Issuing And Paying Agency Agreement

EXECUTION COPY


ISSUING AND PAYING AGENCY AGREEMENT
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This AGREEMENT is made as of June 14, 1994 between Shawmut Bank
Connecticut, National Association, a national banking association
maintaining its principal corporate office at 777 Main Street, Hartford,
Connecticut 06115 (the "Issuing and Paying Agent"), and Connecticut Natural
Gas Corporation, a corporation having its principal place of business at
100 Columbus Boulevard, Hartford, Connecticut 06103 (the "Company"). Except
as otherwise indicated, capitalized terms used herein will have the meanings
attributed to them in the form of Note attached hereto as Exhibit I.

In consideration of the mutual promises hereinafter contained, the
Issuing and Paying Agent and the Company hereby covenant and agree as
follows:

ARTICLE I

APPOINTMENT
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1. The Company hereby appoints the Issuing and Paying Agent to
perform the duties with respect to the Notes hereinafter and in the Notes
set forth.

2. The Issuing and Paying Agent hereby accepts such appointment and
agrees to perform the duties hereinafter and in the Notes set forth.

ARTICLE II

ISSUANCE OF NOTES
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1. The Company has authorized and may from time to time issue its
Medium-Term Notes, Series B, in an aggregate principal amount not exceeding
U.S. $75,000,000 (the "Notes"), pursuant to this Agreement, and proposes to
sell the same from time to time directly or indirectly in accordance with a
Placement Agency Agreement dated June 14, 1994 (the "Placement Agency
Agreement") between the Company and Smith Barney Inc. and A.G. Edwards &
Sons, Inc. (each an "Agent"; collectively, the "Agents"). Although the
Company has authorized the issuance of up to $75,000,000 aggregate principal
amount of Notes, the Company may, from time to time, without the consent of
any holder of Notes, increase the amount it may issue. The Company shall
give notice, promptly, in writing to the Issuing and Paying Agent upon any
such increase in the aggregate principal amount of the Notes issuable
hereunder.
2. The Notes are not being registered under the Securities Act of
1933, as amended (the "Securities Act"), in reliance upon the exemption from
registration provided by Section 4(2) thereof and Regulation D promulgated
thereunder ("Regulation D"), which exempts transactions by an issuer not
involving any public offering. The Notes are being offered only to
institutions that qualify as "accredited investors," as defined in Rule
501(a)(1),(2),(3) or (7) under Regulation D ("Accredited Investors"), or
"qualified institutional buyers," as defined in Rule 144A under the
Securities Act ("Qualified Institutional Buyers") in minimum amounts of
$100,000 for any single purchase. The $100,000 minimum purchase applies to
Notes of each maturity and may not be spread among Notes of different
maturities. If the purchaser is a non-United States bank fiduciary acting
for the account of one or more investors, the amount purchased for each
investor must be at least $100,000, each such investor must be a Qualified
Institutional Buyer or an Accredited Investor, and the purchaser must have
provided the Agents or the Company with a written statement to such effect.

3. The Company may also sell Notes to an Agent as principal for its
own account at a price to be agreed upon at the time of sale. Such Notes
may be resold at prevailing market prices, or at prices related thereto, at
the time of such resale, as determined by such Agent.

4. During the period this Agreement is in effect, there will be
delivered to the Issuing and Paying Agent executed Notes (signed and sealed
manually or by facsimile on behalf of the Company), to be held in
safekeeping by the Issuing and Paying Agent for the account of the Company.
If an officer of the Company whose signature is on a Note no longer holds
such office at the time the Issuing and Paying Agent delivers the Note in
accordance with this Agreement, the Note will be valid nevertheless. In
addition, the Company will advise the Issuing and Paying Agent in writing of
those persons handling administrative responsibilities with whom the Issuing
and Paying Agent is to communicate regarding offers to purchase Notes and
the details of their delivery and will promptly advise the Issuing and
Paying Agent in writing if any such person shall cease to handle such
responsibilities or of the authorization of any additional person to handle
such responsibilities.

5. The Notes will be in registered form, substantially in the form
attached hereto as Exhibit I and which is a part hereof. The Notes will
have maturities of from one (1) year to up to thirty (30) years and each
Note will contain (subject to paragraph 3 of Article V) the legend regarding
restrictions on transfer substantially as set forth on the form of Note
attached as Exhibit I.

6. When any Note is delivered to the Issuing and Paying Agent, the
Issuing and Paying Agent will acknowledge receipt by signing and returning a
receipt to the Company.

7. The Issuing and Paying Agent will authenticate Notes for original
issue in an aggregate principal amount not to exceed U.S. $75,000,000 upon
receipt of instructions therefor from officers and agents of the Company
subject to the terms of this Article II. A Note will not be valid until the
Issuing and Paying Agent manually signs the certificate of authentication on
the Note, which will be conclusive evidence that such Note has been duly
authenticated hereunder and is entitled to the benefits hereof.

8. From time to time the Company will provide issuance instructions
by telephone, telecopy or telex, promptly confirmed in writing, to the
Issuing and Paying Agent, and the Issuing and Paying Agent will withdraw the
necessary number of Notes for completion and authentication in accordance
with such instructions and will complete, countersign for authentication and
issue the Notes on or prior to the settlement dates included in the
instructions provided in the following paragraph.

9. The instructions from the Company to the Issuing and Paying Agent
will include (a) the exact name in which the Note is to be registered (the
person in whose name a Note is registered is hereinafter referred to as a
"Holder" and all such Holders as the "Holders"), (b) the exact address of
the Holder and address for delivery, notices and payments of principal and
interest, (c) the taxpayer identification number of the Holder
(collectively, subparagraphs a, b and c hereof are referred to herein as the
"Registration Instructions"), (d) the principal amount of the Note, which
will be $100,000 or an integral multiple of $1,000 in excess thereof (an
"authorized denomination") and the PPN Number, if any, of the Note, (e) the
sale date, (f) the settlement date, (g) the maturity date, (h) the interest
rate and interest payment dates, with any related information to be
indicated on the Note, (i) the proceeds net of the Agent's commission (if
any), (j) the name and address of the appropriate Agent's clearing
operation, if any, or other location where delivery is to be made (the
"Delivery Instructions") (collectively, subparagraphs d, e, f, g, h, i and j
hereof are referred to as the "Trade Instructions") and (k) such other
information as the Issuing and Paying Agent may reasonably request from time
to time (collectively, subparagraphs (a) through (k) hereof are referred to
as the "Instructions"). If delivery is to be made in Hartford, such
delivery will be at Shawmut Bank Connecticut, National Association, 777 Main
Street, Hartford, Connecticut 06115, Attention: Corporate Trust Operations.

10. The Settlement Date with respect to any offer to purchase Notes
accepted by the Company will be, subject to Section 6 of the Placement
Agency Agreement, the fifth Business Day next succeeding the date of
acceptance unless otherwise agreed by the purchaser and the Company and will
be specified upon acceptance of such offer. The Company will not accept any
offer to purchase a Note that will have a Settlement Date in less than three
Business Days without verifying by telephone, telecopy or telex, promptly
confirmed in writing, that the Issuing and Paying Agent will have adequate
time to prepare and authenticate such Note. As used herein, "Business Day"
means any day, other than a Saturday or Sunday, on which banks in Hartford,
Connecticut are not required or authorized by law to close.

11. The Company will provide the Issuing and Paying Agent with Trade
and Registration Instructions for each offer to purchase a Note solicited by
an Agent in time for the Issuing and Paying Agent to prepare and
authenticate the required Note, but not later than 10:00 a.m., Hartford
time, on the second Business Day preceding the Settlement Date. The Company
will, after receiving the details for each offer from an Agent and recording
the details and any necessary calculations, provide appropriate
documentation to the Issuing and Paying Agent, including the information
provided by such Agent necessary for the preparation and authentication of
each Note. The Issuing and Paying Agent will confirm the details of each
Note prior to preparing the Note for delivery (but in any case no later than
10:00 a.m. on the Business Day next preceding the Settlement Date therefor).
The Issuing and Paying Agent will effect delivery of each Note no later than
1:00 p.m., Hartford time, on the Settlement Date to the applicable Agent for
delivery to the purchaser.

12. The Issuing and Paying Agent will provide to the Company, within
five Business Days following each Record Date, a list of interest payments
to be made for each Note on the next succeeding Interest Payment Date and
the total amount of the interest payments. The Issuing and Paying Agent
will provide monthly to the Company a list of the principal and interest to
be paid on Notes maturing or being redeemed in the next succeeding month.

13. Each instruction given to the Issuing and Paying Agent in
accordance with this Article II will constitute a representation and
warranty to the Issuing and Paying Agent by the Company that the issuance
and delivery of the Notes have been duly and validly authorized by the
Company and that when completed, authenticated and delivered pursuant hereto
and payment has been received therefor by the Company, the Notes will
constitute the valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or by general principles
of equity.

14. Whenever the Company and an Agent determine that the Company shall
sell Notes directly to the Agent, such sale will be made in accordance with
the Placement Agency Agreement and any supplemental agreement relating
thereto (the "Terms Agreement"). The Trade and Registration Instructions
for Notes sold to an Agent pursuant to any Terms Agreement will be agreed to
between the Company and the Agent in the respective Terms Agreement. Any
Terms Agreement entered into between the Company and any Agent will be
provided to the Issuing and Paying Agent as provided in paragraph 11 of this
Article II. If there is no such Terms Agreement, the Trade and Registration
Instructions specified in this Agreement shall apply. Notwithstanding the
above, the Trade and Registration Instructions and/or all time frames for
Notes sold to an Agent pursuant to a Terms Agreement shall be subject to the
limitations set forth in this Article II.

15. Notwithstanding the foregoing, the Company and the Issuing and
Paying Agent may enter into an agreement with The Depository Trust Company,
New York, New York ("DTC") or other depository as may be subsequently
designated by the Company (the "Depository") whereby Notes will be issued in
book-entry form (the "Book-Entry Notes") represented by one or more global
Notes (the "Global Notes") that will be registered in the name of a nominee
of the Depository. The Global Notes will be deposited with or on behalf of
the Depository by the Company. Global Notes will be issued in substantially
the same form as Exhibit I and will not be exchangeable for Notes in the
name of beneficial owners except as provided for in this Agreement. In the
event that Global Notes are issued, the Issuing and Paying Agent will be
responsible for performing the obligations and duties set forth in this
Agreement with respect to the Global Notes as well as complying with the
Administrative Procedures attached as Exhibit A to the Placement Agency
Agreement. To the extent the Administrative Procedures conflict with the
provisions of this Agreement, the provisions of this Agreement shall
control.

16. Any Global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form:

"This Note is a Global Note within the meaning of the Issuing and
Paying Agency Agreement hereinafter referred to and is registered in the
name of the Depository or a nominee of the Depository. This Note is
exchangeable for Notes registered in the name of a person other than the
Depository or its nominee only in the limited circumstances described in the
Issuing and Paying Agency Agreement, and no transfer of this Note (other
than a transfer of this Note as a whole by the Depository to a nominee of
the Depository or by a nominee of the Depository to the Depository or to
another nominee of the Depository) may be registered except in such limited
circumstances."

ARTICLE III

DEPOSIT OF FUNDS
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1. On or prior to 12:00 noon, Hartford time, on each payment date,
whether an interest payment date or a date on which principal is to be paid,
the Company will deposit, or cause to be deposited, with the Issuing and
Paying Agent immediately available funds in an amount equal to the aggregate
amount to be paid by the Issuing and Paying Agent on such payment date. In
the event the amount deposited with respect to a payment date is less than
the sum of the aggregate amounts specified in the statements provided to the
Company pursuant to Article II, the Issuing and Paying Agent will promptly
notify the Company, and will effect no payments with respect to such payment
date until such discrepancy has been resolved.

2. At the Company's option, subject to the execution of a trust
agreement satisfactory to the Company and the Issuing and Paying Agent,
either (i) the Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to any Note or Notes on the 124th
day after the applicable conditions set forth below have been satisfied, or
(ii) the Company shall cease to be under any obligation to comply with any
term, provision, covenant or condition set forth in Article VII hereof or in
connection with any Event of Default at any time after the applicable
conditions set forth below have been satisfied:

(a) the Company shall have deposited or caused to be deposited
irrevocably with the Issuing and Paying Agent as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holder or Holders, (i) money in an amount, or (ii) U.S.
Government Obligations (as defined below), which through the payment of
interest, principal and premium, if any, in respect thereof in
accordance with its terms will provide (without any reinvestment of
such interest, principal or premium), not later than one day before the
due date of any payment, money in an amount, or (iii) a combination of
(i) and (ii), sufficient, in the opinion (with respect to (ii) and
(iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Issuing and Paying Agent at or prior to the time of such deposit,
to pay and discharge each installment of principal and interest on,
such Note or Notes on the dates such installments of interest or
principal are due or such Note or Notes are redeemable, if applicable,
pursuant to paragraph 2 of Article IV below;

(b) in case such Note or Notes are to be redeemed on any date
prior to the date such Notes mature (the "Maturity Date"), the Company
shall have given to the Issuing and Paying Agent an irrevocable notice
requiring redemption of such Note or Notes on such date (the
"Redemption Date") and the Company shall have given to the Issuing and
Paying Agent in form satisfactory to the Issuing and Paying Agent
irrevocable instructions to provide notice of redemption of such Note
or Notes prior to said date; and in the event such Note or Notes are
not to be redeemed within the 60 days next succeeding the date of such
deposit with the Issuing and Paying Agent, the Company shall have given
the Issuing and Paying Agent in form satisfactory to it irrevocable
instructions to provide, as soon as practicable, a notice to the Holder
or Holders of such Note or Notes that the deposit required by this
paragraph 2 has been made with the Issuing and Paying Agent and stating
such Maturity Date or Redemption Date upon which moneys are to be
available for the payment of the principal of, premium, if any, and
interest on such Note or Notes;

(c) no Event of Default or event (including such deposit) which,
with notice or lapse of time, or both, would become an Event of Default
with respect to such Note or Notes shall have occurred and be
continuing on the date of such deposit;

(d) the Company shall have paid or duly provided for payment of
all amounts then due to the Issuing and Paying Agent pursuant to this
Agreement; and

(e) the Company shall deliver to the Issuing and Paying Agent an
opinion of counsel to the effect that the deposit and related Discharge
will not cause the Holders to recognize income, gain, or loss for
federal income tax purposes.

"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under,
the Note or Notes and to have satisfied all the obligations relating to the
Note or Notes (and the Issuing and Paying Agent, at the expense of the
Company, shall execute proper instruments acknowledging the same), except
(A) the rights of the Holder to receive, from the trust fund described in
clause (a) above, payment of the principal of and the interest on such Note
or Notes when such payments are due and (B) the Company's obligations, if
any, with respect to the Note or Notes under paragraph 3 of this Article
III.

"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of an entity controlled
or supervised by and acting as an agency or instrumentality of the United
States of America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America, which, in
either case under clauses (i) or (ii) are not callable or redeemable at the
option of the issuer thereof.

3. All moneys and U.S. Government Obligations deposited with the
Issuing and Paying Agent pursuant to paragraph 2 of this Article III in
respect of the Note or Notes shall be held in trust and applied by it, in
accordance with the provisions of the Note or Notes, to the payment, either
directly or through any paying agent (including the Company acting as its
own paying agent) as the Issuing and Paying Agent may determine, to the
Holder, of all sums due and to become due thereon for principal and
interest, if any, but such money need not be segregated from other funds
except to the extent required by law. The Issuing and Paying Agent shall be
under no liability for interest on any funds received by it hereunder except
as otherwise agreed with the Company. Any funds deposited with the Issuing
and Paying Agent for payment of principal, premium, if any, and interest in
respect of the Note or Notes and remaining unclaimed for two years after the
date upon which the last payment of principal or interest on any Note or
Notes to which such deposit relates shall have become due and payable (or,
if later, two years after the date of the last such deposit relating to such
Note or Notes), shall be repaid to the Company by the Issuing and Paying
Agent on demand, and the Holder to which such deposit related who is
entitled to receive payment shall thereafter look only to the Company for
the payment thereof, and all liability of the Issuing and Paying Agent with
respect to such money shall thereupon cease.

