UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes    X      No        

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes           No    X   

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The number of shares of common stock (Par value $.01 per share) outstanding as of July 30, 2008, was 158,346,335.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances. This Form 10-Q contains certain forward-looking statements that are based upon management's current expectations and information that is currently available. Whenever used in this report, the words "estimate," "expect," "believe," "anticipate," or similar expressions are intended to identify such forward-looking statements.

In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that involve risks and uncertainties that could cause actual results to differ materially from those contemplated in any forward-looking statements are discussed in our Form 10-K for the fiscal year ended December 31, 2007, Item 1A - Risk Factors and Item 7A - MD&A - Quantitative and Qualitative Disclosures About Market Risk, and also include, among others:

• the occurrence of any event, change or other circumstances that could give rise to the termination of our Merger agreement with Iberdrola,
• the outcome of any legal or regulatory proceedings that have been instituted following the announcement of the Merger,
• our ability to compete in the rapidly changing and competitive electric and/or natural gas utility markets,
• increased state and FERC regulation,
• the operation of the NYISO and retroactive NYISO billing adjustments,
• the operation of ISO-NE as an RTO and CMP's continued participation in ISO-NE,
• our continued ability to recover NUG and other costs,
• changes in fuel supply or cost and the success of strategies to satisfy power requirements,
• our ability to expand our products and services including our energy infrastructure in the Northeast,
• the effect of rising commodity costs on customer usage and uncollectible expense,
• market risk from changes in value of financial or commodity instruments, derivative or nonderivative, caused by fluctuations in interest rates or commodity prices,
• the ability of third parties to continue to supply electricity and natural gas,
• our ability to obtain adequate and timely rate relief and/or the continuation of current rate plans,
• the possible discontinuation or further modification of fixed-price supply programs in New York,
• environmental incidents,
• legal or administrative proceedings,
• changes in the cost or availability of capital,
• economic growth or contraction in the areas in which we do business,
• extreme weather-related events such as floods, hurricanes, ice storms or snow storms,
• weather variations affecting customer energy usage,
• changes in authoritative accounting guidance,
• acts of terrorism,
• the effect of volatility in the equity and fixed income markets on the cost of pension and other postretirement benefits,
• the effects of changes in the credit markets on our variable rate debt,
• the inability of our internal control framework to provide absolute assurance that all incidents of fraud or error will be detected and prevented, and
• other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the interim periods presented. All such adjustments are of a normal, recurring nature. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Our financial statements consolidate our majority-owned subsidiaries after eliminating all intercompany transactions.

On June 25, 2007, we announced that we had entered into a Merger agreement with Iberdrola, S.A., and Green Acquisition Capital, Inc. pursuant to which we will become a wholly-owned subsidiary of Iberdrola upon receipt of required regulatory approvals and satisfaction of other closing conditions.

Consummation of the Merger is subject to various customary closing conditions, including the absence of injunctions or restraints imposed by governmental entities, the receipt of required regulatory approvals and the absence of any event that would reasonably be expected to have a material adverse effect on Energy East. To date, all regulatory approvals have been received except approval from the NYPSC. Until the Merger is completed, Energy East will continue to operate as a separate company.

The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes contained in the report on Form 10-K filed for the fiscal year ended December 31, 2007. Due to the seasonal nature of our operations, financial results for interim periods are not necessarily indicative of trends for a 12-month period.

CMP Stipulation on ARP 2008: As part of the stipulation establishing CMP's new five-year rate plan, ARP 2008, CMP was required to write off $5.2 million of previously deferred costs. This write-off was recognized in the second quarter of 2008.

We determine basic EPS by dividing net income by the weighted-average number of shares of common stock outstanding during the period. The weighted-average common shares outstanding for diluted EPS include the incremental effect of restricted stock and stock options issued and exclude stock options issued in tandem with SARs. Historically, we have issued stock options in tandem with SARs and substantially all stock option plan participants have exercised the SARs instead of the stock options. The numerator we use in calculating both basic and diluted EPS for each period is our reported net income.

The reconciliation of basic and dilutive average common shares for each period follows:

We exclude from the determination of EPS options that have an exercise price that is greater than the average market price of the common shares during the period. Shares excluded from the EPS calculation for the three months ended June 30 were 2.8 million in 2008 and 2.1 million in 2007, and for the six months ended June 30 were 2.0 million in 2008 and 2.1 million in 2007.

EITF 06-10: Effective January 1, 2008, we began applying the consensus of EITF 06-10, which the FASB ratified in late March 2007. EITF 06-10 requires an employer to recognize a liability for a postretirement benefit related to a collateral assignment split-dollar life insurance arrangement. In a collateral assignment split-dollar life insurance arrangement, the employee, versus the employer, owns and controls the insurance policy. EITF 06-10 also requires an employer to recognize and measure an asset based on the nature and substance of the collateral assignment split-dollar life insurance arrangement. Entities should recognize the effects of applying the consensus through either (1) a change in accounting principle through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption or (2) a change in accounting principle through retrospective application to all prior periods. CNG is the only Energy East subsidiary with collateral assignment split-dollar life insurance arrangements. We elected to recognize the effects of applying the consensus as a change in accounting principle through a cumulative-effect adjustment that resulted in a decrease in retained earnings of $2.3 million. The application of EITF 06-10 did not affect results of operation or cash flows.

Statement 141(R) and Statement 160: In December 2007 the FASB issued Statement 141(R) and Statement 160, both the result of a joint project between the FASB and the International Accounting Standards Board. The objective of Statement 141(R) is "to improve the relevance, representational faithfulness, and comparability of information that a reporting entity provides in its financial reports about a business combination and its effects." Some key changes that will result from the application of Statement 141(R) are: all transaction costs and most restructuring costs will be expensed, acquired in-process research and development costs will not be expensed at acquisition, and equity securities issued as part of the purchase price will be measured on the closing date instead of the announcement date. Statement 141(R) will apply to business combinations for which the acquisition date is on or after the beginning of an entity's first annual reporting period beginning on or after December 15, 2008 (our annual reporting period beginning January 1, 2009). It may not be applied before that date and must be applied prospectively.

Statement 160 is intended "to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements" about noncontrolling (sometimes called minority) interests. Minority interest earnings will no longer be excluded from net income as a result of applying Statement 160. Statement 160 is effective for fiscal years (including interim periods) beginning on or after December 15, 2008 (our fiscal year beginning January 1, 2009), with earlier adoption prohibited and prospective application required, except that the presentation and disclosure requirements are to be applied retrospectively. We expect that our application of both Statements will not affect our financial position, results of operation or cash flows.

Statement 161: In March 2008 the FASB issued Statement 161, which requires enhanced disclosures about an entity's derivative instruments and hedging activities to enable investors to better understand their effects on the entity's financial position, financial performance and cash flows. It is intended to improve transparency about the location and amounts of derivative instruments in the financial statements and how the entity accounts for derivative instruments and related hedged items. Requirements include: disclosure of fair values of derivative instruments and their gains and losses in a tabular format, disclosure of derivative features that are credit risk-related, and cross-referencing within notes to enable financial statement users to locate important information about derivative instruments. Statement 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 (our fiscal year beginning January 1, 2009). Early application is encouraged. Disclosures for earlier periods presented for comparative purposes are encouraged but not required at initial adoption. In years after initial adoption, comparative disclosures are required only for periods subsequent to initial adoption. Our adoption of Statement 161 will not affect our financial position, results of operation or cash flows.

In September 2006 the FASB issued Statement 157, which we adopted effective January 1, 2008, for financial assets and financial liabilities. Changes from current practice that result from the application of Statement 157 relate to the definition of fair value, the methods used to measure fair value and expanded disclosures about fair value measurements. Statement 157 applies under other accounting pronouncements that require or permit fair value measurements in which the FASB previously concluded that fair value is the relevant measurement attribute, but does not require any new fair value measurements. Our adoption of Statement 157 and related FASB Staff Positions (FSPs) had no effect on our financial position, results of operation or cash flows.

The FASB issued FSP FAS 157-2 in February 2008. FSP FAS 157-2 delays the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity's financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Nonfinancial assets and nonfinancial liabilities include all assets and liabilities other than those that meet the definition of a financial asset or financial liability as defined in paragraph 6 of Statement 159. FSP FAS 157-2 also requires additional disclosures concerning application of the provisions of Statement 157. FSP FAS 157-2 was effective upon issuance.

Valuation techniques: We value our noncurrent investments available for sale - auction rate securities at par due to the variable rate earned on the investments. Such securities ordinarily earn interest at rates established at periodic auctions, typically every seven or 35 days. However, periodic auctions for the securities began to fail during the first quarter of 2008 and we began earning formulaic failure rates on our investments. We held $3.9 million of those securities at June 30, 2008, which are earning pretax equivalent rates of 3.77%. At January 1, 2008, we included the fair value of those investments in Level 1. Due to uncertainties that began to develop in the auction rate securities markets and the need for management to use judgment to value the securities, we began to include the fair value measurements in Level 3 in the first quarter of 2008. In the first quarter of 2008 we classified the securities as current due to our expectation that they would be sold within twelve months. We began classifying our auction rate securities as noncurrent as of June 30, 2008.

We measure the fair value of our noncurrent investments available for sale - other using quoted market prices in active markets for identical assets and include the measurements in Level 1. The investments primarily consist of money market funds, but also include some fixed income and equity investments.

