Nicor Inc.
                                                      Form 10-K
                                                      Exhibit 10.25





                              1999
              NICOR GAS INCENTIVE COMPENSATION PLAN


A. The 1999 Nicor Gas Incentive Compensation Plan is designed to
   link participant incentive compensation to the accomplishment
   of important objectives-both financial goals and defined
   strategic plans.  It ties the pay an individual receives to
   his performance and that of the company.  This plan is
   intended to provide a flexible framework for a performance
   bonus program for Nicor Gas.

B. Purpose

   The purpose of this Plan is to provide an annual incentive
   plan which supports the longer-term strategic planning
   process.  This is done by linking pay to the performance of
   tasks which focus on objectives of strategic importance.  The
   Plan also encourages teamwork among officer areas and among
   line and staff groups.

C. Eligible Group

   Officers of Nicor Gas in Salary Grades EX-1 or higher are
   eligible for participation.  Participation should be limited
   to those employees in positions which enable them to make
   significant contributions to the performance and growth of
   the company.

D. Components of Plan
   
   Compensation Objective
   Bonus Targets
   Performance Targets
   Goal Setting Guidelines
   Program Schedule
   Form of Payment

   Compensation Objective

   Base Salary + Bonus Target = Short-Term Compensation
   Objective




                                 -2-

   An individual's short-term compensation objective will be
   based on salary plus a bonus, expected to be earned if
   agreed-upon performance targets are met.  Under certain
   conditions, short-term compensation above or below targets
   may be paid.

   Standards for base salaries will be managed at the
   appropriate industry quartile which will be determined by
   survey data.  Bonus targets will be set based on the
   individual's grade level and compensation objective, such
   that total compensation objectives are managed at the level
   as determined by the Compensation Committee to remain
   competitive with industry.

   Bonus Target

   The bonus target amount varies according to pay, salary grade
   and ability to impact the organization.  Higher
   responsibility and pay grade results in greater dollars at
   risk.

   Performance Targets

   Performance criteria focus on the achievement of agreed-upon
   and documented strategic goals.  Performance targets may
   include measures of financial performance, defined group
   objectives or individual performance objectives.  Each
   particular performance target will be assigned weighting
   reflected as a percentage of bonus target.

   Goal Setting Guidelines

   The most important aspect of this Plan will be in
   establishing effective goals.  In addition to the goals which
   will be measured by company financial performance, realistic,
   operational management goals may be established.  As well as
   being realistic, the goals should be measurable wherever
   possible by quantifiable performance criteria.  It is
   recognized that measurement of some goals will require
   subjective assessments of performance.  Goals must be
   consistent with the longer-term strategic plan.
   
   Amount of bonus payment for financial/budget related goals
   can vary above and below target based upon results achieved. 
   For targets met, bonus amount will be 100% of bonus target. 
   When targets are exceeded or are not reached, bonus will be
   proportionately more or less than the target.




                                  -3-

   Project goals which are not quantifiable will be evaluated by
   the Nicor Gas CEO based on performance and will fall into one
   of five categories of achievement:  unsatisfactory; less than
   expected, but acceptable given facts and circumstances;
   expected; more than expected, but less than outstanding; and
   outstanding performance.  Accordingly, performance at, below
   or above expected performance will result in awards relative
   to performance.

   The Compensation Committee may make appropriate upward or
   downward adjustments if, after taking into consideration all
   of the facts and circumstances of the performance period, it
   determines that adjustments are warranted.

   Plan Schedule

   The 1999 Nicor Gas Incentive Compensation Plan runs on a
   calendar year basis, with the strategic planning cycle and
   budgeting process the primary link to performance and bonus
   targets.  Responsibility for determination of financial
   results will be with the Accounting Department.  A program
   for review will be established and project or company goal
   performance will be reviewed at least twice each performance
   year.

   Year-end results should be available and evaluated in January
   of the following year.  Following approval of the
   Compensation Committee and Board at the January meeting,
   bonuses will be payable to participants.

   Form of Payment

   All awards will be paid in cash, except that a participant in
   the Stock Deferral Plan may elect to defer up to 50% of their
   award into that plan.  Deferral elections must meet the
   guidelines and timing of the Stock Deferral Plan to be
   effective.  Appropriate taxes for the entire award amount
   will be withheld from the portion of the award being paid in
   cash.
   
E. Integration with Existing Programs

   Base salaries will be managed with range standards at the
   appropriate industry quartile for comparable positions, with
   total compensation objectives to be managed at a level
   appropriate with the performance of the company within
   industry, as determined by the Compensation Committee. 
   Salaries will be monitored each year and increases granted
   based on merit and range standard.  Bonus targets will be set
   as a percentage of base salary.  A change, other than the
   annual salary review, in the compensation objective will




                                 -4-

   customarily occur during the year only through promotion to
   various levels, at which time the base salary and bonus
   target are also likely to change.

   Promotion of an employee during the year or reassignment to
   responsibilities in which new performance objectives apply
   will result in proration of the existing performance
   objectives and bonus target and assignment of new performance
   objectives and if appropriate, a new bonus target as the
   Compensation Committee shall determine.

   Promotion into an Executive Salary Grade would create
   eligibility for bonus at an amount prorated on a monthly
   basis (i.e., eligible for the plan 9 months - 9/12 of an
   annual bonus).

   If a participant voluntarily terminates or is terminated for
   cause prior to the end of the performance period, then the
   participant will be entitled to no award.  In the event a
   participant shall die, become disabled, or retire before the
   end of the performance period, an award is payable prorated
   on a monthly basis or the Compensation Committee may
   authorize payment of an award to the participant, or
   beneficiary, in such other amount as the Committee deems
   appropriate.

F. Responsibility

   Acceptance and success of this Plan will depend on
   documented, realistic goals that are fair, understandable and
   measurable.  Considerable management focus and involvement
   will be required for goals to be established, communicated
   and monitored.

   The Human Resources Department will be responsible for the
   administration of the system for the company.  This will
   include:

   1) monitoring industry salary and total compensation levels,
   
   2) recommending structural changes in base salary and
      compensation objective adjustments, and,

   3) assisting the Nicor Gas CEO in progress and exception
      reporting to the Compensation Committee.




                                 -5-

   The Nicor Gas CEO shall be responsible for:

   1) reviewing industry salary and compensation levels and
      approving recommendations before presentation to the
      Compensation Committee,

   2) approving structural changes in base salary and
      compensation objective adjustments before presentation to
      the Compensation Committee,

   3) recommending eligibility, performance targets and goals to
      the Compensation Committee,

   4) monitoring performance targets through the Accounting
      Department and other sources of necessary documentation,

   5) communicating progress reports to the participants, and,

   6) reporting performance results and making award
      recommendations to the Compensation Committee.

   The company's 1999 Nicor Gas Incentive Compensation Plan and
   changes to its performance targets and measurement criteria
   will be reviewed and approved by the Compensation Committee.

   In establishing the actual bonus awards to be made, the
   Compensation Committee may take into account all of the facts
   and circumstances which exist during the year and may make
   appropriate upward or downward revisions in performance
   criteria, add or delete objectives, or change the relative
   percentages assigned to the various performance objectives.

G. Amendment and Termination

   The Board of Directors may amend or terminate the Plan at any
   time without the consent of the participants.  No such
   amendment or termination shall negatively impact any
   participant's amount which accrued under the Plan prior to
   the calendar year in which the amendment is made.



                                       NICOR Human Resources
                                           February 1999