4. After the Maturity Date and payment of the principal of and
interest on the Note or Notes for which money or U.S. Government Obligations
have been deposited pursuant to paragraph 2 of this Article III, the Issuing
and Paying Agent shall promptly pay or return to the Company upon request
any money and U.S. Government obligations held by it that are not required
for the payment of the principal of and interest on the Note or Notes.

5. If the Issuing and Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with paragraph 2 of this Article
III by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under the Note or
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to paragraph 2 of this Article III until such time as the Issuing
and Paying Agent is permitted to apply all such money or U.S. Governmental
Obligations in accordance with paragraph 2 of this Article III.

ARTICLE IV

PAYMENTS
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1. The Issuing and Paying Agent will effect payment of interest to
the Holder on the Record Date on the respective interest payment dates
provided in the Notes. Interest payments will be made semiannually on
January 15 and July 15 (each an "Interest Payment Date") in each year
commencing on the first Interest Payment Date next succeeding the date the
Note is issued (the "Original Issue Date"), unless the Original Issue Date
occurs between a Record Date, and the next succeeding Interest Payment Date,
in which case payments will commence on the Second Interest Payment Date
succeeding the Original Issue Date. Interest payments will be computed and
paid on the basis of a 360-day year comprised of twelve 30-day months. If
an Interest Payment Date falls on a day which is not a Business Day,
interest payable with respect to such Interest Payment Date will be paid on
the next succeeding Business Day with the same force and effect as if made
on such Interest Payment Date and no interest will accrue with respect to
such payment for the period from and after such Interest Payment Date. The
Issuing and Paying Agent will make such payment by mailing a check, payable
to the Holder as of the Record Date, to the address of such Holder, in
accordance with the information shown on the register maintained by the
Issuing and Paying Agent or, at the option of the Holder, at such other
place in the United States of America as the Holder will designate to the
Issuing and Paying Agent in writing. Notwithstanding the foregoing, upon
receipt of instructions from the Holder of an aggregate principal amount of
at least $10,000,000 of Notes having the same Interest Payment Date, not
less than ten days prior to such Interest Payment Date, the Issuing and
Paying Agent will make such payment of interest by the wire transfer of
immediately available funds to such account at a bank in Hartford,
Connecticut or New York, New York (or other bank consented to by the
Company) as the Holder will have designated, provided that such bank has
appropriate facilities therefor. Once such wire transfer instructions have
been received by the Issuing and Paying Agent, they shall remain in effect
unless (i) the Issuing and Paying Agent is notified of a change thereof not
less than ten days prior to an Interest Payment Date; or (ii) the Holder no
longer holds an aggregate principal amount of at least $10,000,000 of Notes
having the same Interest Payment Dates.

2. The Issuing and Paying Agent will effect payment of principal,
premium, if any, and interest due on the Redemption Date or at the Maturity
Date in immediately available funds by wire transfer to such account at a
bank in Hartford, Connecticut or New York, New York, (or such other bank
consented to by the Company) as the Holder shall have designated, except for
payment to a Holder for which appropriate instructions for payment as

provided above have not been received by the Issuing and Paying Agent by not
later than ten (10) days prior to the date of payment, in which case such
payment will be made by check mailed by the Issuing and Paying Agent to the
address of the Holder appearing in the Register. In such cases where wire
transfer instructions have been received by the Issuing and Paying Agent,
they shall remain in effect unless (i) the Issuing and Paying Agent is
notified of a change thereof not less than ten days prior to an Interest
Payment Date; or (ii) the Holder no longer holds an aggregate principal
amount of at least $10,000,000 of Notes having the same Interest Payment
Dates. Payment of principal, premium, if any, and interest due on the
Redemption Date or the Maturity Date on the Note will only be made against
presentation of the Notes at the office of the Issuing and Paying Agent
maintained in accordance with paragraph 7 of this Article IV or at such
other office or agency of the Company as the Company shall designate.

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