SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC  20549


                             FORM 8-K

                          CURRENT REPORT


                  Pursuant to Section 13 of the
                 Securities Exchange Act of 1934


        Date of Earliest Event Reported: December 3, 1997


                   NEW ENGLAND ELECTRIC SYSTEM

        (exact name of registrant as specified in charter)



Massachusetts             1-3446             04-1663060
(state or other          (Commission        (I.R.S. Employer
jurisdiction of           File No.)         Identification No.)
incorporation)

       25 Research Drive, Westborough, Massachusetts 01582
                                
            (Address of principal executive offices)
                                
                         (508) 389-2000
                                
      (Registrant's telephone number, including area code)

Item 5.  Other Events
- ---------------------

     On December 3, 1997, New England Electric System (NEES)
purchased  the 50 percent interest in AllEnergy Marketing
Company, LLC (AllEnergy) previously owned by a subsidiary of
Eastern Enterprises for approximately $5.4 million.  With this
purchase, AllEnergy becomes a wholly-owned indirect subsidiary of
NEES.  AllEnergy is an energy marketing company which offers
energy commodities (electricity, gas, propane and oil) and
related value-added services to customers in the emerging
competitive energy markets in New England, New York and New
Jersey.

     NEES expects that the execution of AllEnergy's business plan
will negatively impact 1998 earnings by approximately $10
million, after taxes.  The above statement may be considered a
forward looking statement as defined under the securities laws. 
Actual results may differ materially.  Some factors that may
influence actual results include: the highly competitive nature
of the energy marketing business, the pace of deregulation in
energy markets, growth in AllEnergy's business, and price
volatility of energy commodities.

                            SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this Current Report on
Form 8-K to be signed on its behalf by the undersigned thereunto
duly authorized.


                              NEW ENGLAND ELECTRIC SYSTEM

                                  s/Alfred D. Houston
                                 
                              By                            
                                  Alfred D. Houston
                                  Executive Vice President and
                                  Chief Financial Officer
                                  

Date: December 4, 1997










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 assumes
or shall be held to any liability therefor.