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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2001

Commission
file number: 1-7196

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CASCADE NATURAL GAS CORPORATION(Exact name of Registrant as specified in its charter)

|Washington(State or other jurisdiction of
incorporation or organization)       |  | 91-0599090(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------------ |  | ----------------------------------------------
|222 Fairview Avenue North, Seattle, WA(Address of principal executive offices) |  | 98109(Zip code)                               
|(Registrant's telephone number including area code)                            |  | (206) 624-3900                                

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

|TitleCommon Stock, Par Value $1 per Share |  | Outstanding11,045,095 as of January 31, 2002
|----------------------------------------- |  | --------------------------------------------

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CASCADE NATURAL GAS CORPORATION    Index

|          |  |                       |  |                                                                                       |  | Page No.
|--------- |  | --------------------- |  | ------------------------------------------------------------------------------------- |  | --------
|Part I.   |  | Financial Information |  |                                                                                      
|          |  | Item 1.               |  | Financial Statements                                                                  |  |         
|          |  |                       |  | Consolidated Condensed Statements of Income                                           |  | 3       
|          |  |                       |  | Consolidated Condensed Balance Sheets                                                 |  | 4       
|          |  |                       |  | Consolidated Condensed Statements of Cash Flows                                       |  | 6       
|          |  |                       |  | Notes to Consolidated Condensed Financial Statements                                  |  | 7       
|          |  | Item 2.               |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 9       
|          |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 11      
|Part II.  |  | Other Information     |  |                                                                                      
|          |  | Item 2.               |  | Changes in Securities                                                                 |  | 12      
|          |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders.                                  |  | 12      
|          |  | Item 5.               |  | Other Information                                                                     |  | 12      
|          |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                      |  | 13      
|Signature |  | 14                   

2

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PART I. Financial Information

Item 1. Financial Statements

CASCADE NATURAL GAS CORPORATION  CONSOLIDATED CONDENSED STATEMENTS OF INCOME  (unaudited)

|                                           |                               | THREE MONTHS ENDED
|------------------------------------------ | ----------------------------- | ------------------
|
|
|Operating revenues                         |                               | $                 
|Less: Gas purchases                        |                               |                   
|                                           |                               | Revenue taxes     
|                                           |                               |                   
|Operating margin                           |                               |                   
|                                           |                               |                   
|Cost of operations:                        |                               |                   
|                                           | Operating expenses            |                   
|                                           | Depreciation and amortization |                   
|                                           | Property and payroll taxes    |                   
|                                           |                               |                   
|                                           |                               |                   
|                                           |                               |                   
|Income from operations                     |                               |                   
|Less interest and other deductionsnet     |                               |                   
|                                           |                               |                   
|Income before income taxes                 |                               |                   
|Income taxes                               |                               |                   
|                                           |                               |                   
|Net Income                                 |                               | $                 
|                                           |                               |                   
|Weighted average common shares outstanding |                               |                   
|Net earnings per common share              |                               |                   
|                                           | Basic                         |                   
|                                           |                               |                   
|                                           | Diluted                       |                   
|                                           |                               |                   
|Cash dividends per share                   |                               | $                 
|                                           |                               |                   

The
accompanying notes are an integral part of these financial statements

3

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CASCADE NATURAL GAS CORPORATION  CONSOLIDATED CONDENSED BALANCE SHEETS  (Dollars in Thousands)

|                                                                        |                                                                                                                           | Dec 31, 2001 |         | Sep 30, 2001
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------ | ------- | ------------
|
|ASSETS                                                                  |                                                                                                                           |              |         |             
|Utility Plant, net of accumulated depreciation of $205,233 and $201,530 |                                                                                                                           | $            | 287,563 |             
|                                                                        | Construction work in progress                                                                                             |              |         | 7,794       
|                                                                        |                                                                                                                           |              |         |             
|                                                                        |                                                                                                                           |              | 295,357 |             
|                                                                        |                                                                                                                           |              |         |             
|Other Assets:                                                           |                                                                                                                           |              |         |             
|                                                                        | Investments in non-utility property                                                                                       |              |         | 202         
|                                                                        | Notes receivable, less current maturities                                                                                 |              |         | 287         
|                                                                        |                                                                                                                           |              |         |             
|                                                                        |                                                                                                                           |              | 489     |             
|                                                                        |                                                                                                                           |              |         |             
|Current Assets:                                                         |                                                                                                                           |              |         |             
|                                                                        | Cash and cash equivalents                                                                                                 |              |         | 4,016       
|                                                                        | Accounts receivable and current maturities of notes receivable, less allowance of $1,568 and $1,421 for doubtful accounts |              |         | 48,697      
|                                                                        | Materials, supplies and inventories                                                                                       |              |         | 9,867       
|                                                                        | Prepaid expenses and other assets                                                                                         |              |         | 4,088       
|                                                                        | Deferred income taxes                                                                                                     |              |         | 577         
|                                                                        |                                                                                                                           |              |         |             
|                                                                        |                                                                                                                           |              | 67,245  |             
|                                                                        |                                                                                                                           |              |         |             
|Deferred Charges                                                        |                                                                                                                           |              |         |             
|                                                                        | Gas cost changes                                                                                                          |              |         | 24,717      
|                                                                        | Other                                                                                                                     |              |         | 9,504       
|                                                                        |                                                                                                                           |              |         |             
|                                                                        |                                                                                                                           |              | 34,221  |             
|                                                                        |                                                                                                                           |              |         |             
|                                                                        |                                                                                                                           | $            | 397,312 |             
|                                                                        |                                                                                                                           |              |         |             

4

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CASCADE NATURAL GAS CORPORATION  CONSOLIDATED CONDENSED BALANCE SHEETS (continued)  (Dollars in Thousands)

|                                                              |                                                                                                              | Dec 31, 2001 |         | Sep 30, 2001 |  
|------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ------------ | ------- | ------------ | -
|
|COMMON SHAREHOLDERS' EQUITY,
PREFERRED STOCKS AND LIABILITIES |                                                                                                              |              |         |              |  
|Common Shareholders' Equity:                                  |                                                                                                              |              |         |              |  
|                                                              | Common stock, par value $1 per share, authorized 15,000,000 shares, issued and outstanding 11,045,095 shares |              | $       | 11,045       |  
|                                                              | Additional paid-in capital                                                                                   |              |         | 97,380       |  
|                                                              | Accumulated other comprehensive income (loss)                                                                |              |         | (4,161       | )
|                                                              | Retained earnings                                                                                            |              |         | 20,962       |  
|                                                              |                                                                                                              |              |         |              |  
|                                                              |                                                                                                              |              | 125,226 |              |  
|                                                              |                                                                                                              |              |         |              |  
|Long-term Debt                                                |                                                                                                              |              | 165,000 |              |  
|                                                              |                                                                                                              |              |         |              |  
|Current Liabilities:                                          |                                                                                                              |              |         |              |  
|                                                              | Notes payable and commercial paper                                                                           |              |         | 9,500        |  
|                                                              | Accounts payable                                                                                             |              |         | 29,655       |  
|                                                              | Property, payroll and excise taxes                                                                           |              |         | 7,334        |  
|                                                              | Dividends and interest payable                                                                               |              |         | 5,435        |  
|                                                              | Other current liabilities                                                                                    |              |         | 8,531        |  
|                                                              |                                                                                                              |              |         |              |  
|                                                              |                                                                                                              |              | 60,455  |              |  
|                                                              |                                                                                                              |              |         |              |  
|Deferred Credits and Other                                    |                                                                                                              |              | 46,631  |              |  
|                                                              |                                                                                                              |              |         |              |  
|Commitments and Contingencies                                 |                                                                                                              |              |        |              |  
|                                                              |                                                                                                              |              |         |              |  
|                                                              |                                                                                                              | $            | 397,312 |              | $
|                                                              |                                                                                                              |              |         |              |  

The
accompanying notes are an integral part of these financial statements

5

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CASCADE NATURAL GAS CORPORATION  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  (Unaudited)

|                                          |                                                                                   | THREE MONTHS ENDED                        |      
|----------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------- | -----
|
|
|Operating Activities                      |                                                                                   |                                           |      
|                                          | Net income                                                                        |                                           | $    
|                                          | Adjustments to reconcile net income to net cash provided by operating activities: |                                           |      
|                                          |                                                                                   | Depreciation and amortization             |      
|                                          |                                                                                   | Deferrals of gas cost changes             |      
|                                          |                                                                                   | Amortization of gas cost changes          |      
|                                          |                                                                                   | Other deferrals and amortizations         |      
|                                          |                                                                                   | Deferred income taxes and tax creditsnet |      
|                                          |                                                                                   | Change in current assets and liabilities  |      
|                                          |                                                                                   |                                           |      
|                                          | Net cash provided by operating activities                                         |                                           |      
|                                          |                                                                                   |                                           |      
|Investing Activities                      |                                                                                   |                                           |      
|                                          | Capital expenditures                                                              |                                           |      
|                                          | Customer contributions in aid of construction                                     |                                           |      
|                                          | Other                                                                             |                                           |      
|                                          |                                                                                   |                                           |      
|                                          | Net cash used by investing activities                                             |                                           |      
|                                          |                                                                                   |                                           |      
|Financing Activities                      |                                                                                   |                                           |      
|                                          | Redemption of preferred stock                                                     |                                           |      
|                                          | Proceeds from long-term debt, net                                                 |                                           |      
|                                          | Changes in notes payable and commercial paper, net                                |                                           |      
|                                          | Dividends paid                                                                    |                                           |      
|                                          |                                                                                   |                                           |      
|                                          | Net cash provided by financing activities                                         |                                           |      
|                                          |                                                                                   |                                           |      
|Net Increase in Cash and Cash Equivalents |                                                                                   |                                           | 3,594
|Cash and Cash Equivalents                 |                                                                                   |                                           |      
|                                          | Beginning of year                                                                 |                                           |      
|                                          |                                                                                   |                                           |      
|                                          | End of period                                                                     |                                           | $    
|                                          |                                                                                   |                                           |      

The
accompanying notes are an integral part of these financial statements

6

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CASCADE NATURAL GAS CORPORATION  NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  THREE MONTHS ENDED DECEMBER 31, 2001

The preceding statements were taken from the books and records of the Company and reflect all adjustments which are, in the opinion of management, necessary for a
fair statement of the results for the interim periods. All adjustments were of a normal and recurring nature. Because of the highly seasonal nature of the natural gas distribution business, earnings
or loss for any portion of the year are disproportionate in relation to the full year.

Reference
is directed to the Notes to Consolidated Financial Statements contained in the 2001 Annual Report on Form 10-K for the fiscal year ended September 30,
2001, and comments included therein under "Management's Discussion and Analysis of Financial Condition and Results of Operations".

Earnings Per Share.The following table sets forth the calculation of earnings per share as prescribed in FAS No. 128.

Quarter Ended December 312001

2000(in thousands except
per share data)Net Income

$
6,243

$
8,395Weighted average shares outstanding


11,045


11,045Basic earnings per share

$
0.57

$
0.76Weighted average shares outstanding


11,045


11,045Plus: Issued on assumed exercise of stock options


22


4Weighted average shares outstanding assuming dilution


11,067


11,049Diluted earnings per share

$
0.56

$
0.76


Commitments and Contingencies

Gas Service Contracts.During the quarter ended December 31, 2001, the Company terminated all of its gas supply
contracts with Enron based on Enron's insolvency and other reasons, including concerns about its ability to perform. These contracts supplied part of the natural gas portfolio used to serve certain
non-core customers. The supply has been replaced with contracts with other suppliers. Enron Canada Corp., a Canadian entity is disputing Cascade's right to terminate one of the Enron gas
supply contracts. On February 6, 2002, Enron Canada sent a letter to the Company claiming that the Company owes it a termination payment in the amount of $3.7 million. Company management
believes that the Company has no further obligation under the terminated contract and intends to contest Enron Canada's claim.

Other
than the above mentioned contracts to replace supplies that had been available under the Enron contracts, the Company did not enter into any new long-term supply
commitments during the quarter.

Environmental Matters.There are two claims against the Company for as yet unknown costs for clean up of alleged
environmental contamination related to manufactured gas plant sites that were previously operated by companies, which were subsequently merged into Cascade.

7

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The
first claim was received in 1995, and relates to a site in Oregon. An investigation has shown that contamination does exist, but there is currently not enough information available
to estimate the potential liability associated with this claim. It is expected that other parties will participate in the clean
up costs, and negotiations are ongoing as to the sharing arrangement. Through the end of the fiscal year the amounts spent, primarily on investigation and containment, have been immaterial.

The
second claim was received in 1997, and relates to a site in Washington. An investigation has determined there is evidence of contamination at the site, but there is also evidence of
an oil line crossing the property, operated by an unrelated party, which may have also contributed to the contamination. There is currently not enough information available to estimate the potential
liability associated with this claim. The party who originally made this claim has not been actively pursuing it.

Management
intends to pursue reimbursement from its insurance carriers, and recovery from its customers through increased rates, for any remediation costs for which the Company is
determined to be liable. There is precedent for such recovery through increased rates, as both the WUTC and OPUC have previously allowed regulated utilities to increase customer rates to recover
similar costs. No claims now pending, in the opinion of management, are expected to have a material effect on the Company's financial position, results of operations, or liquidity.

Litigation.Various lawsuits, claims, and contingent liabilities may arise from time to time from the conduct of the
Company's business. In 1998, the Company was served with a lawsuit by six plaintiffs, claiming unspecified damages for personal injuries in connection with carbon monoxide exposure. The plaintiffs
were residents of a house served by the Company at the time of the incident. The Company denied any responsibility for these injuries. In November 2001, the parties agreed to a settlement
calling for payments totaling $250,000 to the plaintiffs. This settlement is subject to the approval of the courts. No other claims now pending, in the opinion of management, are expected to have a
material effect on the Company's financial position, results of operations, or liquidity.

8

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is management's assessment of the Company's financial condition and a discussion of the principal factors that affected consolidated results of
operations and cash flows for the three month periods ended December 31, 2001 and December 31, 2000.

RESULTS OF OPERATIONS

Net income for the first quarter of fiscal 2002 (quarter ended December 31, 2001) was $6,243,000, or $0.57 basic earnings per share ($0.56 diluted),
compared to $8,395,000, or $0.76 per share (basic and diluted), for the quarter ended December 31, 2000. This represents a 25% decline in first quarter basic earnings per share from first
quarter 2001 results. The decline in results for the quarter result primarily from lower operating margins combined with increased costs of operations.

Operating Margin

Residential and Commercial Margin.Operating margins derived from sales to residential and commercial customers were as set
forth in the following table:

Residential and Commercial Operating MarginFirst Quarter of FiscalPercent
Change2001

2001(dollars in thousands)Degree Days


2,038


2,308

-11.7
%Average Number of CustomersResidential


167,713


162,342

3.3
%Commercial


28,001


27,648

1.3
%Average Therm Usage per CustomerResidential


268


295

-9.2
%Commercial


1,232


1,443

-14.6
%Operating MarginResidential

$
12,530

$
13,194

-5.0
%Commercial

$
6,895

$
8,218

-16.1
%


For
the quarter ended December 31, 2001, operating margin from sales to residential and commercial customers decreased $1,987,000 from the same period last year. The decline in
these margins is attributable to lower per customer gas usage. Reduced per customer usage negatively affected margins by approximately $2.6 million for the quarter. Per customer gas usage has
been influenced by warmer weather through much of the quarter, conservation efforts that followed last year's western energy crisis, and the national recession. Partially offsetting the decline in per
customer consumption, the addition of 5,724 new customers provided approximately $620,000 margin.

Industrial and Other Margin.Operating margin from industrial customers increased $593,000 quarter to quarter, with much of
the increase coming from the Company's new gas management services. Margin from electric generation customers was $200,000 lower than last year, reflecting abundant hydroelectric availability and a
general reduction in demand for electricity in the West. Margins from gas deliveries to customers other than electric generators were up slightly compared to the first quarter of fiscal 2001,
reflecting the favorable response of industrial customers to current gas costs. Additionally, during the quarter there was $240,000 of margin from off-system pipeline capacity agreements
entered into in fiscal 2001.

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Cost of Operations

Cost of operations for the quarter ended December 31, 2001, which consists of operating expenses, depreciation and amortization, and property and payroll
taxes, increased $2,237,000 or 16% from the quarter ended December 31, 2000.

