DE 98-019
             Petition for Approval of Third Amendment to Lease
                     Order Approving Third Amendment 
                         O R D E R   N O.  22,879
                              March 23, 1998
         Pursuant to New Hampshire Public Utilities Commission
     (Commission) Order No. 18,773, (July 20, 1987), Order No. 21,442,
     (November 30, 1994), and Order No. 22,252, (July 29, 1996),
     Granite State Gas Transmission, Inc. (Granite) leases an 18-inch
     converted oil pipeline from Portland Pipe Line Corp. (Portland)
     to ship natural gas for delivery to its affiliates Bay State Gas
     Corp. and Northern Utilities, Inc. (Northern).  In accordance
     with the current terms of the agreement, the lease is due to
     expire on April 30, 1998.   
         On February 20, 1998, Portland filed proposed Amendment
     #3, which provides Granite with an option to extend the lease to
     April 30, 1999.  Amendment #3 has also been filed at the Federal
     Energy Regulatory Commission (FERC) for approval.  The extension
     includes a provision for early termination by Granite on or
     before November 1, 1998 with 90 days prior written notice.  In
     the petition, Portland requests that the Commission either:
         (1)  Rule that the Commission has no
                   jurisdiction over the lease and the
                   amendments thereto because of preemption
                   by Federal law, or
         (2)  Approve the Third Amendment and
                   authorize Portland to execute it and to
                   enter into the agreements provided for
                   by it, subject to approval of the Third
                   Amendment by FERC. 
         Granite uses the leased facilities to provide natural
     gas supplies to Northern for use in Maine and New Hampshire.
     Northern intends to discontinue service from the leased
     facilities upon completion of the Portland Natural Gas
     Transmission System (PNGTS) and Joint PNGTS/Maritimes & Northeast
     Pipeline, L.L.C. (M&N) pipelines.  Although the proposed
     pipelines are in advanced stages of regulatory approval, it is
     uncertain whether they will attain their projected in-service
     date of November 1, 1998.  Consequently, Granite, at Northern's
     request, has entered into the lease extension to ensure a source
     of supply for the 1998-1999 winter period in the event the
     replacement capacity is unavailable.
         The leased facilities have proven to be a reliable
     source of natural gas in a region traditionally limited in
     supply.  In previous rulings we asserted jurisdiction and
     approved the lease and subsequent amendments.  The leased
     facilities represent an alternative delivery mechanism in the
     event that the new pipeline projects are delayed.  Although we
     support the new pipeline projects, we are cognizant of the
     potential delays which may occur.  Therefore, we approve the
     third amendment subject to FERC approval. 
         Based upon the foregoing, it is hereby
         ORDERED, that Portland Pipe Line Corporation is GRANTED
     authorization to execute Amendment #3 to the Amended Lease
     Agreement based on the terms contained therein. 
         By order of the Public Utilities Commission of New
     Hampshire this twenty-third day of March, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary