Blackstone Valley Electric and Newport Electric file for inflation rate adjustment as authorized by 1996 law.

LINCOLN, R.I.--(BUSINESS WIRE)--Nov. 15, 1996-- Blackstone Valley Electric and Newport Electric, subsidiaries of Eastern Utilities, today filed with the Rhode Island Public Utilities Commission (PUC) for rate increases authorized by the Rhode Island Electric Utilities Restructuring Act of 1996. These increases would not affect low-income rates.

"Neither company has had a base rate increase since 1992," said John D. Carney, executive vice president of Eastern Utilities and president of Blackstone Valley Electric and Newport Electric. "In fact, we decreased our rates -- across the board for all customers -- by 5 percent in 1995. Further, the cost of electricity -- in real and in inflationary terms -- has gone down over the past few years."

Historically, regulators allowed utilities to recover their costs of doing business plus a fair return on shareholders' investments through the price charged for electricity.

Under the new legislation, Performance Based Ratemaking (PBR) will be introduced. The utility will be rewarded or penalized for service quality. This provision is to ensure that current performance standards are maintained for such items as reliability of service, safety and customer service.

Under the statute, rate changes for 1997 and 1998 will be capped at the rate of inflation. Therefore, utilities are authorized to increase their base rates to reflect the change in inflation based on the Consumer Price Index (CPI) for the prior year.

For customers of Blackstone Valley Electric (excluding customers on the low income rate, R-2), the rate increase for a typical customer, one who used 500 kWh per month, would be $1.25 per month or 2.08%.

For customers of Newport Electric (excluding customers on the low income rate, R-2), the rate increase for a typical customer, one who used 500 kWh per month, would be $1.40 per month or 2.21%.

For both companies, the law establishes a fixed level of conservation funding and provides that utilities will not be allowed to pass through increases in wholesale power costs until retail competition is implemented for all customers -- which is expected in 1998.

If approved by the PUC, the new rates for both companies would go into effect on January 1, 1997.

Eastern Utilities -- EUA -- is a Boston-based, diversified-energy-services company whose shares are traded on the New York and Pacific Stock exchanges. Subsidiaries are Blackstone Valley Electric Co.; Eastern Edison Co.; Newport Electric Corp.; EUA Cogenex Corp.; EUA Energy Investment Corp.; EUA Ocean State Corp.; EUA Service Corp.; EUA Energy Services Inc.; and Montaup Electric Co. Together, the companies are known as the EUA System. Information about EUA is available on the World Wide Web at http://www.eua.com.

CONTACT: Eastern Utilities

Elaine D. Hunt, 401-333-1400 ext. 3664