Connecticut Energy Corp. Reports 6.5 Percent Increase in 1997 Earnings.

BRIDGEPORT, Conn.--(BUSINESS WIRE)--Nov. 5, 1997--Connecticut Energy Corp. (CNE:NYSE) today reported record earnings for fiscal 1997 which ended September 30. Earnings per share of $1.81 increased by 6.5 percent over 1996 earnings of $1.70 per share. Net income also reached a record $16.4 million, which was over eight percent higher than the 1996 net income of $15.2 million.

"I am proud to report that fiscal 1997 marked the eighth consecutive year in which we have achieved growth in annual earnings per share -- a record unmatched by any other natural gas distribution company in the United States," said Carol A. Forest, vice president finance, chief financial officer and treasurer. "This was done primarily through customer growth in our principal subsidiary, The Southern Connecticut Gas Company (Southern), a concerted effort to lower expenses, and modest contributions from our unregulated subsidiaries."

During fiscal 1997, Southern added over 2,600 new residential heating customers, an increase of 42 percent over 1996 additions. This residential customer growth helped increase firm margins to new record levels, although the volumes of gas sold and transported to firm customers were lower than last year, principally because of warmer weather. "Weather in fiscal 1997 was four percent warmer than normal; however, Southern has a Weather Normalization Adjustment (WNA) mechanism," continued Forest. "Margins were enhanced by nearly $2.3 million as a result of the WNA. Weather normalization has had a significant impact in stabilizing our margins and earnings since its inception in 1994.

"Southern was able to reduce 1997 operations and maintenance (O&M) expenses by two percent, marking the third consecutive year these expenses have declined," according to Forest. "O&M expenses are now seven percent below their 1994 levels. Over that same time period, O&M expense as a percentage of gross margin has dropped from 48 percent to 42 percent, well below last year's industry average of 47 percent."

"Although Southern has and will continue to be our core business," Forest continued, "for the first time we realized contributions from our unregulated subsidiaries." Connecticut Energy has three nonutility subsidiaries. CNE Energy Services Group markets energy commodities and services to commercial and industrial customers throughout New England and New York. CNE Development Corp. participates in bulk purchases and storage of natural gas, and CNE Venture-Tech invests in energy related-technology innovations.

"As we progress through the deregulation of our industry, we will continue to focus on growing our utility customer base," Forest stated. "However, we expect an increasing portion of earnings contributions to come from the unregulated side."

The utility is expecting to see higher volumes of throughput in the coming years also, with the addition of two new major projects on its system. The first is a firm sales contract to supply gas to Yale University's new 13.5 megawatt cogeneration plant which is expected to be in service in early 1998. The other project, currently under negotiations, involves the transportation of natural gas to a new 520 megawatt electric generating plant to be built at Bridgeport Harbor by Duke Energy Trading and Marketing LLC. The plant is expected to be in operation in 1998.

The Southern Connecticut Gas Co. distributes natural gas to approximately 157,000 customers in 22 towns from Westport to Old Saybrook. Connecticut Energy Corp., through its predecessor companies, has been paying dividends since 1850, one of the longest consecutive dividend payment records of any company on the New York Stock Exchange.

This press release contains forward-looking statements about the projected financial performance of Connecticut Energy Corp. While the company believes such statements to be reasonable at the date of this press release and makes them in good faith, Connecticut Energy cautions that they may vary from actual results. Investors should be aware of important factors that could have a material impact on future results, such as the availability and terms of capital; competition for energy services; actions by federal and state regulatory authorities; legislative and judicial developments which affect the company or significant groups of its customers; and other uncertainties. -0-

CONNECTICUT ENERGY CORPORATION
PRINCIPAL ITEMS
(Dollars in thousands, except per share)

                                Twelve Months         Three Months(a)
                                    Ending                Ending
                             Sept. 30   Sept. 30   Sept. 30   Sept. 30
                               1997        1996       1997        1996

Revenues                    $252,008    $261,093   $ 26,243   $ 27,175

Gross Margin                $119,336    $119,465   $ 12,155   $ 12,633

Net Income (loss)           $ 16,441    $ 15,165   $ (2,974)  $ (3,815)

Net Income (loss) per share $   1.81    $   1.70   $  (0.32)  $  (0.42)

Weighted Average Common
 Shares Outstanding        9,095,521   8,924,299  9,152,261  8,979,896

(a) Since the company's principal business is natural gas
    distribution, it is normal to show a loss during the quarter
    ending September.

CONTACT: Connecticut Energy Corporation, Bridgeport

Judith E. Falango

203/382-8156