SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
Form 10-K


 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997

OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________

<TABLE>
<CAPTION>
<S>            <C>                                     <C>
Commission     Registrant; State of Incorporation;     IRS Employer
 File Number   Address and Telephone Number       Identification No.

1-11603        SIGCORP, Inc.                      35-1940620
               (An Indiana Corporation)
               20 N. W. Fourth Street
               Evansville, Indiana  47741-0001
               (812) 465-5300

1-3553         Southern Indiana Gas and
                Electric Company                  35-0672570
               (An Indiana Corporation)
               20 N. W. Fourth Street
               Evansville, Indiana  47741-0001
               (812) 465-5300
</TABLE>
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
<S>             <C>                               <C>
                                                  Name of each exchange
 Registrant     Title of each class                on which registered

SIGCORP, Inc.   Common Stock, Without Par Value   New York Stock Exchange
                Rights to Purchase Common Stock   New York Stock Exchange

Southern Indiana
Gas and         None
Electric Company
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
<S>             <C>                               <C>
                                           Name of each exchange
 Registrant      Title of each class       on which registered

SIGCORP, Inc.   None

Southern Indiana
Gas and         Cumulative Preferred Stock,       New York Stock Exchange
Electric Co.    $100 Par Value
</TABLE>

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether all Registrants (1) have
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
registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past
90 days: Yes   X   No

At February 27, 1998, the aggregate market values of
SIGCORP, Inc. Common Stock, Without Par Value, and Southern
Indiana Gas and Electric Company Cumulative Preferred Stock,
$100 Par Value, 185,895 shares, held by non-affiliates were
$682,450,804 and $16,334,756, respectively.

As of February 27, 1998, the number of shares outstanding of
each of the Registrants' classes of common stock were:

SIGCORP, Inc.:  Common stock, no par value, 23,630,568
shares

Southern Indiana Gas
 and Electric Company: Common stock, no par value,
23,630,568 shares outstanding and held by SIGCORP, Inc.

           Documents Incorporated by Reference
The Joint Proxy Statement of SIGCORP, Inc. and Southern
Indiana Gas and Electric Company dated March 23, 1998 is
incorporated by reference into Part III of this report.

This combined Form 10-K is separately filed by SIGCORP, Inc.
and Southern Indiana Gas and Electric Company.











<PAGE> 3

<TABLE>
<CAPTION>
                             Table of Contents
<S>   <C>                                                     <C>
Item                                                          Page
Number                                                        Number
                                  Part I
  1   Business                                                    4
  2   Properties                                                 15
  3   Legal Proceedings                                          15
  4   Submission of Matters to Vote of Security Holders          15
                                  Part II
  5   Market for Registrant's Common Equity
        and Related Security Holder Matters                      16
  6   Selected Financial Data                                    17
  7   Management's Discussion and Analysis of Results
      of Operations and Financial Condition                      18
  8   Financial Statements and Supplementary Data                26
  9   Disagreements on Accounting and Financial
        Disclosure                                               61
                                 Part III
 10   Directors and Executive Officers of
        the Registrants                                          61
 11   Executive Compensation and Transactions                    61
 12   Security Ownership of Certain Beneficial
        Owners and Management                                    61
 13   Certain Relationships and Related
        Transactions                                             62
                                  Part IV
 14   Exhibits, Financial Statement Schedules and
        Reports on Form 8-K                                      62
 15   Subsidiaries of the Registrant                             68
 16   Signatures                                                 69
</TABLE>


<PAGE> 4
                           PART I
Item 1.  BUSINESS

SIGCORP and SIGECO

ORGANIZATION

  SIGCORP, Inc. (SIGCORP) is a holding company incorporated
October 19, 1994 under the laws of the State of Indiana.
SIGCORP has ten wholly-owned subsidiaries:  Southern Indiana
Gas and Electric Company (SIGECO), a gas and electric
utility, and nine nonregulated subsidiaries.

  On December 20, 1994, SIGECO's Board of Directors
authorized the steps required for a corporate reorganization
in which a holding company would become the parent of
SIGECO.  SIGECO's shareholders approved the reorganization
at SIGECO's March 28, 1995 annual meeting, and approval by
the Federal Energy Regulatory Commission and the Securities
and Exchange Commission was granted November 7, 1995 and
December 14, 1995, respectively.

  Effective January 1, 1996, the new holding company,
SIGCORP, became the parent of SIGECO, which accounts for
over 90% of SIGCORP's net income, and four of SIGECO's
former wholly-owned nonregulated subsidiaries:  Energy
Systems Group, Inc., Southern Indiana Minerals, Inc.,
Southern Indiana Properties, Inc. and ComSource, Inc.  All
of the shares of SIGECO's common stock were exchanged on a
one-for-one basis for shares of SIGCORP, while all of
SIGECO's debt securities and all of its outstanding shares
of preferred stock remained securities of SIGECO and were
unaffected.  (See "Nonregulated Subsidiaries - General" and
Note 1 of the Notes to Consolidated Financial Statements,
page 43, for further discussion.)

  The reorganization was in response to the changes created
in the electric industry by the Energy Policy Act of 1992
and the need to respond quickly to the more competitive
business environment.  The new structure buffers SIGECO and
its customers from the effects of pursuing nonregulated
opportunities while allowing SIGCORP to engage in closely
related, but historically nonregulated, businesses.
Providing gas and electric utility service to customers
through SIGECO remains the core business and primary focus
of SIGCORP.

SIGECO - GENERAL

  SIGECO is an operating public utility incorporated June
10, 1912, under the laws of the State of Indiana, engaged in
the generation, transmission, distribution and sale of
electric energy and the purchase of natural gas and its
transportation, distribution and sale in a service area
which covers ten counties in southwestern Indiana.

  Electric service is supplied directly to Evansville and
74 other cities, towns and communities, and adjacent rural
areas.  Wholesale electric service is supplied to an
additional eight communities.  At December 31, 1997, SIGECO
served 122,937 electric customers and was also obligated to
provide for firm power commitments to the City of Jasper,
Indiana and to maintain spinning reserve margin requirements
under an agreement with the East Central Area Reliability
Group (ECAR).

  At December 31, 1997, SIGECO supplied gas service to
107,278 customers in Evansville and 64 other nearby
communities and their environs.  Since 1986, SIGECO has
purchased its natural gas supply requirements from numerous
suppliers.  During 1997, forty-five suppliers were used.
Until November 1993,  Texas Gas Transmission Corporation
(TGTC) was SIGECO's primary contract supplier.  In November
1993, TGTC restructured its services so that its gas
supplies would be sold separately from its interstate
transportation services, and SIGECO assumed full
responsibility for the purchase of all its natural gas
supplies.

  The principal industries served by SIGECO include
polycarbonate resin (Lexan) and plastic products, aluminum
smelting and recycling, aluminum sheet products, appliance
manufacturing, pharmaceutical and nutritional products,
automotive glass, gasoline and oil products and coal mining.

<PAGE> 5

  The only property SIGECO owns outside of Indiana is
approximately eight miles of a 138,000 volt electric
transmission line which is located in Kentucky and which
interconnects with Louisville Gas and Electric Company's
transmission system at Cloverport, Kentucky.  The original
cost of the property is less than $425,000.  SIGECO does not
distribute any electric energy in Kentucky.

SIGECO - LINES OF BUSINESS

  The percentages of operating revenues and operating
income before income taxes attributable to the electric and
gas operations of SIGECO for the five years ended December
31, 1997, were as follows:
<TABLE>
<CAPTION>
<S>                              <C>     <C>    <C>    <C>     <C>
                                 Year Ended December 31,
                                 1993    1994   1995   1996    1997
Operating Revenues:
  Electric                       78.4%   79.1%  81.3%  74.2%   76.1%
  Gas                            21.6    20.9   18.7   25.8    23.9

Operating Income Before Income Taxes:
  Electric                       99.5%   90.9%  96.4%  89.0%   87.1%
  Gas                            0.5     9.1    3.6    11.0    12.9
</TABLE>
Reference is made to Note 11 of the Notes to Consolidated
Financial Statements, page 57, for Segments of Business
data.

SIGECO - ELECTRIC BUSINESS

  SIGECO supplies electric service to 122,937 customers,
including 107,046 residential, 15,692 commercial, 176
industrial, 19 public street and highway lighting, and four
municipal customers.

  SIGECO's installed generating capacity as of December 31,
1997 was rated at 1,236,000 kilowatts (Kw).  Coal-fired
generating units provide 1,021,000 Kw of capacity and gas or
oil-fired turbines used for peaking or emergency conditions
provide 215,000 Kw.

  In addition, SIGECO has interconnections with Louisville
Gas and Electric Company, Cinergy Services, Inc.,
Indianapolis Power & Light Company, Hoosier Energy Rural
Electric Cooperative, Inc.,  Big Rivers Electric
Corporation, Wabash Valley Power Association, and the City
of Jasper, providing an ability to simultaneously
interchange approximately 750,000 Kw.

  Record-breaking peak conditions occurred on July 14,
1997, when SIGECO's system summer peak load reached
1,022,700 Kw.  SIGECO's total load, including its firm power
commitments to the City of Jasper, Indiana, for each of the
years 1993 through 1997 at the time of the system summer
peak, and the related reserve margin, are presented below.

<TABLE>
<CAPTION>
<S>                    <C>        <C>        <C>        <C>      <C>
Date of Summer Peak
Load                   7-28-93    7-20-94    8-17-95    8-21-96   7-14-97
Company System Peak
Load (Kw)              1,012,700  992,000    1,021,000  999,800   1,022,700
Firm Power Commit-
ments at Peak          55,300     42,000     60,800     53,500    63,700
Total at Peak          1,068,000  1,034,000  1,081,800  1,053,300 1,086,400

Total Generating
 Capability (Kw)       1,238,000  1,238,000  1,236,000  1,236,000 1,236,000
Reserve Margin at Peak 16%        20%        14%        17%       14%
</TABLE>

<PAGE> 6
  An all-time record winter peak load of 823,700 Kw
occurred during the 1996-1997 season on January 14, 1997,
and was 5.2% greater than the previous winter peak of
783,700 Kw reached on February 2, 1996.

  SIGECO, primarily as agent of Alcoa Generating
Corporation (AGC), operates the Warrick Generating Station,
a coal-fired steam electric plant which interconnects with
SIGECO's system and provides power for the Aluminum Company
of America's Warrick Operations, which includes aluminum
smelting and fabricating facilities.  Of the four turbine
generators at the plant, Warrick Units 1, 2 and 3, with a
capacity of 144,000 Kw each, are owned by AGC.  Warrick Unit
4, with a rated capacity of 270,000 Kw, is owned by SIGECO
and AGC as tenants in common, each having shared equally in
the cost of construction and sharing equally in the cost of
operation and in the output.

  SIGECO (a summer peaking utility) has an agreement with
Hoosier Energy Rural Electric Cooperative, Inc. (Hoosier
Energy) for the sale of firm peaking power to Hoosier Energy
during the annual winter heating season (November 15-March
15).  The contract made available 200 Mw during the 1997-1998
winter season, and allows for a possible increase to
250 Mw by November 15, 1998.  The contract will terminate
March 15, 2000.

  Electric generation for 1997 was fueled by coal (99.4%)
and natural gas (0.6%).  Oil was used only for testing of
gas/oil fired peaking units.

  Historically, coal for SIGECO's Culley Generating Station
and Warrick Unit 4 has been purchased from operators of
nearby Indiana strip mines pursuant to long-term contracts.
During 1991, SIGECO pursued negotiations for new contracts
with these mine operators and while doing so, purchased coal
from the respective operators under interim agreements.  In
October 1992, SIGECO finalized a new supply agreement
effective through 1995 and retroactive to 1991, with one of
the operators under which coal was supplied to both
locations.  Included in the agreement was a provision
whereby the contract could be reopened by SIGECO for
modification of certain coal specifications.  In early 1993,
SIGECO reopened the contract for such modifications.
Effective July 1, 1993, SIGECO bought out the remainder of
its contractual obligations with the supplier, enabling
SIGECO to acquire lower-priced spot market coal.  SIGECO
estimated the savings in coal costs during the 1991-1995
period, net of the total buy out costs, approximated $59
million.  The net savings were  passed back to SIGECO's
electric customers through the fuel adjustment clause.  The
coal supplier retained the right of first refusal to supply
Warrick Unit 4 and the Culley plant during the years 1996-2000.
The coal used in these plants is blended, when
necessary, to meet specifications set in conformance with
the requirements of the Indiana State Implementation Plan
for sulfur dioxide issued under Federal laws regulating air
quality (Clean Air Act).  Approximately 1,453,000 tons of
coal were used during 1997 in the generation of electricity
at the Culley Station and Warrick Unit 4.  Culley Units 2
and 3 were recently equipped with flue gas desulfurization
equipment as part of the Clean Air Act Compliance Plan.
(See  "Environmental Matters", page 11, for further
discussion.)   SIGECO's remaining long-term contract coal
supplier supplied the A. B. Brown Generating Station.  On
April 10, 1995, SIGECO reached an agreement with this coal
supplier, effective July 16, 1995, to buy out the remainder
of SIGECO's contractual obligations, enabling it to acquire
lower-priced spot market coal for all coal-fired generation.
SIGECO estimates the total savings in coal costs resulting
from the buyout, net of total buyout costs, will approximate
$58 million through December 31, 1998, the term of the
original contract.  The net savings from this coal contract
renegotiation are also being passed back to SIGECO's
electric customers through the fuel adjustment clause.  The
amount of coal burned at A. B. Brown Generating Station
during 1997 was approximately 1,401,000 tons.  Both units at
the generating station are equipped with flue gas
desulfurization equipment so that coal with a higher sulfur
content can be used.  There are substantial coal reserves in
the southern Indiana area.  (See "SIGCORP Fuels, Inc." in
Item 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION, page 23, for discussion
of a new coal supply initiative.)  The average cost
(including contract buyout costs) of coal consumed in
generating electrical energy for the years 1993 through 1997
was as follows:

<PAGE> 7

                                         Average Cost
           Average Cost  Average Cost    Per Kwh
   Year    Per Ton        Per MMBTU      (In Mills)
   1993    $  32.56      $ 1.46          15.66
   1994       31.86        1.42          14.91
   1995       30.02        1.33          14.10
   1996       26.01        1.16          12.40
   1997       20.75        0.91          9.80

  The Broadway Turbine Units 1 and 2, Northeast Gas
Turbines and A. B. Brown Gas Turbine, when used for peaking,
reserve or emergency purposes, use natural gas for fuel.
Number 2 fuel oil can also be used in the Broadway Turbine
Units and the Brown Gas Turbine.

  All metered electric rates contain a provision for
adjustment in charges for electric energy to reflect changes
in the cost of fuel and the net energy cost of purchased
power through the operation of a fuel adjustment clause
unless certain criteria contained in the regulations are not
met.  Effective April 26, 1995, the principal restriction to
recovery of fuel cost increases is that such recovery is not
allowed to the extent that total operating income for the
60-month period including the twelve-month period provided
in the fuel cost adjustment filing exceeds the total
operating income authorized by the Indiana Utility
Regulatory Commission (IURC) during the same 60-month
period.  Prior to April 26, 1995, the operating income test
period was the twelve-month period provided in the fuel cost
adjustment filing.  During 1995-1997, neither restriction
affected SIGECO.  As prescribed by order of the IURC, the
adjustment factor is calculated based on the estimated cost
of fuel and the net energy cost of purchased power in a
designated future quarter.  The order also provides that any
over- or underrecovery caused by variances between estimated
and actual cost in a given quarter will be included in the
second succeeding quarter's adjustment factor.  This
continuous reconciliation of estimated incremental fuel
costs billed with actual incremental fuel costs incurred
closely matches revenues to expenses.

  See "Rate and Regulatory Matters" in Item 7, MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, page 20, and Note 2 of the Notes to
Consolidated Financial Statements, page 50, for discussion
of SIGECO's general adjustments in electric rates.

  SIGECO participates in research and development in which
the primary goal is cost savings through the use of new
technologies.  This is accomplished, in part, through the
efforts of the Electric Power Research Institute (EPRI).  In
1997, SIGECO paid $761,000 to EPRI to help fund research and
development programs such as advanced clean coal burning
technology.

  SIGECO is participating with 14 other electric utility
companies through Ohio Valley Electric Corporation (OVEC) in
arrangements with the United States Department of Energy
(DOE), to supply the power requirements of the DOE plant
near Portsmouth, Ohio.  The sponsoring companies are
entitled to receive from OVEC, and are obligated to pay for,
any available power in excess of the DOE contract demand.
The proceeds from the sale of power by OVEC are designed to
be sufficient to meet all of its costs and to provide for a
return on its common stock.  During 1997, SIGECO's
participation in the OVEC arrangements was 1.5%.

  SIGECO participates with 32 other utilities and other
affiliated groups located in eight states comprising the
east central area of the United States, in the East Central
Area Reliability group, the purpose of which is to
strengthen the area's electric power supply reliability.

SIGECO - GAS BUSINESS

  SIGECO supplies natural gas service to 107,278 customers,
including 97,671 residential, 9,386 commercial and 222
industrial customers, through 2,870 miles of gas
transmission and distribution lines.

<PAGE> 8
  SIGECO owns and operates three underground gas storage
fields with an estimated ready delivery from storage of 3.9
million Dth of gas.  Natural gas purchased from SIGECO's
suppliers is injected into these storage fields during
periods of light demand which are typically periods of lower
prices.  The injected gas is then available to supplement
the  contracted volumes during periods of peak requirements.
It is estimated that approximately 119,000 Dth of gas per
day can be withdrawn from the three storage fields during
peak demand periods on the system.

  The gas procurement practices of SIGECO and several of
its major customers have been altered significantly during
the past twelve years as a result of changes in the natural
gas industry.  In 1985 and prior years, SIGECO purchased
nearly its entire gas requirements from TGTC compared to
1997 when a total of 45 suppliers sold gas to SIGECO.  In
total, SIGECO purchased 16,262,033 Dth in 1997. In November
1993, TGTC restructured its services so that its gas
supplies would be sold separately from its interstate
transportation services, and SIGECO assumed full
responsibility for the purchase of all its natural gas
supplies.  During 1997, forty-nine of SIGECO's major gas
customers utilized SIGECO's gas transportation program to
procure a portion of their gas supply needs from suppliers
other than SIGECO.  A total of 14,548,909 Dth, 50% of total
gas throughput, was transported for these major customers in
1997 compared to 11,801,376 Dth transported in 1996.  SIGECO
receives fees for the use of its facilities in transporting
such gas.

  See "Rate and Regulatory Matters" in Item 7, MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, page 20, for discussion of SIGECO's
general adjustment in gas rates during 1996.

  The all-time record send out occurred during the 1993-1994
winter season on January 18, 1994, when 247,449 Dth of
gas were delivered to SIGECO's customers.  Of this amount,
97,946 Dth was purchased, 106,558 Dth was taken out of
SIGECO's three underground storage fields, and 42,945 Dth
was transported to customers under transportation
agreements.  The 1996-1997 winter season peak day send out
was 193,103 Dth on December 5, 1997.

  The average cost per Dth of gas purchased by SIGECO
during the past five calendar years was as follows:   1993,
$2.85; 1994, $2.54; 1995, $2.48; 1996, $3.47; and 1997,
$3.25.

  The State of Indiana has established procedures which
result in SIGECO passing on to its customers the changes in
the cost of gas sold unless certain criteria contained in
the regulations are not met.  Effective April 26, 1995, the
principal restriction to recovery of gas cost increases is
that such recovery is not allowed to the extent that total
operating income for the 60-month period including the
twelve-month period provided in the gas cost adjustment
filing exceeds the total operating income authorized by the
IURC during the same 60-month period.  Prior to April 26,
1995, the operating income test period was the twelve-month
period provided in the gas cost adjustment filing.  During
1995-1997, neither restriction  affected SIGECO.
Additionally, these procedures provide for scheduled
quarterly filings and IURC hearings to establish the amount
of price adjustments for a designated future quarter.  The
procedures also provide for inclusion in a later quarter of
any variances between estimated and actual costs of gas sold
in a given quarter.  This reconciliation process with regard
to changes in the cost of gas sold closely matches revenues
to expenses.  SIGECO's rate structure does not include a
weather normalization-type clause whereby a utility would be
authorized to recover the gross margin on sales established
in its last general rate case, regardless of actual weather
patterns.

  Natural gas research is supported by SIGECO through the
Gas Research Institute in cooperation with the American Gas
Association.  Since passage of the Natural Gas Act of 1978,
a major effort has gone into promoting gas exploration by
both conventional and unconventional sources.  Efforts
continue through various projects to extract gas from tight
gas sands, shale and coal.  Research is also directed toward
the areas of conservation, safety and the environment.

<PAGE> 9


SIGCORP

NONREGULATED SUBSIDIARIES - GENERAL

  In addition to its wholly-owned utility subsidiary,
SIGECO, SIGCORP has nine wholly-owned nonutility
subsidiaries, of which eight were active by December 1997.
Southern Indiana Properties, Inc., formed in 1986, invests
in leveraged leases of real estate and equipment, real
estate partnerships and joint ventures and private placement
subordinated debt instruments.  Energy Systems Group, Inc.,
incorporated in April 1994, has a one-third ownership in
Energy Systems Group, LLC, an energy-related performance
contracting firm serving industrial and commercial
customers.  Southern Indiana Minerals, Inc., incorporated in
May 1994, processes and markets coal combustion by-products.
ComSource, Inc., incorporated in June 1995, markets
telecommunications services.  SIGCORP Energy Services, Inc.,
incorporated in October 1996, was established to market
energy and related services and currently provides natural
gas, pipeline management, storage service and other natural
gas-related services to SIGECO and other customers.  SIGCORP
Capital, Inc., also incorporated in October 1996, is the
primary financing vehicle for SIGCORP's nonregulated
subsidiaries.  SIGCORP Fuels, Inc., incorporated in December
1996, was formed to provide coal and related services to
SIGECO and other customers.  SIGCORP Power Marketing, Inc.,
also incorporated in December 1996, but not yet active, was
formed to procure electric power supplies for SIGECO and
other customers, and will market SIGECO's excess electric
generation capacity.  SIGCORP Communications Services, Inc.,
incorporated in August 1997, was formed to undertake
telecommunications related strategic initiatives.  (See Note
1 of the Notes to Consolidated Financial Statements, page
43, for further discussion.)

SIGCORP and SIGECO

PERSONNEL

  The holding company, SIGCORP, had no employees as of
December 31, 1997.

  SIGECO's network of gas and electric operations directly
involves 788 employees with an additional 160 employed at
Alcoa's Warrick Power Plant.  Alcoa reimburses SIGECO for
the entire cost of the payroll and associated benefits at
the Warrick Plant, with the exception of one-half of the
payroll costs and benefits allocated to Warrick Unit 4,
which is jointly owned by SIGECO and Alcoa.  The total
payroll and benefits for SIGECO employees in 1997 (including
all Warrick Plant employees) were $54.6 million.  In 1996,
total payroll and benefits were $53.4 million.

  On July 1, 1994, SIGECO signed a new four-year contract
with Local 702 of the International Brotherhood of
Electrical Workers.  The contract provides for annual wage
increases of 3.5%, 3.5%, 3.75% and 4.0%.  Improvements in
productivity, work practices and the pension plan are also
included, along with initiatives to increase
labor/management cooperation.  Additionally, SIGECO's
Hoosier Division signed a five-year labor contract with
Local 135 of the Teamsters, Chauffeurs, Warehousemen and
Helpers.  The contract provides for annual wage increases of
3.5%, 3.5%, 3.75%, 4.0% and 4.0%.  Also included are
improvements in health care coverage costs and pension
benefits.

  As of December 31, 1997, Southern Indiana Properties,
Inc. had 2 employees; Energy Systems Group, Inc. had 18
employees; Southern Indiana Minerals, Inc. had 8 employees;
ComSource, Inc. had 14 employees;  SIGCORP Energy Services,
Inc. had 9 employees; SIGCORP Communications, Inc. had 3
employees; and SIGCORP Fuels, Inc. had 2 employees.  SIGCORP
Capital, Inc. and SIGCORP Power Marketing, Inc. had no
employees as of December 31, 1997.  There were no labor
organizations representing employees of the nonregulated
entities.

CONSTRUCTION PROGRAM AND FINANCING

  SIGCORP's demand for capital is primarily related to
SIGECO's construction of utility plant and equipment
necessary to meet customers' electric and gas energy needs,
as well as environmental compliance requirements.  See
"Liquidity and Capital Resources" in Item 7, MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

<PAGE> 10
AND FINANCIAL CONDITION, page 24, for discussion of
construction expenditures and financing during 1997.

  For 1998, SIGECO's construction expenditures are
presently estimated to be $70 million.  Expenditures in the
power production area are expected to total $25.2 million.
The balance of the 1998 construction program consists of
$20.3 million for additions and improvements to other
electric system facilities, $10 million for additions and
improvements to the gas system, $13.3 million for several
strategic information systems and for common utility plant
buildings and equipment, and $1.2 million for demand side
management (DSM) programs.

  In keeping with SIGECO's objective to bring new
facilities on line as needed, the construction program and
amount of scheduled expenditures are reviewed periodically
to factor in load growth projections, system planning
requirements, environmental compliance and other
considerations.  As a result of this program of periodic
review, construction expenditures may change in the future
from the program as presented herein.

  Currently it is estimated that SIGECO's construction
expenditures will total about $315 million, including
allowance for funds used during construction,  for the years
1998-2002 as follows: 1998 - $70 million; 1999 - $63
million; 2000 - $60 million; 2001 - $56 million and 2002 -
$66 million.  This construction program reflects
approximately $14.5 million for the design and
implementation of several comprehensive information systems
initiated in 1996 and $4.5 million for DSM programs, but
excludes construction expenditures that may be required to
comply with new federal Environmental Protection Agency
(EPA) air quality standards discussed under "Environmental
Matters."  While SIGCORP expects the majority of SIGECO's
construction requirements to be provided by internally
generated funds, external financing requirements of $60-70
million are anticipated and will be used primarily to redeem
an estimated $57 million of the total $65.6 million of
SIGCORP long-term debt redemptions anticipated during the
five year period.

REGULATION

  Because of its ownership of SIGECO, SIGCORP is a "Holding
Company" as defined by the Public Utility Holding Company
Act of 1935 (PUHCA).  Furthermore, SIGECO is also a "Holding
Company" as defined by PUHCA due to SIGECO's ownership of
33% of Community Natural Gas Company.  Both SIGCORP and
SIGECO are exempt from regulation under the PUHCA except for
the provisions of Section 9(A)(2), which pertain to
acquisitions of other utilities.

  Operating as a public utility under the laws of Indiana,
SIGECO is subject to regulation by the Indiana Utility
Regulatory Commission as to its rates, services, accounts,
depreciation, issuance of securities, acquisitions and sale
of utility properties or securities, and in other respects
as provided by the laws of Indiana. See subsequent
discussion under "Competition" regarding the restructuring
of the electric utility industry and possible deregulation
of certain segments or functions of electric utility
service.

  In addition, SIGECO is subject to regulation by the
Federal Energy Regulatory Commission with respect to the
sale and transmission of electric energy in interstate
commerce, its rates for sales for resale, interconnection
agreements with other utilities, the classification of its
accounts and the acquisition and sale of utility property in
certain circumstances as provided by the Federal Power Act.

  See "SIGECO-Electric Business", page 5 and "SIGECO-Gas
Business", page 7 for further discussion regarding
regulatory matters.

  SIGECO is subject to regulations issued pursuant to
federal and state laws, pertaining to air and water
pollution control.  The economic impact of compliance with
these laws and regulations is substantial, as discussed in
detail under "Environmental Matters."  SIGECO is also
subject to multiple regulations issued by both federal and
state commissions under the Federal Public Utility
Regulatory Policies Act of 1978.

<PAGE> 11

COMPETITION

  As part of its efforts to develop a national energy
strategy, Congress amended PUHCA and the Federal Power Act
by enacting the National Energy Policy Act of 1992 (NEPA),
which will affect the traditional structure of the electric
utility industry.   As a result of changes brought about by
NEPA, SIGECO competes with other utilities and wholesale
generators for sales of electricity to existing wholesale
customers of SIGECO and other potential wholesale customers.
SIGECO currently competes with other utilities in connection
with intersystem bulk power sales.  SIGECO does not
presently compete for retail electric or gas customers with
the other utilities within its assigned service areas.
However, various federal and state legislators, including
members of the Indiana General Assembly, have introduced
proposed legislation addressing retail wheeling and other
related issues.  Under the proposed legislation, the
electric generation function (and the marketing function
under some proposals) would be subject to competition and
deregulated, while other functions such as transmitting and
distributing power, would continue to be regulated.  See
"Competition" in Item 7, MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION,
page 21, for discussion of the major changes effected by
NEPA and FERC Orders 888 and 889, issued during 1996; the
status of related recently proposed Indiana legislation; and
further discussion of the deregulation of the electric
industry and possible further deregulation of the natural
gas industry.

  Some of SIGECO's gas customers have, or in the future
could acquire, access to energy sources other than those
available through SIGECO.  (See "SIGECO-Gas Business", page
7, for discussion of gas transportation.)  Although federal
statute allows for bypass of a local distribution company,
Indiana law disallows bypass in most cases and SIGECO would
likely litigate such an attempt in the Indiana courts.
There is also increasing interest in research on the
development of sources of energy other than those in general
use.  Such competition from other energy sources has not
been a material factor to SIGECO in the past.  SIGECO is
unable, however, to predict the extent of competition in the
future or its potential effect on SIGECO's operations.

ENVIRONMENTAL MATTERS

  Testing of five of the six sites utilized for the
manufacture of gas by predecessors of SIGECO was
substantially completed in 1995.  The sixth, and last, site
is currently being investigated.  Under current regulations,
no remedial action is necessary or required unless the soil
is disturbed.  If remediation efforts are required in the
future, SIGECO estimates the related costs would not exceed
$350,000 on a current basis.  At the present time, SIGECO
does not anticipate that remediation efforts will be
required at any of these sites and therefore has not
provided for such costs.  If, however, significant remedial
action is required on the sixth, or any other sites, SIGECO
will seek recovery of all related costs in excess of amounts
recovered from other potentially responsible parties or
insurance carriers, through rates.  SIGECO has not been
named a potentially responsible party by the federal EPA for
these, or any other, sites.

  SIGECO is subject to federal, state and local regulations
with respect to environmental matters, principally air,
solid waste and water quality.  Pursuant to environmental
regulations, SIGECO is required to obtain operating permits
for the electric generating plants which it owns or operates
and construction permits for any new plants which it might
propose to build.  Regulations concerning air quality
establish standards with respect to both ambient air quality
and emissions from SIGECO's facilities, including
particulate matter, sulfur dioxide and nitrogen oxides.
Regulations concerning water quality establish standards
relating to intake and discharge of water from SIGECO's
facilities, including water used for cooling purposes in
electric generating facilities.  Because of the scope and
complexity of these regulations, SIGECO is unable to predict
the ultimate effect of such regulations on its future
operations, nor is it possible to predict what other
regulations may be adopted in the future.  SIGECO intends to
comply with all applicable valid governmental regulations,
but will contest any regulation it deems to be unreasonable
or impossible to comply with or which is otherwise invalid.

  The implementation of federal and state regulations
designed to protect the environment, including those
hereinafter referred to, involves or may involve review,
certification or issuance of permits by federal and state
agencies.  Compliance with such regulations may limit or
prevent certain operations or substantially increase the
cost of operation of

<PAGE> 12
existing and future generating installations, as well as
seriously delay or increase the cost of future construction.
Such compliance may also require substantial investments
above those amounts stated under "Construction Program and
Financing", page 9.

  All existing SIGECO electric generation facilities have
operating permits from the Indiana Department of
Environmental Management or other agencies having
jurisdiction.  In order to secure approval for these
permits, SIGECO had installed electrostatic precipitators on
all coal-fired units and is operating flue gas
desulfurization (FGD) units to remove sulfur dioxide from
the flue gas at its A. B. Brown Units 1 and 2 generating
facilities.  The FGD units at the Brown Station remove most
of the sulfur dioxide from the flue gas emissions by way of
a scrubbing process, thereby allowing SIGECO to burn high
sulfur southern Indiana coal at the station.

  In October 1990, the U.S. Congress adopted major
revisions to the Federal Clean Air Act.  The revisions
require reduction in emissions of sulfur dioxide (SO2) and
nitrogen oxide (NOX) from coal-burning electric generating
facilities, including those owned and operated by SIGECO.
Two of SIGECO's principal coal-fired facilities (A. B. Brown
Units 1 and 2, totaling 500 megawatts of capacity) were
equipped with sulfur dioxide removal equipment (scrubbers)
and were not  severely affected by the new legislation.
However, 523 megawatts of SIGECO's coal-fired generating
capacity were significantly impacted by the lower emission
requirements.  SIGECO was required to reduce total emissions
from Culley Unit 3 (250 megawatts), Warrick Unit 4 (135
megawatts) and Culley Unit 2 (92 megawatts) by approximately
50% to 2.5 lb/MMBTU by January 1995 (Phase I) and to 1.2
lb/MMBTU by January 2000 (Phase II).  SIGECO met all of the
Phase I emission requirements and some of the Phase II
requirements by January 1995 with the implementation of its
Clean Air Act Compliance Plan which includes equipping
Culley Units 2 and 3 with a sulfur dioxide scrubber, among
other provisions.   Unit 1 at Culley Station (46 megawatts)
is also subject to the 1.2 lb/MMBTU restriction by January
2000.  Current regulatory policy allows for the recovery
through rates of all authorized and approved pollution
control expenditures.  Refer to "Environmental Matters" in
Item 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION, page 23, for further
discussion of SIGECO's Clean Air Act Compliance Plan, and
the associated costs.  SIGECO filed Title V (of the 1990
Amendments to the Federal Clean Air Act) permit applications
for all of its applicable generation facilities during the
fourth quarter of 1996.  The applications have been approved
for completeness and are being processed by the Indiana
Department of Environmental Management.  Warrick Unit 4 (50%
owned by SIGECO) is covered by Title V permit applications
filed by Alcoa Generating Corporation, majority owner of the
Warrick Generating Station.

  With the addition of the scrubber at the Culley
generating station, SIGECO is exceeding the minimum
compliance requirements of Phase I and intends, at this
time, to utilize resulting "overcompliance allowances" and
fuel blending (with low sulfur coal) strategies to help meet
the stricter Phase II requirements effective January 2000.
SIGECO anticipates that purchases of additional allowances
will be required to fully meet Phase II requirements.  No
material capital expenditures are anticipated to meet Phase
II requirements, and thus, none are reflected in the
projected construction requirements for the years 1998-2002
discussed previously in "Construction Program and Financing"
or in "Liquidity and Capital Resources" in Item 7,
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION, page 24.

  In October 1996, SIGCORP received a notice of violation
(NOV) from the federal EPA for alleged violations of Indiana
air pollution regulations regarding particulate matter
emissions in October 1995 by the Unit 1 boiler of SIGECO's
Culley Station.  Subsequent analysis determined the unit
was, in fact, in full compliance with all applicable state
and federal emission standards, bringing the matter to
closure.

  In December 1996 and January 1997, the federal EPA issued
proposed regulations regarding new national ambient air
quality standards for regional ozone and particulate matter
concentration levels.  In July 1997, the federal EPA issued
its final rule which revised the national ambient air
quality standard for ozone by setting a lower concentration
limit and changing the averaging period from one hour to
eight hours.  There remains much uncertainty as to the
extent that SIGECO would be affected by this ruling.  Refer
to "Environmental Matters" in Item 7, MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION, page 23, for discussion of this new
ruling and related issues and the estimated possible costs
to comply with reductions if ultimately required.

<PAGE> 13

  In connection with the use of sulfur dioxide removal
equipment at the A. B. Brown Generating Station, SIGECO
operates a solid waste landfill for the disposal of
approximately 200,000 tons of residue per year from the
scrubbing process.  Application for renewal of the landfill
operating permit was filed with the Indiana Department of
Environmental Management (IDEM) in August 1996.  The
existing permit will remain in effect until action is taken
by IDEM on the renewal application.  SIGECO also has a solid
waste landfill available for the disposal of the gypsum by-product
being produced by the new sulfur dioxide scrubber at
the Culley Generating Station.  SIGECO was granted a five-year
operating permit for the landfill in June 1995, but
anticipates using this landfill only when the gypsum by-product
does not meet contract specifications for its sale
to a wallboard manufacturer.  Such utilization has not been
necessary, to date.

  Under the Federal Water Pollution Control Act of 1972 and
Indiana law and regulations, SIGECO is required to obtain
permits to discharge effluents from its existing generating
stations into the navigable waterways of the United States.
The State of Indiana has received authorization from the EPA
to administer the Federal discharge permits program in
Indiana.  Variances from effluent limitations may be granted
by permit on a plant-by-plant basis where the utility can
establish the limitations are not necessary to assure the
protection of aquatic life and wildlife in and on the body
of water into which the discharge is to be made.  SIGECO has
been granted National Pollution Discharge Elimination System
(NPDES) permits covering miscellaneous waste water and
thermal discharges for all its generating facilities to
which the NPDES is applicable, namely the Culley Station, A.
B. Brown Station and Broadway Station (gas turbines).  As
majority owner of Warrick Generating Station, Alcoa
Generating Corporation has been granted an NPDES permit for
that facility, including Warrick Unit 4.  Such discharge
permits are limited in time and must be renewed at five-year
intervals.  During 1994, SIGECO submitted renewal
applications for these permits, which are currently pending,
as they are for most industries.  The existing permits will
remain in effect until action is taken by IDEM on the
renewal applications.  SIGECO anticipates renewal of the
permits by IDEM.  At present, there are no known enforcement
proceedings concerning water quality pending or threatened
against SIGECO.


<PAGE> 13

EXECUTIVE OFFICERS OF SIGCORP AND SIGECO
<TABLE>
<CAPTION>
<S>           <C>        <C>                              <C>
              Age at        Positions Held
Name          12/31/97   During Past Five Years           Date

R.G.Reherman    62       Chairman of the Board of
                         Directors, President and
                         Chief Executive
                         Officer of SIGCORP            Jan 1996 - Present
                         Chairman of the Board of
                         Directors of SIGECO           Sept 1997 -Present
                         Chairman of the Board of
                         Directors,
                         President and Chief Executive
                            Officer of SIGECO          * - Sept 1997

A.E.Goebel      50       Executive Vice President of
                         SIGCORP                       Sept 1997 - Present
                         Secretary and Treasurer of
                         SIGCORP                       Jan 1996 - Sept 1997
                         President and Chief Executive
                         Officer of SIGECO             Sept 1997 - Present
                         Senior Vice President,
                         Chief Financial Officer
                         and Secretary of SIGECO       Oct 1996 - Sept 1997
                         Senior Vice President,
                         Chief Financial Officer,
                         Secretary and Treasurer
                         of SIGECO                     * - Oct 1996

J.G.Hurst       54       Executive Vice President
                         and Chief Operating
                         Officer of SIGECO             Sept 1997 - Present
                         Senior Vice President
                         and General Manager
                         of Operations of SIGECO       * - Sept 1997

J.L.Davis       42       Vice President of Marketing
                         and Customer
                         Service of SIGECO             July 1995 - Present
                         Director of Marketing
                         of SIGECO                     * - July 1995

R.G.Jochum      50       Vice President and Director
                         of Power
                         Production of SIGECO          July 1994 - Present
                         Director of Power Production
                         of SIGECO                     Sept 1993 - July
1994

G.M.McManus     50       Vice President and Director
                         of Governmental
                         and Public Relations
                         of SIGECO                     * - Present

</TABLE>
* Indicates positions held at least since 1993.

<PAGE> 15

Item 2.  PROPERTIES

SIGCORP and SIGECO

  SIGCORP has no significant properties other than common
stock of affiliates.

  SIGECO's installed generating capacity as of December 31,
1997 was rated at 1,236,000 Kw.  SIGECO's coal-fired
generating facilities are:  the Brown Station with 500,000
Kw of capacity, located in Posey County about eight miles
east of Mt. Vernon, Indiana; the Culley Station with 386,000
Kw of capacity, and  Warrick Unit 4 with 135,000 Kw of
capacity.  Both the Culley and Warrick Stations are located
in Warrick County near Yankeetown, Indiana.  SIGECO's gas-fired
turbine peaking units are:  the 80,000 Kw Brown Gas
Turbine located at the Brown Station; two Broadway Gas
Turbines located in Evansville, Vanderburgh County, Indiana,
with a combined capacity of 115,000 Kw; and  two Northeast
Gas Turbines located northeast of Evansville in Vanderburgh
County, Indiana with a combined capacity of 20,000 Kw.  The
Brown and Broadway turbines are also equipped to burn oil.
Total capacity of SIGECO's five gas turbines is 215,000 Kw
and they are generally used only for reserve, peaking or
emergency purposes due to the higher per unit cost of
generation.

  SIGECO's transmission system consists of 802 circuit
miles of 138,000 and 69,000 volt lines.  The transmission
system also includes 31 substations with an installed
capacity of 4,016,590 kilovolt amperes (Kva).  The electric
distribution system includes 3,181 pole miles of lower
voltage overhead lines and 203 trench miles of conduit
containing 1,213 miles of underground distribution cable.
The distribution system also includes 86 distribution
substations with an installed capacity of 1,696,484 Kva and
48,182 distribution transformers with an installed capacity
of 2,131,925 Kva.

  SIGECO owns and operates three underground gas storage
fields with an estimated ready delivery from storage
capability of 3.9 million Dth of gas.  The Oliver Field, in
service since 1954, is located in Posey County, Indiana,
about 13 miles west of Evansville.  The Midway Field is
located in Spencer County, Indiana, about 20 miles east of
Evansville near Richland, Indiana, and was placed in service
in December 1966.  The third field is the Monroe City Field,
located in Knox County, about 10 miles east of Vincennes,
Indiana.  The field was placed in service in 1958.

  SIGECO's gas transmission system includes 359 miles of
transmission mains, and the gas distribution system includes
2,511 miles of distribution mains.

  SIGECO's properties are subject to the lien of the First
Mortgage Indenture dated as of April 1, 1932 between SIGECO
and Bankers Trust Company, New York, as Trustee, as
supplemented by various supplemental indentures, all of
which are exhibits to this report and collectively referred
to as the "Mortgage".

  Subsidiaries other than SIGECO have no significant
properties other than investments in real estate
partnerships, leveraged leases, private placement
subordinated debt instruments and coal mining property.

Item 3.  LEGAL PROCEEDINGS

SIGCORP and SIGECO

  There are no pending legal proceedings, other than
routine litigation incidental to the business, to which the
registrant is a party.

  No material legal proceedings were terminated during the
fourth quarter of 1997.

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

SIGCORP and SIGECO

  None


>page> 16
                          PART II

Item 5.       MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
              RELATED SECURITY HOLDER MATTERS

SIGCORP and SIGECO

  Effective January 1, 1996, all shares of common stock of
SIGECO were exchanged for an equal number of shares of
common stock of SIGCORP.  As of February 20, 1998, SIGCORP
had 8,074 holders of record of common stock.  The principal
market on which SIGCORP's common stock is traded is the New
York Stock Exchange, Inc. where the common stock is listed.
The high and low sales prices for SIGCORP's stock as
reported in the consolidated transaction reporting system
for each quarterly period during the two most recent fiscal
years were:
<TABLE>
Caption>
QUARTERLY PERIOD

<S><C>    <C>    <C>          <C>     <C>       <C>     <C>     <C>
   1              2             3                 4
   High    Low    High         Low     High      Low     High    Low

1997
  $24-9/16 $22-9/16  $26-15/16 $21-7/8 $26-15/16 $24-1/8 $30-1/8 $24-15/16

1996
  $24-5/8  $21-7/8   $23-1/4   $21-7/8 $23-3/4   $22-1/8 $23-7/8 $22
</TABLE>
  Dividends declared and paid per share of SIGCORP common
stock during the past two years were:

<TABLE>
<CAPTION>
 QUARTERLY PERIOD

<S>             <C>            <C>              <C>            <C>
                1              2                3              4

1997            $0.2950        $0.2950          $0.2950        $0.2950
1996            $0.2883        $0.2883          $0.2883        $0.2883
</TABLE>

The quarterly dividend on common stock was increased to 30-1/4
cents per share in January 1998, payable March 20, 1998.

DIVIDEND RESTRICTIONS

  The following restrictions pertain to SIGECO but, to the
extent that the dividends of SIGCORP depend on SIGECO
earnings, may have an effect on SIGCORP.

  The payment of cash dividends on SIGECO's common stock to
SIGCORP is, in effect, restricted by SIGECO's Mortgage to
accumulated surplus, available for distribution to the
common stock, earned subsequent to December 31, 1947,
subject to reduction if amounts deducted from earnings for
current repairs and maintenance and provisions for renewals,
replacements and depreciation of all the property of SIGECO
are less than amounts specified in the Mortgage.  (See
Section 1.02 of the Supplemental Indenture dated as of July
1, 1948, as supplemented.)  No amount was restricted against
cash dividends on common stock as of December 31, 1997 under
this restriction.

  The payment of cash dividends on common stock is, in
effect, restricted by SIGECO's Amended Articles of
Incorporation to accumulated surplus, available for
distribution to the common stock, earned subsequent to
December 31, 1935.  The Amended Articles of Incorporation
require that, immediately after such dividends, there shall
remain to the credit of earned surplus an amount at least
equal to two times the annual dividend requirements on all
then outstanding Preferred Stock, No Par Value.  (See Art.
VI, Terms of Capital Stock, General Provisions (B)).  The
amount restricted against cash dividends on common stock at
December 31, 1997 under this restriction was $2,194,121,
leaving $226,375,272 unrestricted for the payment of
dividends.  In addition, the Amended Articles of
Incorporation provide that surplus otherwise available for
the payment of dividends on common stock shall be restricted
to the extent that such surplus is included in a calculation
required to permit SIGECO to issue,  sell or dispose of
preferred stock or other stock senior to the common stock
(Art. VI, Terms of Capital Stock, General Provisions (E)).

<PAGE> 17
Item  5.       MARKET FOR THE REGISTRANT'S COMMON EQUITY
               AND RELATED SECURITY HOLDER MATTERS
               (Continued)

  An order of the Securities and Exchange Commission dated
October 12, 1944 under the Public Utility Holding Company
Act of 1935 in effect restricts the payment of cash
dividends on common stock to 75% of net income available for
distribution to the common stock, earned subsequent to
December 31, 1943, if the percentage of common stock equity
to total capitalization and surplus, as defined, is less
than 25%.  At December 31, 1997, such ratio amounted to
approximately 50%.

Item 6.  SELECTED FINANCIAL DATA

SIGCORP and SIGECO
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                     <C>       <C>        <C>      <C>      <C>
Year Ended December 31
 (in thousands except for per share amounts)
                        1997       1996      1995     1994      1993
Operating Revenues      $433,237   $404,738  $360,771 $330,899  $330,317
Operating Income        $85,582    $82,717   $72,401  $70,779   $69,403
Net Income Before Cumulative
Effect of Accounting
 Change                 $46,140    $43,264   $38,525  $39,920   $38,483
Net Income              $46,140    $43,264   $44,819  $39,920   $38,483
Average Common Shares
 Outstanding            23,631     23,631    23,631   23,631    23,631
Earnings Per Share of
 Common Stock Before
 Cumulative Effect
 of Accounting Change   $1.95      $1.83     $1.63    $1.69     $1.63
 Cumulative Effect of
 Accounting Change      $-         $-        $0.27    $-        $-
 Basic and Diluted
 Earnings Per Share     $1.95      $1.83     $1.90    $1.69     $1.63
Dividends Per Share
 of Common Stock        $1.18      $1.15     $1.13    $1.10     $1.07
Total Assets            $989,896   $952,653  $923,981 $917,416  $860,841
Redeemable Preferred
 Stock                  $8,424     $8,424    $8,424   $8,515    $8,515
Long-Term Obligations   $276,844   $266,951  $265,085 $274,467  $274,884
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana Gas And Electric Company
<S>                     <C>        <C>       <C>     <C>        <C>
Year Ended December 31
(in thousands)          1997       1996      1995     1994      1993

Operating Revenues      $358,106   $372,730  $338,698 $330,035  $329,489
Operating Income        $62,912    $61,041   $53,873  $52,367   $51,565
Net Income Before
 Cumulative
 Effect of Accounting
 Change                 $45,363    $42,841   $39,624  $41,025   $39,588
Net Income Applicable
 to Common Stock        $44,266    $41,744   $44,819  $39,920   $38,483
Total Assets            $864,463   $852,325  $923,981 $917,416  $860,841
Redeemable Preferred
 Stock                  $8,424     $8,424    $8,424   $8,515    $8,515
Long-Term Obligations   $239,420   $252,114  $265,085 $274,467  $274,884
</TABLE>


<PAGE> 18

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

References to "Notes" pertain to the Notes to Consolidated
Financial Statements.

SIGCORP and SIGECO

The consolidated financial statements of SIGCORP, Inc.
(SIGCORP), an investor-owned holding company, include
SIGCORP's principal subsidiary, Southern Indiana Gas and
Electric Company (SIGECO), a regulated gas and electric
utility, and eight nonregulated subsidiaries.  The following
discussion and analysis includes those factors which have,
or may, materially affect the results of operations and
financial condition of SIGCORP and its subsidiaries.

This discussion includes forward looking statements based on
information currently available to management.  Such
statements are subject to certain risks and uncertainties.
These statements typically contain, but are not limited to,
the terms "anticipate", "expect", "potential", "estimate"
and similar words, and actual results may differ materially
due to the speed and nature of increased competition and
deregulation in the electric and gas utility industry,
economic or weather conditions affecting future sales and
margins, changes in markets for energy services, changing
energy market prices, legislative and regulatory changes
including revised environmental requirements, availability
and cost of capital, and other similar factors.

RESULTS OF OPERATIONS

Earnings per share were a record $1.95 in 1997, compared to
$1.83 for 1996 and $1.63 for 1995 before the cumulative
effect of an accounting change.  Utility operations
contributed $1.87 of the 1997 per share earnings and
nonregulated operations contributed $.08 per share; for
1996, utility net income represented $1.77 and nonregulated
subsidiary results contributed $.06 per share of the total
earnings.  The factors effecting the $.12 increase in 1997
earnings follow:

Period ended December 31, 1996          $ 1.83
Weather                                   (.10)
Customer growth and usage                  .08
Electric sales to other utilities and
power marketers                            .06
Adjustment in base gas rates               .03
Utility O&M expense                        .03
Nonregulated gas energy services and
nonutility operations                      .02
Period ended December 31, 1997          $ 1.95

Revenues  The increase in electric utility revenues due to
greater nonfirm wholesale electric sales was fully offset by
the recovery of lower unit fuel costs through retail rates
and fewer sales to retail customers, resulting in a $3.9
million (1.4%) decrease in electric revenues during 1997.
In 1996, electric revenues rose slightly when revenue
increases from greater electric sales and the full year
impact of an increase in retail electric rates were offset
by the recovery of lower unit fuel costs.  Although cooling
degree days were 19% below normal and 8% below 1996, sales
to retail and firm wholesale customers declined only
slightly (1%) in 1997 following a 3.4% increase in 1996, due
to continued strong economic growth in SIGECO's service
area.  Excluding sales to Alcoa Generating Corporation,
which declined in 1997, nonfirm wholesale electric sales
increased 35% in 1997, after a 15% increase in 1996,
reflecting SIGECO's low electric energy costs and aggressive
marketing efforts.  These sales represented approximately
19% of total 1997 electric sales.

Fewer sales to all retail gas customers, net of the impact
of an approved July 1996 increase in base gas rates,
resulted in an 11% ($10.7 million) decrease in 1997 gas
utility revenues, following 52% ($33 million) greater gas
revenues in 1996 chiefly due to stronger sales to all retail
gas customers and higher unit gas costs recovered through
retail rates.  Gas sales were down 23% in 1997, after a 24%
rise in 1996, reflecting the impact of 12% milder
temperatures on weather-sensitive sales during the first
quarter of 1997 and fewer sales to commercial and industrial
transportation customers.  Residential sales declined 12%
during 1997 due to the milder weather, after a

<PAGE> 19

19% increase in 1996 when weather was 17% colder than in
1995.  Sales to commercial and industrial customers were
down 22% and 63%, respectively, because transportation
customers purchased more of their 1997 gas supplies from
suppliers other than SIGECO; total natural gas sold and
transported to commercial and industrial customers declined
only 2% as continued economic development in the area
partially offset the impact of weather on commercial sales.

The full year operation of SIGCORP Energy Services, Inc.
(Energy), which currently markets natural gas and related
services, added $70.2 million to SIGCORP's 1997 revenues.  A
$27.1 million decrease in other revenues, which includes the
operating revenues of SIGCORP's other nonregulated
subsidiaries, reflected the absence of new performance
contracts at Energy Systems Group, Inc. (ESGI) during the
first six months of 1997; during the last half of 1997,
several major contracts, including a $15 million contract
with the Evansville-Vanderburgh School Corporation, were
awarded to Energy Systems Group, LLC, of which ESGI is a
one-third owner (see "Energy Systems Group, Inc." for
further discussion of the change of ownership).  The $9.9
million increase in 1996 revenues from SIGCORP's
nonregulated operations was chiefly due to greater revenues
from ESGI.

Operating Expenses  Although electric generation increased
4.2%, related fuel expenses, the most significant electric
operating cost, declined 16.3% ($12.2 million)  in 1997 due
to 21% lower unit coal costs resulting from SIGECO's coal
contract reformation efforts.  Average coal costs per kWh
generated were $.0098, $.0124 and $.0141 for 1997, 1996 and
1995, respectively.  SIGECO will continue to aggressively
manage its fuel expenses as a key component of its strategy
to remain a low-cost provider of electricity.  The 1996 fuel
for electric generation expense was 7.8% lower than 1995
expense due to 12% lower unit coal costs.  Changes in the
unit costs of fuel and purchased electric energy are passed
on to electric customers through commission-approved fuel
and purchased power cost recovery mechanisms.

While the majority of SIGECO's sales of electric energy to
nonfirm wholesale customers is from excess capacity, SIGECO
increased its purchases of electricity from other utilities
24% in 1997 for resale to nonfirm electric wholesale
customers.  Conversely, purchases of electric energy in 1996
were 15% lower than in 1995.  Higher average market prices
also contributed to the $5.7 million increase in cost of
purchased electric energy during 1997.

The cost of gas sold, the major component of gas operating
expenses, declined 18.2% ($12 million) in 1997 due to the
decrease in gas sales.  The 64% ($25.8 million) increase in
cost of gas sold in 1996 was attributed to 37% higher
average unit gas costs and 24% greater sales of gas compared
to 1995.  The generally downward trend of natural gas market
prices experienced several years prior to 1996 was reversed
in 1996 when the combination of  greater demand for gas
caused by colder winter temperatures nationwide  and fewer
available natural gas supplies caused higher unit gas costs.

During 1997, the cost of energy services and other revenues,
which was chiefly the cost of natural gas purchased for
resale by Energy and performance contract costs at ESGI,
rose $45.1 million compared to 1996 due to the full year
operation of Energy, partially offset by significantly lower
performance contract costs at ESGI.  Conversely, additional
performance contracts in 1996 caused related costs to be
greater than those incurred in 1995.

Other operation expenses for 1997 were comparable to the
$60.9 million incurred in 1996; lower expenses at SIGECO and
ESGI offset higher full year operation expenses at Energy.
In 1996, other operation expenses were up 14% ($7.4 million)
due primarily to an 11% ($5.5 million) increase in such
expenses at SIGECO, to additional performance contract sales
activity at ESGI and to higher expenses at SIGCORP's other
nonregulated subsidiaries.  Additional expenses for
postretirement benefits other than pensions deferred until
1996 and full-year operating costs of the new sulfur dioxide
scrubber at SIGECO's Culley Generating Station represented
the majority of the increase in other operation expenses at
SIGECO in 1996.

<PAGE> 20

Maintenance expenses, essentially all incurred at SIGECO,
declined 1.9% ($.6 million) in 1997, following a 7.6% ($2.4
million) decrease in 1996.  Higher power generation
maintenance expenditures during 1997 related to turbine
generator and boiler repairs were offset by lower
maintenance expenditures on gas and electric transmission
and distribution facilities.  Maintenance expenses in 1995
reflected a major turbine generator maintenance overhaul and
system repairs caused by a devastating storm in SIGECO's
service area.

Depreciation and amortization expense increased 3.2% ($1.2
million) in 1997 due to utility plant additions for the
major refurbishment of the Culley Unit 3 turbine generator
and boiler ($16.3 million), a new $4.4 million gas
transmission line to serve a rapidly developing industrial
sector in SIGECO's service territory, and for SIGECO's
continued investment in other gas and electric utility
facilities required to serve new business development and
upgrade existing energy delivery systems.  Depreciation and
amortization expense declined slightly in 1996, the result
of lower depreciation rates on electric utility plant
related to SIGECO's retail electric rate adjustment.

While inflation has a significant impact on the replacement
cost of SIGECO's facilities, only the historical cost of
electric and gas plant investment is recoverable in revenues
as depreciation under the ratemaking principles to which
SIGECO is subject.  With the exception of adjustments for
changes in fuel and gas costs and margin on sales lost under
SIGECO's demand side management programs, SIGECO's electric
and gas rates remain unchanged until a rate application is
filed and a general rate order is issued by the IURC.

The favorable outcome of contested prior year property tax
assessments resulted in a $1.4 million decline in 1997
property and other taxes expense, following a 3.4% increase
in 1996.

Interest and Other Charges  SIGECO's additional capitalized
interest and allowance for equity funds related to several
large construction projects during 1997 were the primary
reasons for the $1.9 million reduction in SIGCORP's total
interest and other charges in 1997.  Increases in SIGCORP's
total interest expense and in interest income during 1997
reflected increased financial investment activities by
Southern Indiana Properties, Inc. and the related costs.
SIGCORP's interest and other charges declined slightly in
1996 when greater interest income more than offset SIGECO's
lower capitalized interest and the allowance for equity
funds.

Income Tax Expense  SIGCORP's federal and state income taxes
rose $1.9 million during 1997 due to the increase in
SIGECO's pretax income.  SIGCORP's federal and state income
taxes were $5.7 million greater during 1996 due to SIGECO's
higher pretax income and to a $1.2 million downward
adjustment to SIGECO's income tax reserves during 1995.

Rate and Regulatory Matters  SIGECO complies with the
provisions of Statement of Financial Accounting Standard
(SFAS) 71, "Accounting for the Effects of Certain Types of
Regulation" that allows certain costs incurred by SIGECO
that have been, or are expected to be, approved by
regulatory authorities for recovery through rates, to be
deferred as regulatory assets until recovered by SIGECO.
Criteria that could give rise to the discontinuance of SFAS
71 include (1) increasing competition that restricts
SIGECO's ability to establish prices to recover specific
costs, and (2) a significant change in the manner in which
rates are set by regulators from cost-based regulation to
another form of regulation.  SIGECO periodically reviews
these criteria to ensure the continuing application of SFAS
71 is appropriate.  In the event SIGECO determines that it
no longer meets the criteria for following SFAS 71, the
accounting impact could be an extraordinary noncash charge
to operations of an amount that could be material.  SFAS
121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", imposes a stricter
criterion for these regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet
date.  Under SIGECO's present regulatory environment and
given its current competitive position in the industry,
SIGECO believes its use of regulatory accounting is
appropriate.

In September 1995, SIGECO petitioned the IURC seeking a
general increase in gas rates.  On July 3, 1996, the IURC
issued its order, effective July 15, 1996, granting a 7.3%,
or $4.8 million, increase in annual revenues.

<PAGE> 21

The adjustment in rates was necessary to recover increases
in operating and maintenance costs and additional investment
in gas distribution facilities.  The adjustment includes
recovery of additional costs incurred for postretirement
benefits other than pensions related to gas operations
approximating $1.1 million annually.

In June 1995, the IURC approved the third of three retail
electric rate increases related to its Clean Air Act
Compliance project, representing an increase of 2.1%, or
$4.5 million, in revenues.  The final adjustment was
necessary to cover financing costs related to the balance of
the project construction expenditures, costs related to the
operation of the scrubber, and certain nonscrubber-related
operating costs such as additional costs incurred for
postretirement benefits other than pensions beginning in
1993 and the recovery of demand side management program
expenditures.

Over the past several years, SIGECO has been actively
involved in intensive contract negotiations and legal
actions to reduce coal costs and thereby lower electric
rates.  In April 1995, SIGECO reached an agreement with its
remaining long-term contract coal supplier, effective July
1995, to buy out the remainder of SIGECO's contractual
obligations, enabling it to acquire lower-priced spot market
coal.  In 1997, the full benefit of the contract buyout was
reflected in average coal costs per kWh generated, which
were down 21% from 1996.  SIGECO estimates the total savings
in coal costs resulting from the buyout, net of total buyout
costs, will approximate $58 million through December 31,
1998, the term of the original contract.  The net savings
are being passed back to SIGECO's retail and firm wholesale
electric customers through the fuel adjustment clause.

Competition  SIGCORP's predominant subsidiary, SIGECO, is
presently a fully integrated provider of retail gas and
electric utility service within a franchised, monopoly
service area.  The production of electricity is the most
significant functional component of the integrated SIGECO
operations, representing approximately 60% of regulated
assets and, as a result of wholesale sales of electricity, a
greater portion of the net income of the utility.

A fundamental change is occurring in the United States with
respect to the monopoly structure of the electric utility
industry.  The National Energy Policy Act of 1992 (NEPA)
initiated some of the most significant changes in the
history of the electric industry.  The primary purpose of
the electric provisions of NEPA is to increase competition
in electric generation by enabling virtually nonregulated
entities, such as exempt wholesale generators, to develop
power plants, and by granting the Federal Energy Regulatory
Commission (FERC) authority to require a utility to provide
transmission services, including the expansion of the
utility's transmission facilities necessary to provide such
services, to any entity selling or purchasing electricity at
wholesale.  Although the FERC may not order retail wheeling
(the transmission of electricity directly to an ultimate
consumer), it may order wheeling of electricity generated by
an exempt wholesale generator or another utility to a
wholesale customer of a regulated utility.

FERC has aggressively undertaken the introduction of
competition into the wholesale electric business.  On April
24, 1996, FERC issued Order 888 which finalized the key
provisions of its Notice of Proposed Rulemaking (Mega-NOPR)
on Open Access issued in March 1995.  Order 888 provided for
mandatory filing of open access transmission tariffs,
provided for functional unbundling of all transmission
services, required utilities to use the tariffs for their
own bulk power transactions, and allowed recovery of
stranded costs in certain circumstances.  SIGECO has filed
the mandatory tariffs to comply with Order 888.

Also on April 24, 1996, FERC issued Order 889 which required
each public utility that owns, controls or operates
facilities used for the transmission of electric energy in
interstate commerce to create or participate in an Open
Access Same-time Information System for posting information
about available transmission capacity, prices and other
information that will enable customers to obtain open access
nondiscriminatory transmission service.  Order 889 required
the filing of detailed Standards of Conduct defining how a
transmission provider will functionally separate its
transmission and wholesale power merchant functions.  SIGECO
has implemented the necessary changes and filed the
Standards of Conduct to comply with Order 889.

<PAGE> 22

The results of Orders 888 and 889 on SIGECO have been
generally favorable.  Because SIGECO has below average
variable costs of generation, it has been an aggressive
seller of electricity to power marketers and other providers
seeking low-priced electricity to fulfill wholesale sales
contracts.  The results of the increased wholesale sales are
discussed further in "Results of Operations."  Conversely,
SIGECO has reduced prices to firm wholesale customers, or
offered to do so, to retain their business after the
expiration of existing contracts.  These discounts in
pricing terms, when fully effective, result in gross margins
which are several million dollars below margins attainable
from such customers prior to NEPA.  SIGECO cannot predict
the long-term consequences of these rules on its results of
operations or financial condition.

FERC does not have jurisdiction over the retail sales of
electricity.  The various states retain jurisdiction over
the permitting of retail competition, the terms of such
competition and the recovery of any costs or other
transition charges resulting from retail competition.

To date, more than a dozen state legislatures or regulatory
agencies have adopted laws or regulations to introduce
retail electricity competition.  However, most states are
continuing to evaluate the issue.  In Indiana, the state
legislature must adopt appropriate legislation to amend the
Public Utility Act to provide for retail competition.  In
1997, and again in 1998, such legislation was introduced in
the Indiana Senate.  The 1997 proposal did not pass out of
its committee of origin in its original form.  The 1998
legislation, although passed out of its committee of origin,
did not receive widespread acceptance by the legislature and
was not voted upon by the full Senate.  A substitute
proposal, which addressed only the participation of Indiana
utilities in multi-state transmission pools under the
control of an Independent System Operator (or ISO), was
rejected by the Senate.  The 1997 legislative proposal,
initially a comprehensive proposal to introduce retail
competition in the year 2000, was altered to only authorize
a joint Senate/House study committee, called the Regulatory
Flexibility Committee, to study the issue.  That committee
met numerous times in 1997, hearing testimony from a broad
cross-section of consultants, utilities, customer groups and
regulators.

It is anticipated by SIGECO that pressure on the Indiana
legislature could intensify if other states successfully
implement retail competition for electricity.  SIGECO will
continue to participate in the debate to represent the
interest of all its stakeholders.  One of SIGECO's primary
concerns in the debate is that appropriate reciprocity
provisions with other utilities and power marketers are
enacted which would prevent out-of-state providers from
having an unfair advantage over Indiana utilities.  In
addition, SIGECO has taken the position in the debate (and
will continue to attempt to influence the outcome of the
debate) that low-cost producers such as SIGECO should not,
as has occurred in other states, be penalized for being
historically low-cost.  More specifically, the
implementation of "access charges" and "transition charges"
in other states have served to make it very difficult for
low-cost producers to economically compete for business from
the customers of high-cost producers due to the need for
those customers to pay their current provider very high
fixed charges for the privilege of "accessing" the
marketplace.  At the same time, historically low-cost
producers, such as SIGECO, have lower access charges because
their "stranded costs" are low, making it economically less
difficult for high-cost producers to sell to a low-cost
producer's customer base at marginal production costs.

SIGCORP and SIGECO are unable to predict the timing or final
provisions of Indiana legislative actions on competition, if
any.  Although SIGECO is uncertain of the timing and/or
final outcome of these developments, it is committed to
pursuing, and is rapidly implementing, its corporate
strategy of positioning itself as a low-cost energy producer
and the provider of high-quality service to its retail as
well as wholesale customers.  Based on a recent Edison
Electric Institute survey, SIGECO industrial rates were 8th
lowest among 135 electric utilities in 1996.

SIGECO also provides retail integrated natural gas service
in Indiana.  However, SIGECO does not currently earn a
margin on the direct sale of the commodity natural gas.
SIGECO simply charges its retail gas customers the cost
SIGECO incurs to purchase the gas and have it delivered to
SIGECO's metering points on the interstate pipeline network.
SIGECO does earn a return on the investment in its assets
used to deliver the gas to

<PAGE> 23

customers.  As a result, SIGECO does not anticipate any
material impact on the financial results of its operations
should the right of retail customers to choose gas commodity
providers extend beyond the current level.

SIGCORP's nonutility subsidiaries are all subject to the
competitive forces existing in their respective industries,
including the gas marketing industry, the energy services
industry, telecommunications, industrial mineral products,
coal production and so on.  As such, the financial results
of the nonregulated entities depend upon their ability to
successfully compete in their respective markets.

SIGCORP

Energy Systems Group, Inc.  On May 23, 1997, Energy Systems
Group, Inc. (ESGI), IGC Energy and Citizens By-Products Coal
Company formed Energy Systems Group, LLC (ESG LLC) an
equally owned limited liability corporation.  On June 18,
1997, ESGI, an energy- related performance contracting firm,
contributed significantly all of its assets and liabilities
to ESG LLC for a one-third interest in ESG LLC, which
assumed the operations and responsibilities of ESGI.  ESGI's
results of operations through June 18, 1997 are included in
other revenues and the respective operating expense accounts
in SIGCORP's consolidated financial statements.  Subsequent
to June 18, 1997, ESGI's share of the pretax earnings and
losses of ESG LLC are included in Other, net.

SIGCORP Fuels, Inc.  Incorporated in December 1996, SIGCORP
Fuels, Inc. (Fuels) was formed to provide coal and related
services to SIGECO and other customers.  In June 1997,
SIGECO obtained approval from the IURC to purchase coal from
Fuels under a fixed price schedule and to recover the
respective costs from SIGECO's retail and firm wholesale
electric customers.  In late 1997, Fuels purchased coal
reserves located in SIGECO's service area and took delivery
of coal mining equipment.  The first shipments of coal to
SIGECO were delivered in January 1998.  Currently, Fuels
anticipates providing  approximately 25% of SIGECO's total
coal supply requirements.

SIGCORP Communications Services, Inc.  Incorporated in
August 1997, SIGCORP Communications Services, Inc. was
formed to undertake various telecommunications-related
strategic initiatives for SIGCORP.  Its activities have
focused on broadband and fiber optic systems installations
for small to mid-size communities throughout the United
States.

SIGCORP and SIGECO

Environmental Matters  To meet the Phase I requirements of
the Clean Air Act Amendments of 1990 (CAAA), effective 1995,
and some of the Phase II requirements (effective 2000),
SIGECO installed a single sulfur dioxide scrubber at the
Culley Generating Station to serve Culley Units 2 and 3 and
installed low nitrogen oxide (NOx) burners on the two units.
The facilities were constructed at a total cost of $103
million and began commercial operation February 1, 1995.
With the addition of the scrubber, SIGECO is exceeding the
minimum compliance requirements of Phase I of the CAAA and
has available unused allowances, called "overcompliance
allowances", for retention by SIGECO to meet stricter post-2000
emission limitations.  SIGECO anticipates that
purchases of additional allowances will be required to fully
meet Phase II requirements.

In July 1997, the United States Environmental Protection
Agency (USEPA) issued its final rule which revised the
national ambient air quality standard for ozone by setting a
lower concentration limit and changing measurement methods.
It is anticipated that the number of ozone nonattainment
counties in the United States will increase significantly as
determined by the concentration of nitrogen oxide (NOx), a
key ingredient of ozone.  The USEPA has encouraged states to
target utility coal-fired boilers for the majority of the
reductions required, especially NOx emissions, because they
believe this approach is the most cost effective.
Northeastern states have claimed that ozone transport from
midwestern states (including Indiana) is the primary reason
for their ozone concentration problems.  Although this
premise is challenged by others based on various air quality
modeling studies, including studies commissioned by the
USEPA, the USEPA intends to incorporate a regional

<PAGE> 24

control strategy to reduce ozone transport.  In October
1997, the USEPA provided each state a proposed NOx budget of
allowed emissions.  Under that budget, utilities may be
required to reduce NOx emissions to a rate of 0.15 lb/mmBtu
from levels already imposed by Phase I and Phase II of the
CAAA.  There remains much uncertainty as to the extent that
SIGECO would be affected by this ruling.  An alliance of
electric utilities, including SIGECO, from the  midwestern
states are working together to determine the most
appropriate compliance strategy as an alternative to the
USEPA proposal.  Depending on the level of system-wide
emissions reductions ultimately required, and the control
technology utilized to achieve the reductions, control
equipment expenditures ranging from estimates of $10 million
to $90 million could be required.  This is in addition to
expenditures previously made to bring SIGECO in compliance
with the CAAA requirements.  Under the current USEPA
implementation schedule, the emissions reductions and
required control equipment must be implemented and in place
by 2004.

Also in July 1997, the USEPA announced a new 2.5-micron
particulate matter (PM) standard while retaining the
existing 10-micron PM standard.  The regulatory impacts of
this action cannot be determined until appropriate
monitoring data is collected and subsequent national ambient
air quality area designations are determined.  The extent of
the impact on SIGECO, if any, is unknown.

Demand Side Management  In November 1995, SIGECO filed an
update of its Integrated Resource Plan (IRP) with the IURC,
requesting approval to greatly reduce previously ordered
future DSM programs due to the anticipated changes
precipitated by NEPA.  In July 1996, the IURC approved the
reduction of projected DSM program expenditures during the
1997-2012 period from a total of $138 million to $39
million.  In the latest update of its IRP, filed in November
1997, SIGECO determined that certain of these programs were
not cost effective and were to be discontinued.  As a
result, projected DSM expenditures for the 1998-2013 period
are expected to further decline from a total of $38 million
to $22 million.  Although future DSM expenditures will be
substantially reduced, the IRP projections indicate that by
2000, approximately 52 megawatts of capacity are expected to
have been postponed or eliminated due to these programs.

SIGECO will continue to monitor the benefits of its DSM
programs and additional changes are possible.  Although
SIGECO is already recognized as one of the most competitive
electric utilities in the nation, the reductions enable
SIGECO to be even more cost competitive in the future with
very low stranded investment exposure.

Year 2000 Compliance Costs  SIGECO has several major
information systems projects in progress, to be completed
before 2000, that will replace applications identified that
may not have been year 2000 compliant.  Based on SIGECO's
preliminary investigation, which is ongoing, all other
internal critical systems are year 2000 compliant.  SIGCORP
does not expect the amounts required to be expensed for year
2000 compliance modifications to have a material effect on
its financial position or results of operations.  SIGCORP
does not yet know whether the critical systems of its
suppliers and customers will be year 2000 compliant, however
it believes that non-compliance of such systems would not
have a material adverse effect on its financial position or
results of operations.

LIQUIDITY AND CAPITAL RESOURCES

In 1997, financial performance continued to be solid.
Internally generated cash (net income less dividends plus
charges to net income not requiring cash) funded 78% of
SIGECO's 1997 construction and DSM program expenditures;
these expenditures were fully funded with internally
generated cash in 1996.  SIGCORP's ratio of earnings to
fixed charges (SEC method) was 4.1:1, and its embedded cost
of long-term debt and preferred stock is 6.6 % and 5.6%,
respectively.  SIGCORP's financial strength is reflected in
high quality credit ratings.  SIGECO's senior secured debt
continues to be rated AA, or equivalent, by major credit
rating agencies.

<PAGE> 25

Capital Requirements  SIGCORP's demand for capital is
primarily related to SIGECO's construction of utility plant
and equipment necessary to meet customers' electric and gas
energy needs, environmental compliance requirements, and to
expenditures for SIGECO's DSM programs.  Construction
expenditures  totaled $68.4 million during 1997, including
$16.3 million expended on the major refurbishment of the F.
B. Culley Generating Station Unit 3 turbine generator and
boiler, $4.9 million for facilities under construction to
serve the new Toyota truck manufacturing plant, $4.4 million
for construction of a new gas transmission line to serve the
rapidly developing Mt. Vernon, Indiana industrial area, $5.8
million expended on the design and implementation of several
comprehensive information systems necessary to meet
expanding customer service needs and to better manage
SIGECO's resources, and $2.3 million for DSM programs.  The
1997 expenditures compare to $43.9 million and $54.1 million
expended in 1996 and 1995, respectively.

Construction requirements for the years 1998-2002 are
projected to total approximately $315 million, including
approximately $15 million to complete the information
systems projects and approximately $5 million of capitalized
expenditures for DSM programs, but  exclude construction
expenditures that may be required to comply with new USEPA
air quality standards discussed under "Environmental
Matters".  SIGECO does not currently anticipate the need for
construction of new base-load generation.

Financing Activities  SIGCORP's financing activity during
1997 included a $24.7 million increase in long-term notes
payable incurred primarily for structured financial
investments by Southern Indiana Properties, Inc.  In 1996,
SIGCORP's only financing activity was an $8.5 million
increase in short-term debt.  At year end, SIGCORP had $41.4
million in short-term borrowings, leaving unused lines of
credit and trust demand note arrangements totaling $39
million.

During the five-year period of 1998-2002, SIGCORP
anticipates that a total of $65.6 million of debt
securities, primarily those of SIGECO, will be redeemed.

SIGCORP expects the majority of the 1998-2002 construction
program and debt redemption requirements to be provided by
internally generated funds.  External financing requirements
of $60-70 million are anticipated and will be used primarily
to redeem long-term debt.

SIGCORP is confident that its long-term financial
objectives, which include maintaining a capital structure
near 45-50% long-term debt, 3-7% preferred stock and 43-48%
common equity, will continue to be met, while providing for
future construction and other capital requirements.

<PAGE> 26


<PAGE>
Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
                                                               Page
                                                               Number
<S>  <C>                                                       <C>
1.   Financial Statements
     SIGCORP
          Report of Independent Public Accountants             28

          Consolidated Statements of Income for the years
          ended December 31, 1997, 1996 and 1995               29

          Consolidated Statements of Cash Flows for the years
          ended December 31, 1997, 1996 and 1995               30

          Consolidated Balance Sheets -
          December 31, 1997 and 1996                           31

          Consolidated Statements of Capitalization -
          December 31, 1997 and 1996                           33

          Consolidated Statements of Retained Earnings
           for the years ended December 31, 1997,
           1996 and 1995                                       34

     SIGECO
          Report of Independent Public Accountants             36

          Statements of Income for the years
          ended December 31, 1997, 1996 and 1995               37

          Statements of Cash Flows for the years
          ended December 31, 1997, 1996 and 1995               38

          Balance Sheets - December 31, 1997 and 1996          39

          Statements of Capitalization -
          December 31, 1997 and 1996                           41

          Statements of Retained Earnings for the
          years ended December 31, 1997, 1996 and 1995         42

     SIGCORP and SIGECO
          Notes to Consolidated Financial Statements           43

2.   Supplementary Information
     SIGCORP and SIGECO
          Selected Quarterly Financial Data                    61

3.   Supplemental Schedules
     SIGCORP and SIGECO
          Schedule II - Valuation and Qualifying Accounts and
          Reserves for the years ended December 31, 1997,
           1996 and 1995                                       66
</TABLE>
  All other schedules have been omitted as not applicable
or not required or because the
  information required to be shown is included in the
Consolidated Financial Statements or
  the accompanying Notes to Consolidated Financial
Statements.



<PAGE> 27



                     SIGCORP, Inc. and
                        Subsidiaries


<PAGE> 28

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO SIGCORP, Inc.:

  We have audited the consolidated balance sheets and
consolidated statements of capitalization of SIGCORP, Inc.
(an Indiana corporation) and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of
income, retained earnings and cash flows for each of the
three years in the period ended December 31, 1997.  These
financial statements and the supplemental schedule referred
to below are the responsibility of SIGCORP, Inc.'s
management.  Our responsibility is to express an opinion on
these financial statements and supplemental schedule based
on our audits.

  We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.

  In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of  SIGCORP, Inc. as of December 31,
1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted
accounting principles.

  As discussed in Note 3, effective January 1, 1995,
SIGCORP, Inc. changed its method of accounting for unbilled
revenues.

  Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The supplemental schedule listed under Item 8 (3) is
presented for the purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic
financial statements.  This supplemental schedule has been
subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Chicago, Illinois
January 23, 1998


<PAGE> 29
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED  STATEMENTS OF INCOME
<S>                                       <C>         <C>         <C>
Year Ended December 31 (in thousands except for per share amounts)                        1997      1996      1995
OPERATING REVENUES:
  Electric utility                      $ 272,545  $  276,479  $  275,495
  Gas utility                             85,561      96,251      63,203
  Energy services and other               75,131      32,008      22,073
     Total operating revenues             433,237     404,738     360,771
OPERATING EXPENSES:
  Fuel for electric generation            62,630      74,860      81,236
  Purchased electric energy               13,985      8,295       9,332
  Cost of gas sold                        54,060      66,105      40,303
  Cost of energy services and other       73,668      28,553      18,401
  Other operation expenses                60,726      60,885      53,502
  Maintenance                             29,224      29,784      32,222
  Depreciation and amortization           40,373      39,140      39,442
  Property and other taxes                12,989      14,399      13,932
     Total operating expenses             347,655     322,021     288,370
OPERATING INCOME                          85,582      82,717      72,401
INTEREST AND OTHER CHARGES:
  Interest expense on long-term debt      19,797      18,432      18,789
  Interest expense on short-term debt     1,519       2,387       1,905
  Amortization of premium, discount
   and expense on debt                    671         690         693
  Allowance for funds used
   during construction                    (1,378)     (445)       (1,001)
  Preferred dividend requirements
   of subsidiary                          1,097       1,097       1,099
  Interest income                         (3,003)     (2,135)     (1,278)
  Other, net                              (3,122)     (2,536)     (2,563)
    Total interest and other charges      15,581      17,490      17,644

 INCOME BEFORE INCOME TAXES               70,001      65,227      54,757
  Federal and state income taxes          23,861      21,963      16,232

NET INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE                      46,140      43,264      38,525

Cumulative effect at January 1, 1995
 of adopting the unbilled revenues
 method of accounting - net of
 income taxes                             -           -           6,294

NET INCOME                              $ 46,140   $  43,264   $  44,819
AVERAGE COMMON SHARES OUTSTANDING         23,631      23,631      23,631
BASIC AND DILUTED EARNINGS PER SHARE
  BEFORE CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE                     $ 1.95     $  1.83     $  1.63
  CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE                       -           -           0.27

  BASIC AND DILUTED EARNINGS PER SHARE  $  1.95    $  1.83     $  1.90
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>


<PAGE> 30
<TABLE>
>caption>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S>                                       <C>         <C>         <C>

Year Ended December 31 (in thousands)     1997        1996        1995
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                            $ 46,140   $  43,264   $  44,819
  Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization         40,373      39,140      39,442
    Preferred dividend requirements
     of subsidiary                        1,097       1,097       1,099
    Deferred income taxes and investment
     tax credits, net                     (3,923)     11,474      9,516
    Allowance for other funds used
    during construction                   (581)       -           (380)
    Cumulative effect of
    accounting change                     -           -           (6,294)
    Change in assets and liabilities:
    Receivables, net (including accrued
    unbilled revenues)                    (19,497)    (17,170)    (22,167)
      Inventories                         (4,306)     3,721       11,479
      Coal contract settlement            -           12,928      (5,243)
      Accounts payable                    14,141      (4,396)     2,813
      Accrued taxes                       (1,855)     (1,098)     1,972
      Refunds from gas suppliers          (915)       (1,213)     2,037
      Refunds to customers                (651)       (4,961)     (7,348)
      Accrued coal liability              -           -           (22,018)
      Other assets and liabilities        8,103       5,120       (1,706)
    Net cash provided by operating
     activities                           78,126      87,906      48,021
CASH FLOWS FROM INVESTING ACTIVITIES
  Construction expenditures (net of allowance for
  other funds used during construction)   (65,501)    (40,302)    (44,709)
  Demand side management program
   expenditures                           (2,340)     (3,633)     (9,051)
  Investments in leveraged leases         -           (6,850)     -
  Purchases of investments                (423)       -           (2,034)
  Sales of investments                    264         700         4,211
  Investments in partnerships             3,166       126         (901)
  Change in nonutility property           (5,572)     395         2,316
  Change in notes receivable              (5,592)     (11,533)    (1,138)
  Other                                   (1,120)     (84)        4,800
    Net cash used in investing
 activities                               (77,118)    (61,181)    (46,506)
CASH FLOWS FROM FINANCING ACTIVITIES
  First mortgage bonds                    (295)       (8,000)     (5,300)
  Dividends paid                          (30,482)    (28,353)    (27,725)
  Reduction in preferred stock            -           -           (91)
  Change in environmental improvement
   funds held by trustee                  (272)       (188)       6,884
  Payments on partnership obligations     (2,276)     (2,787)     (3,256)
  Change in notes payable                 26,980      11,432      9,127
  Other                                   1,973       528         620
     Net cash used in financing
      activities                          (4,372)     (27,368)    (19,741)
NET DECREASE IN CASH AND
 CASH EQUIVALENTS                         (3,364)     (643)       (18,226)