We determine the fair value of our various derivative assets and liabilities utilizing market approach valuation techniques:

• NYSEG, RG&E and our energy marketing subsidiaries enter into electric energy derivative contracts to hedge the forecasted purchases required to serve their electric load obligations. Those companies hedge their electric load obligations using derivative contracts that are settled based upon Locational Based Marginal Pricing published by the NYISO. Forward market price quotes for some NYISO locations are not actively traded and not readily available outright from market dealers. We derive forward market prices for some locations based on the historical relationship of prices in those locations to prices in locations where an active market exists. The resulting value represents the derived forward market price for each location, which we use to value the open derivative contracts. Because we adjust quoted market prices for our own load characteristics, we include these fair value measurements in Level 3.
• NYSEG, RG&E and our energy marketing subsidiaries enter into natural gas derivative contracts to hedge the forecasted purchases required to serve their natural gas load obligations. The forward market prices used to value our open natural gas derivative contracts are exchange-based prices for the identical derivative contracts traded actively on the New York Mercantile Exchange. Because we use prices quoted in an active market, we include these fair value measurements in Level 1.
• We enter into treasury-related derivative contracts to hedge the forecasted issuance of debt, to manage the risk of changes in interest rates associated with existing debt, and to maintain desired fixed-to-floating rate ratios. We value those derivatives based on indicative values provided by transaction counterparties and calculated based upon proprietary models that use well-recognized financial principles and reasonable, market-based estimates of relevant future market conditions. We assess the reasonableness of the transaction counterparty valuations utilizing a model that constructs forward LIBOR (London Interbank Offer Rate) rates from a spot LIBOR curve, applies the forward rates to construct pro forma cash flows and discounts the pro forma cash flows to the present using forward rates. Because the valuations provided by the counterparties are only indicative and do not represent prices at which the counterparties would be willing to transact, we include these fair value measurements in Level 3.

The amounts of realized and unrealized gains and losses included in earnings for the periods (above), which are reported in the various categories indicated are:

As of June 30, 2008, NYSEG and RG&E have outstanding $776 million of tax-exempt pollution control notes, of which $278 million have coupons fixed to maturity, $100 million are auction rate notes under a special rate period where the rate is fixed until January 2010, $296 million are 7-day auction rate notes and $102 million are 35-day auction rate notes.

In response to market disruptions triggered by downgrades of bond insurers that began in the first quarter of 2008, NYSEG and RG&E have restructured portions of their auction rate portfolios.

• In May 2008 NYSEG converted its $70 million NYSERDA Pollution Control Revenue Bonds, 2004 Series B maturing in December 2028 to a 5.35% fixed rate to maturity; the bonds become callable at par in May 2013. The coupon was subsequently swapped to a floating rate.
• In May 2008 RG&E converted its $50 million NYSERDA Pollution Control Revenue Bonds, 2004 Series B maturing in May 2032 to a 5.375% fixed rate to maturity; the bonds become callable at par in May 2013. The coupon was subsequently swapped to a floating rate.
• In July 2008 NYSEG converted three series of NYSERDA Pollution Control Refunding Revenue Bonds and one series of Indiana County Industrial Development Authority Pollution Control Revenue Refunding Bonds, totaling $187 million in principal amount, from 7-day auction rate mode to weekly variable rate demand notes (VRDNs). In connection with those conversions, certain banks have issued letters of credit to provide credit and liquidity enhancement for the VRDNs. The letters of credit are issued pursuant to a $190 million revolving credit agreement that expires in August 2009 among NYSEG, certain lenders and JPMorgan Chase Bank, N.A., as administrative agent.

As of July 24, 2008, NYSEG and RG&E were paying rates averaging 5.3% on the remaining $211 million of 7- and 35-day auction rate debt. NYSEG and RG&E are taking the steps necessary to place orders in the auctions for the remaining outstanding 7- and 35-day auction rate bonds in accordance with SEC guidance to issuers of auction rate debt.

Our accounts receivable include unbilled revenues of $154 million at June 30, 2008, and $273 million at December 31, 2007, and are shown net of an allowance for doubtful accounts of $57 million at June 30, 2008, and $51 million at December 31, 2007.

Note 11. Retirement Benefits

We have funded noncontributory defined benefit pension plans that cover substantially all of our employees. The plans provide defined benefits based on years of service and final average salary. We also have other postretirement health care benefit plans covering substantially all of our employees. The health care plans are contributory with participants' contributions adjusted annually.

Our electric delivery segment consists of our regulated transmission, distribution and generation operations in New York and Maine, and our natural gas delivery segment consists of our regulated transportation, storage and distribution operations in New York, Connecticut, Maine and Massachusetts. We measure segment profitability based on net income. Other includes primarily our energy marketing companies, and interest income, intersegment eliminations and our other nonutility businesses. Selected information for our business segments includes: