Providence Energy Announces Increased First Quarter Earnings for Fiscal Year 1998.

PROVIDENCE, R.I.--(BUSINESS WIRE)--Feb. 4, 1998--Providence Energy Corporation (NYSE:PVY) today reported earnings for the three months ended December 31, 1997 of $.75 per share of common stock, an increase of $.01 per share from the first quarter last year. Temperatures for the current quarter were 6.4 percent colder than the same period last year, increasing margin by about $800,000 or 9 cents per share, net of tax. Providence Gas Company's "Energize RI", a price stabilization plan approved by the Rhode Island Public Utilities Commission and effective October 1, 1997, contributed a net margin increase to fund investments included in the plan. In addition, Providence Energy Corporation's acquisition of two oil distribution companies, Super Service Companies and Mohawk Oil Company, in November 1997, resulted in additional margin for the current quarter when compared to the same period last year.

Operating and maintenance expenses for the current quarter versus the same quarter last year increased approximately 8 cents per share, net of tax, mainly as a result of Providence Energy Corporation's acquisition of the two oil distribution companies. Increases in depreciation, amortization, and taxes other than income resulted primarily from costs associated with infrastructure and technology investments.

Gary S. Gillheeney, Senior Vice President, Treasurer, and Chief Financial Officer stated, "Assuming normal weather, Energize RI will enhance the stability and predictability of earnings and reduce the Company's overall risk profile, while positioning Providence Energy Corporation for long-term growth. The results for the quarter were as expected and we are pleased with the progress made in growing our oil distribution and energy marketing businesses."

Providence Energy Corporation is a distributor and marketer of natural gas, heating oil, and petroleum products as well as a marketer of electricity and energy services. Providence Energy's goal is to provide complete and competitive energy, home and business services to customers throughout New England. Its principal subsidiaries include ProvGas, Super Service Oil, North Attleboro Gas, and Mohawk Oil. Providence Energy also owns, in partnership with an affiliate of Southern Company, Providence-Southern, LLC, a retail energy marketing venture.

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Forward-looking statements in this document are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation those risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission.

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PROVIDENCE ENERGY CORPORATION Financial Highlights
(Thousands, except per share amounts)
For the First Quarter Ended December 31, 1997

                               Fiscal Year 1998     Fiscal Year 1997
                            Quarter Ended  Year-to   Quarter Ended
                                Dec 31      Date    Dec 31    Mar 31
Income Statement
Energy revenues               $ 67,942  $ 67,942  $ 64,038  $ 79,946
Cost of energy                  39,939    39,939    37,280    46,938
 Operating margin               28,003    28,003    26,758    33,008
Operating expenses:
 Operation and maintenance      12,057    12,057    11,374    12,930
 Depreciation and amortization   3,579     3,579     3,099     3,297
 Taxes, other than income        3,747     3,747     3,538     4,411
Total operating expenses        19,383    19,383    18,011    20,638
Operating income (loss)          8,620     8,620     8,747    12,370
Other income (expense)             188       188      (118)       77
Interest expense                 2,004     2,004     1,870     1,979
Income before Federal
 income taxes                    6,804     6,804     6,759    10,468
Provision for Federal
 income taxes                    2,262     2,262     2,321     3,557
Net Income (Loss)                4,542     4,542     4,438     6,911
Preferred dividends of
 subsidiary                       (139)     (139)     (174)     (174)
Earnings applicable to
 common stock                 $  4,403  $  4,403  $  4,264  $  6,737
Common Shares Outstanding
End of Period                  5,905.0   5,905.0   5,767.4   5,791.1
Average                        5,868.4   5,868.4   5,757.8   5,779.2
Earnings Per Share ($)            0.75      0.75      0.74      1.17
Cash Flow Per Share(A) ($)        0.06      0.06     (1.28)     2.04
Dividends Paid Per Share ($)      0.27      0.27      0.27      0.27
Capital Expenditures ($)         5,861     5,861     5,596     4,116
Book Value Per Share ($)         15.18     15.18     14.85     15.74
Market Closing Price ($)         21.81     21.81     17.50     17.75
Balance Sheet
% total capitalization
 represented by:
  Common equity                  53.06     53.06     52.10     53.66
  Preferred stock                 3.79      3.79      4.87      3.77
  Long-term debt                 43.15     43.15     43.03     42.57
Gas Distribution
 Operating Statistics
Gas sold and transported (MMcf)
Residential                      4,349     4,349     4,277     6,057
Commercial/industrial            2,253     2,253     2,393     3,517
Total firm                       6,602     6,602     6,670     9,574
Interruptible and other            431       431       776       480
Transportation                   1,256     1,256       619       631
Company use and other              360       360       316       437
Total gas sold and transported   8,649     8,649     8,381    11,122
Off-system sales                  --        --         (22)     --
Total sendout                    8,649     8,649     8,359    11,122
Twelve month average customers 168,603   168,603   166,554   166,986
Number of Employees                548       548       560       556
Degree Days - Actual             2,071     2,071     1,946     2,728
              Normal             1,949     1,949     1,949     2,877
Colder (Warmer) than normal        6.3%      6.3%     (0.2)%    (5.2)%

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PROVIDENCE ENERGY CORPORATION - CONTINUED

                                       Fiscal Year 1997
                                         Quarter Ended        Fiscal
                                       Jun 30     Sep 30     Year '97
Income Statement
Energy revenues                       $ 42,921  $  33,515   $ 220,420
Cost of energy                          22,594     17,564     124,376
 Operating margin                       20,327     15,951      96,044
Operating expenses:
 Operation and maintenance              11,613     12,851      48,768
 Depreciation and amortization           3,259      3,219      12,874
 Taxes, other than income                3,092      2,691      13,732
Total operating expenses                17,964     18,761      75,374
Operating income (loss)                  2,363     (2,810)     20,670
Other income (expense)                    (114)       (64)       (219)
Interest expense                         1,888      1,866       7,603
Income before Federal income taxes         361     (4,740)     12,848
Provision for Federal income taxes          87     (1,574)      4,391
Net Income (Loss)                          274     (3,166)      8,457
Preferred dividends of subsidiary         (139)      (139)       (626)
Earnings applicable to common stock   $    135  ($  3,305)  $   7,831
Common Shares Outstanding
End of Period                          5,812.0    5,831.9     5,831.9
Average                                5,801.4    5,821.9     5,790.1
Earnings Per Share ($)                    0.02      (0.58)       1.35
Cash Flow Per Share(A) ($)                4.39      (0.34)       4.81
Dividends Paid Per Share ($)              0.27       0.27        1.08
Capital Expenditures ($)                 4,937      8,646      23,295
Book Value Per Share ($)                 15.51      14.69       14.69
Market Closing Price ($)                 17.50      19.63       19.63
Balance Sheet
 % total capitalization represented by:
  Common equity                          53.23      52.10       52.10
  Preferred stock                         3.78       3.89        3.89
  Long-term debt                         42.99      44.01       44.01
Gas Distribution Operating Statistics
Gas sold and transported (MMcf)
Residential                              2,306      1,213      13,853
Commercial/industrial                    1,316        860       8,086
Total firm                               3,622      2,073      21,939
Interruptible and other                    793        584       2,633
Transportation                             715        760       2,725
Company use and other                      185        (67)        871
Total gas sold and transported           5,315      3,350      28,168
Off-system sales                            (4)      (254)       (280)
Total sendout                            5,311      3,096      27,888
Twelve month average customers         167,433    167,983     167,983
Number of Employees                        558        553         553
Degree Days - Actual                       895         88       5,657
              Normal                       720        106       5,652
Colder (Warmer) than normal               24.3%     (17.0)%       0.1%

(A) Cash flow per share calculated by taking net cash provided by
operations for each quarter and dividing by the average common shares
outstanding for the quarter.

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CONTACT: Providence Energy Corporation

Investor contact:

Maryann Pernorio, [phone], Ext. 2274

or

Media contact:

James Grasso, [phone], Ext. 2340