Operating Expenses,which are primarily labor and benefits expenses, increased $1,864,000, or 21%, for the quarter. Most of the increase
resulted from employee related expenses, including increases in benefit plan expenses, as well as market-rate wage and salary adjustments made in fiscal 2001. Also included are increased
software and plant maintenance costs, and a one-time $250,000 charge for the settlement of the lawsuit referred to in Note 12 to the 2001 financial statements.

Depreciation and Amortizationincreased $297,000, or 8.7%, for the quarter ended December 31, 2001 compared to the same period a
year earlier, as a result of increases in depreciable assets.

Property and Payroll Taxesincreased $76,000, or 6.2%, for the December 2001 quarter compared to a year earlier. The increase is
primarily related to increased wage and salary costs, and higher property assessments.

Interest and Other DeductionsNet

Interest and other deductionsnet, for the quarter was $2,901,000, a $175,000 (6.4%) increase from the December 2000 quarter. Most of the
increase is related to interest on $40 million of debt required due to negative cash flow from the unrecovered gas cost during the winter of October 2000 through March of 2001.

LIQUIDITY AND CAPITAL RESOURCES

The seasonal nature of the Company's business creates short-term cash requirements to finance customer accounts receivable and construction
expenditures. To provide working capital for these requirements, the Company has a $50 million bank revolving credit commitment. This agreement has an annual 0.16% commitment fee with a term
that expires in 2004. The Company also has $25 million of uncommitted lines from two banks. As of December 31, 2001, there was $9.5 million outstanding under the committed line.

To
provide longer-term financing, the Company in 2001 filed an omnibus registration statement under the Securities Act of 1933 providing ability to issue up to
$150 million of new debt and equity securities. On November 26, 2001, the Company issued $40 million of 30-year debt under the omnibus registration statement, leaving
$110 million available under that registration statement for future financing. The proceeds of the $40 million offering were used to pay down outstanding short-term debt. In
addition, the Company still has available $15 million of Medium-Term Notes for issuance under an earlier registration statement.

Because
of the availability of short-term credit and the ability to issue long-term debt and additional equity, management believes it has adequate financial
flexibility to meet its anticipated cash needs.

Operating Activities

Net cash provided by operating activities during the quarter was $2,539,000 compared to $3,737,000 for the December 2000 quarter. Lower net income was the
primary reason for the decrease. Operating cash flow was negatively affected by an $11 million under-recovery of gas costs for the December 2000 quarter. Effective November 1,
2001, the WUTC approved new rates for Washington customers. The new rates reflect a surcharge to recover over a three-year period the gas cost increases incurred and deferred during fiscal
2001. This arrangement is expected to add cash flow of

10

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approximately $10 million per year for the three years, as well as stabilize rates for customers for that period.

Investing Activities

Cash used by investing activities for the quarter ended December 31, 2001 was $4,534,000, compared to $5,221,000 for the prior year's quarter.

Budgeted
capital expenditures for fiscal 2002 are approximately $22.8 million. This budget includes $19 million for new customer connections and distribution system
replacement and reinforcement.

Financing Activities

Net financing activities for the quarter ended December 31, 2001 provided $5,589,000, compared to $5,787,000 for the comparable period last year. The
principal financing activity during the quarter was the issuance of $40 million of new long-term debt. The net proceeds of $38.7 million were used to pay down
short-term debt.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Cascade has evaluated its risk related to financial instruments whose values are subject to market sensitivity. The Company has fixed-rate debt
obligations, but does not have derivative financial instruments subject to interest rate risk. Cascade makes interest and principal payments on these obligations in the normal course of its business,
and does not plan to redeem these obligations prior to normal maturities, except to the extent required under the terms of the Company's $40 million note offering in the case of the death of
the owner of the note.

The
Company's natural gas purchase commodity prices are subject to fluctuations over time resulting from weather, congestion on interstate pipelines, and other unpredictable factors. The
Company has fixed-price contracts covering a substantial portion of natural gas supply requirements of its core customers through September 2004. This strategy is followed to assure
availability of adequate supplies to meet customer needs and to shield the Company and its core customers from price volatility. There is risk that market prices may fall below the price levels
established in the contracts. However the WUTC and the OPUC support the Company's strategy, and have approved rates that reflect the recovery of the contracted prices. Thus the Company believes that
regulatory policy, including Purchased Gas Adjustment mechanisms, assure the recovery of prudently incurred wholesale gas cost, and that the Company's commodity price risk is immaterial. Further, the
Company does not engage in significant energy trading activities.

