 1, 1994, HCAR No. 35-26017, the
Commission authorized NEERI to perform electrical related services for non-
affiliates, including designing, engineering, installing, constructing and/or
procuring electrical related materials.  NEERI now requests authorization to
expand the services it may perform for certain affiliates.   

   NEERI requests authorization to perform the following additional
services (the "Services") for Selected Affiliates (as defined below) in
connection with electric generation, distribution, and/or transmission
projects, equipment, and facilities:

   (1)  Operation and maintenance services, which shall include, without
limitation, staffing, scheduling, procurement, recordkeeping, licensing and
permitting, training, inspection, maintenance and repair of facilities,
systems, buildings, grounds and equipment, contracting with vendors, security,
quality control, safety, and other similar services. 

   (2)  Administrative management services, which shall include, without
limitation, maintaining financial records and books of account, budgeting,
negotiation and administration of contracts, coordination of federal, state,
and local regulatory matters and public affairs, disbursement of funds,
maintenance of insurance and statistical information, supervision of
engineering, financial planning, insurance, tax accounting, operations and
maintenance, and legal service providers, and other similar services.  

   NEERI requests authority to provide some or all of the Services to
certain affiliates ("Selected Affiliates") at market-based rates provided:

   (1) Neither NEERI nor any of its other affiliates, considered together,
exercise majority voting control of the Selected Affiliate; and

   (2) NEERI and any NEERI affiliate having a right to participate in
choosing the provider of the Services recuses itself by not exercising any
vote in decision-making in connection therewith.

For situations where the foregoing two conditions are met, NEERI requests an
exemption from the requirements of Section 13(b) of the Act, and the rules and
regulations under such Section, to enable it to provide Services to Selected
Affiliates at market-based rates. 

   No more than 50% of revenues resulting from NEERI's provision of
Services would be derived from work performed outside the New York and New
England service territory.

   Finally, NEERI also requests authority to provide Services to any
affiliated project entity that is an exempt wholesale generator ("EWG"), as
defined in Section 32 of the Act, a foreign utility company ("FUCO"), as
defined in Section 33 of the Act, or a Qualifying Facility ("QF"), as defined
in the Public Utility Regulatory Policies Act of 1978, as amended, 
(collectively, "Exempt Projects") at fair market prices. 

   Accordingly, NEERI requests an exemption from the requirements of
Section 13(b) of the Act, and the rules and regulations under such Section, in
connection with such transactions in any case in which one or more of the
following conditions are satisfied:


   1.   Such Exempt Project is a FUCO, or is an EWG which derives no part
of its income, directly or indirectly, from the generation, transmission, or
distribution of electric energy for sale within the United States;

   2.   Such Exempt Project is an EWG which sells electricity at market-
based rates which have been approved by the Federal Energy Regulatory
Commission ("FERC") or the appropriate state regulatory commission, provided
that the purchaser of such electricity is not an associate company of NEERI
within the NEES system;

   3.   Such Exempt Project is a QF that sells electricity exclusively  (i)
at rates negotiated at arms-length to one or more industrial or commercial
customers purchasing such electricity for their own use and not for resale,
and/or (ii) to an electric utility company, other than an associate company of
NEERI within the NEES system, at the purchaser's "avoided cost" as determined
in accordance with the regulations under the Public Utilities Regulatory
Policies Act of 1978, as amended; or 

   4.   Such Exempt Project is an EWG or QF that sells electricity at rates
based upon its cost of service, as approved by FERC or any state public
utility commission having jurisdiction, provided that the purchaser of such
electricity is not an associate company of NEERI within the NEES system.

   NEERI shall not sell any Services to any associate Exempt Project which,
in turn, sells such Services, directly or indirectly, to any other associate
Exempt Project which does not fall within the preceding enumerated categories,
except pursuant to the requirements of the Commission's rules and regulations
under Section 13(b) of the Act or an exemption therefrom obtained in a
separate filling.  No NEES operating utility subsidiary personnel will be
assigned to a NEERI Services project if such assignment would interfere with
the normal operation of the NEES system.  Utility operating subsidiaries of
NEES will at all times have first priority in the use of personnel, including
employees of New England Power Service Company ("NEPSCO"), a service company
subsidiary of NEES.  During the course of a calendar year, no more than the
full time equivalent of five percent of the employees of NEES operating
utility subsidiaries and NEPSCO will be assigned to Service projects for
NEERI.

   Neither NEES nor any subsidiary currently has an ownership interest in
an EWG or a FUCO.  Additionally, neither NEES nor any subsidiary is a party
to, or has any rights under, a service, sales, or construction agreement with
an EWG or FUCO.  By its Order dated April 15, 1996 (HCAR 35-26504), the
Commission has authorized EWG and FUCO acquisitions and financings by NEES
and/or NEERI as set forth in their Application/Declaration in File No. 70-
8783.  In the event that the total amount of authority requested in the above-
referenced Application/Declaration (File No. 70-8783) is invested in
connection with EWGs and FUCOs, NEES' 'aggregate investment' (determined in
accordance with Rule 53(a)(1)(i)) in EWGs and FUCOs would not exceed 50% of
NEES' 'consolidated retained earnings' (as defined in Rule 53(a)(1)(ii)) in
compliance with the provisions set forth in Rule 53 under the Act.  NEES and
its subsidiaries shall comply with the requirements of Rules 53 and 54 of the
Act in connection with EWG and FUCO acquisitions and financings. 

   NEERI will provide the Commission on a quarterly basis within 60 days of
the end of each calendar quarter, a certificate of notification pursuant to
Rule 24 under the Act ("Certificate").  Such Certificate will identify each
Service project undertaken by NEERI during such period, a description of the
types of Services provided, and the nature of the customer.  NEERI will also
break done each project in which it provides Services from the other items on
its financial statements.  Pursuant to Section 22 and Rule 104, NEERI may
request confidential treatment for information contained in Certificates which
is commercially sensitive or proprietary.