FORWARD LOOKING STATEMENTS

Statements contained in this report that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially. Such risks and uncertainties with respect to the
Company include, among others, its ability to successfully implement internal performance goals, competition from alternative forms of energy, consolidation in
the energy industry, the failure or inability of key natural gas suppliers to honor their commitments, the capital-intensive nature of the Company's business, regulatory issues, including the need for
adequate and timely rate relief to recover increased capital and operating costs resulting from customer growth and to sustain dividend levels, the weather, increasing competition brought on by
deregulation initiatives at the federal and state regulatory levels, the potential loss of large volume industrial customers due to "bypass" or the shift by such customers to special competitive
contracts at lower per unit margins, exposure to environmental cleanup requirements, and economic conditions, particularly in the Company's service area.

11

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PART II. Other Information

Item 2. Changes in Securities

Under the terms of its bank credit agreement, the Company is required to maintain a minimum tangible net worth of $104,618,000 as of December 31, 2001.
Under this agreement, approximately $15,006,000 was available for payment of dividends at December 31, 2001.

Item 4. Submission of Matters to a Vote of Security Holders

At the annual meeting of shareholders on January 24, 2002, the following directors were elected by the vote indicated for terms of office expiring in 2003:

For

WithheldCarl Burnham, Jr.

9,355,734

144,654Melvin C. Clapp

9,361,882

138,506Thomas E. Cronin

9,369,437

130,951David A. Ederer

9,361,797

138,591Howard L. Hubbard

9,346,304

154,084W. Brian Matsuyama

9,366,616

133,772Larry L. Pinnt

9,354,073

146,315Brooks G. Ragen

9,360,099

140,289Mary Pugh

9,359,015

141,373


In
addition, a proposal to approve an amendment to the Cascade Natural Gas Corporation 1998 Incentive Stock Plan providing for an increase of 300,000 shares of Common Stock subject to
awards was approved by a vote of 8,556,486 for and 943,902 against or withheld.

Item 5. Other Information

Ratio of Earnings to Fixed Charges:

Twelve Months Ended12/31/01

9/30/01

9/30/00

9/30/99

9/30/98

9/30/973.07

3.39

3.12

3.00

2.42

2.68


For
purposes of this calculation, earnings include income before income taxes, plus fixed charges. Fixed charges include interest expense and the amortization of debt issuance expenses.
Refer to Exhibit 12 for the calculation of these ratios, as well as the ratio of earnings to fixed charges including preferred dividends.

Enron Claim:

During the quarter ended December 31, 2001, the Company terminated all of its gas supply contracts with Enron based on Enron's insolvency and other
reasons, including concerns about its ability to perform. These contracts supplied part of the natural gas portfolio used to serve certain non-core customers. The supply has been replaced
with contracts with other suppliers. Enron Canada Corp., a Canadian entity is disputing Cascade's right to terminate one of the Enron gas supply contracts. On February 6, 2002, Enron Canada
sent a letter to the Company claiming that the Company owes it a termination payment in the amount of $3.7 million. Company management believes that the Company has no further obligation under
the terminated contract and intends to contest Enron Canada's claim.

12

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Item 6. Exhibits and Reports on Form 8-K

|No. |  | Description                                      
|--- |  | -------------------------------------------------
|12  |  | Computation of Ratio of Earnings to Fixed Charges

During
the quarter ended December 31, 2001, the following reports were filed on Form 8-K in connection with the issuance by the Company of $40 million
7.5% Notes due November 15, 2031 pursuant to a Registration Statement on Form S-3 (No. 333-69516), which was declared effective on October 11, 2001:

November 16,
2001To report the Registrant's audited consolidated financial statements for the fiscal year ended September 30, 2001.

November 27,
2001To report as exhibits certain documents in connection with the offering.

November 30,
2001To report an additional exhibit in connection with the offering.

13

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|CASCADE NATURAL GAS CORPORATION |  |                                                                                                                     
|------------------------------- |  | --------------------------------------------------------------------------------------------------------------------
|By:                             |  | /s/J. D. WESSLINGJ. D. Wessling Sr. Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
|Date:                           |  | February 14, 2002                                                                                                   

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