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                      9,191       9,834       28,060

CASH AND CASH EQUIVALENTS
 AT END OF PERIOD                       $ 5,827    $  9,191    $  9,834
<FN>
The accompanying Notes to Consolidated Financial Statements
 are an integral part of these statements
</FN>
</TABLE>


<PAGE> 31
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
<S>                                            <C>            <C>
At December 31 (in thousands)                  1997           1996
ASSETS
Utility Plant, at original cost:
  Electric                                   $ 1,091,349    $ 1,047,717
  Gas                                          141,646        131,796
                                               1,232,995      1,179,513
  Less accumulated provision
   for depreciation                            557,631        524,104
                                               675,364        655,409
  Construction work in progress                32,241         25,849
     Net utility plant                         707,605        681,258
Other Investments and Property:
  Investments in leveraged leases              42,964         42,887
  Investments in partnerships and limited
   liability corporations                      21,197         23,983
  Environmental improvement funds
   held by trustee                             4,102          3,830
  Notes receivable                             21,404         15,812
  Nonutility property and other                12,503         6,931
     Total other investments and property      102,170        93,443
Current Assets:
  Cash and cash equivalents                    5,827          9,191
  Temporary investments, at market             749            565
  Receivables, less allowance of $327,581
   and $214,956, respectively                  52,496         36,469
  Accrued unbilled revenues                    22,320         34,744
  Inventories                                  32,930         31,241
  Current regulatory assets                    11,749         13,687
  Other current assets                         3,250          3,064
     Total current assets                      129,321        128,961
Other Assets:
  Unamortized premium on reacquired debt       4,704          5,184
  Postretirement benefits other
   than pensions                               3,263          5,541
  Demand side management programs              24,467         22,757
  Allowance inventory                          2,093          -
  Deferred charges                             16,273         15,509
     Total other assets                        50,800         48,991
TOTAL                                        $ 989,896      $ 952,653
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>


<PAGE> 32
<TABLE>
<CAPTION>

<S>                                            <C>            <C>
At December 31 (in thousands)                  1997           1996
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock                                 $ 78,258       $ 78,258
Retained Earnings                              270,828        252,626
  Total common shareholders' equity            349,086        330,884
Cumulative Nonredeemable Preferred
 Stock of Subsidiary                           11,090         11,090
Cumulative Redeemable Preferred
 Stock of Subsidiary                           7,500          7,500
Cumulative Special Preferred
 Stock of Subsidiary                           924            924
Long-Term Debt, net of current maturities      273,707        261,629
Long-Term Partnership Obligations,
 net of current maturities                     2,424          4,563
  Total capitalization, excluding bonds
   subject to tender (see Consolidated
   Statements of Capitalization)               644,731        616,590
Current Liabilities:
Current Portion of Adjustable Rate
 Bonds Subject to Tender                       31,500         31,500
Current Maturities of Long-Term Debt,
 Interim Financing
 and Long-Term Partnership Obligations:
   Maturing long-term debt                     12,695         659
   Notes payable                               41,368         38,750
   Partnership obligations                     2,139          2,276
     Total current maturities of
    long-term debt, interim financing
    and long-term partnership obligations      56,202         41,685
Other Current Liabilities:
   Accounts payable                            47,741         33,600
   Dividends payable                           123            123
   Accrued taxes                               5,868          7,723
   Accrued interest                            5,216          4,585
   Refunds to customers                        1,155          2,722
   Other accrued liabilities                   17,866         31,138
     Total other current liabilities           77,969         79,891
     Total current liabilities                 165,671        153,076
Other Liabilities:
  Accumulated deferred income taxes            146,218        147,070
  Accumulated deferred investment
   tax credits, being
   amortized over lives of property            20,249         21,706
  Regulatory income tax liability              -              1,614
  Postretirement benefits other
   than pensions                               11,271         10,084
  Other                                        1,756          2,513
    Total other liabilities                    179,494        182,987
TOTAL                                        $ 989,896      $ 952,653
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>



<PAGE> 33
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<S>                                            <C>            <C>
At December 31 (in thousands)                  1997           1996
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 23,630,568         $ 78,258       $ 78,258
Retained Earnings, $2,194,121 restricted as
to payment of cash dividends on common stock   270,828        252,626
   Total common shareholders' equity           349,086        330,884
PREFERRED STOCK OF SUBSIDIARY
Cumulative, $100 par value, authorized
 800,000 shares, issuable in series:
Nonredeemable
   4.8% Series, outstanding 85,895 shares,
   callable at $110 per share                  8,590          8,590
   4.75% Series, outstanding 25,000 shares,
   callable at $101 per share                  2,500          2,500
   Total nonredeemable preferred
   stock of subsidiary                         11,090         11,090
Redeemable
   6.50% Series, outstanding 75,000 shares,
   redeemable at $100 per share
   December 1, 2002                            7,500          7,500
SPECIAL PREFERRED STOCK OF SUBSIDIARY
Cumulative, no par value, authorized 5,000,000
shares, issuable in series: 8-1/2% series, outstanding
9,237 shares redeemable at $100 per share      924            924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds                           238,420        251,115
Notes payable                                  36,000         11,273
Unamortized debt premium and discount, net     (713)          (759)
     Total long-term debt                      273,707        261,629

LONG-TERM PARTNERSHIP OBLIGATIONS,
 NET OF CURRENT MATURITIES                     2,424          4,563
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
   2015, Series B, presently 4.05%             31,500         31,500
TOTAL CAPITALIZATION, including bonds
 subject to tender                           $ 676,231      $ 648,090
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>



<PAGE> 34
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<S>                                           <C>        <C>      <C>
Year Ended December 31 (in thousands)         1997       1996     1995

Balance, January 1                         $ 252,626  $ 236,617  $ 218,424
Net income                                   46,140     43,264     44,819
                                             298,766    279,881    263,243
Common Stock Dividends ($1.18 per share in 1997,
$1.15 per share in 1996 and $1.13
 per share in 1995)                          27,938     27,255     26,626
Balance, December 31 (See Consolidated
 Statements of Capitalization
 for restriction)                          $ 270,828  $ 252,626  $ 236,617
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>


<PAGE> 35




                          Southern Indiana Gas
                           And Electric Company



<PAGE> 36

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO SOUTHERN INDIANA GAS AND ELECTRIC COMPANY:

    We have audited the balance sheets and statements of
capitalization of SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(an Indiana corporation) as of December 31, 1997 and 1996,
and the related  statements of income, retained earnings and
cash flows for each of the three years in the period ended
December 31, 1997.  These financial statements and the
supplemental schedule referred to below are the
responsibility of Southern Indiana Gas and Electric
Company's management.  Our responsibility is to express an
opinion on these financial statements and supplemental
schedule based on our audits.

    We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.

    In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Southern Indiana Gas and Electric
Company as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.

    As discussed in Note 3, effective January 1, 1995,
Southern Indiana Gas and Electric Company changed its method
of accounting for unbilled revenues.

    Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The supplemental schedule listed under Item 8 (3) is
presented for the purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic
financial statements.  This supplemental schedule has been
subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Chicago, Illinois
January 23, 1998



<PAGE> 37
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
<S>                                       <C>          <C>        <C>
Year Ended December 31 (in thousands)     1997         1996       1995
OPERATING REVENUES:
   Electric                             $ 272,545   $  276,479 $  275,495
   Gas                                    85,561       96,251     63,203
Total operating revenues                  358,106      372,730    338,698
OPERATING EXPENSES:
   Fuel for electric generation           62,630       74,860     81,236
   Purchased electric energy              13,985       8,295      9,332
   Cost of gas sold                       54,060       66,105     40,303
   Other operation expenses               55,611       56,188     50,712
   Maintenance                            29,086       29,641     32,158
   Depreciation and amortization          40,191       38,617     39,302
   Federal and state income taxes         26,844       24,034     18,093
   Property and other taxes               12,787       13,949     13,689
     Total operating expenses             295,194      311,689    284,825
OPERATING INCOME                          62,912       61,041     53,873
OTHER INCOME:
   Allowance for other funds
   used during construction               581          -          380
   Interest                               541          1,824      1,213
   Other, net                             992          1,003      4,914
     Total other income                   2,114        2,827      6,507
INCOME BEFORE INTEREST
 AND OTHER CHARGES                        65,026       63,868     60,380
INTEREST AND OTHER CHARGES:
   Interest on long-term debt             18,020       18,432     18,789
   Amortization of premium, discount,
   and expense on debt                    671          690        694
   Other interest                         1,769        2,350      1,894
   Allowance for borrowed funds
    used during construction              (797)        (445)      (621)
     Total interest and other charges     19,663       21,027     20,756
NET INCOME BEFORE CUMULATIVE
 EFFECT OF ACCOUNTING CHANGE              45,363       42,841     39,624
Cumulative Effect at January 1, 1995
of Adopting the Unbilled
Revenues Method of Accounting -
Net of Income Taxes                       -            -          6,294
NET INCOME                                45,363       42,841     45,918
   Preferred Stock Dividends              1,097        1,097      1,099
NET INCOME APPLICABLE TO COMMON STOCK   $ 44,266    $  41,744  $  44,819
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>



<PAGE> 38
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
<S>                                       <C>         <C>         <C>
Year Ended December 31 (in thousands)     1997        1996        1995
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                           $ 45,363   $  42,841   $  45,918
   Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization        40,191      38,617      39,302
     Deferred income taxes and
     investment tax credits, net          (4,951)     10,558      9,516
     Allowance for other funds used
     during construction                  (581)       -           (380)
     Cumulative effect of
     accounting change                    -           -           (6,294)
     Change in assets and liabilities:
     Receivables, net (including accrued
     unbilled revenues)                   (3,261)     (18,128)    (22,167)
     Inventories                          (3,407)     3,772       11,479
     Coal contract settlement             -           12,928      (5,243)
     Accounts payable                     (272)       (4,882)     2,813
     Accrued taxes                        (2,788)     (1,682)     1,972
     Refunds from gas suppliers           (915)       (1,213)     2,037
     Refunds to customers                 (651)       (4,961)     (7,348)
     Accrued coal liability               -           -           (22,018)
     Other assets and liabilities         7,950       5,194       (1,707)
     Net cash provided by
     operating activities                 76,678      83,044      47,880
CASH FLOWS FROM INVESTING ACTIVITIES
   Construction expenditures (net of
   allowance for other funds used
   during construction)                   (65,501)    (40,302)    (44,709)
   Demand side management program
   expenditures                           (2,340)     (3,633)     (9,051)
   Purchases of investments               -           -           (2,034)
   Sales of investments                   -           -           4,211
   Investments in partnerships            -           -           (901)
   Change in nonutility property          -           648         2,316
   Change in notes receivable             -           -           (1,138)
   Other                                  (456)       (211)       4,941
     Net cash used in investing
     activities                           (68,297)    (43,498)    (46,365)
CASH FLOWS FROM FINANCING ACTIVITIES
   First mortgage bonds                   (295)       (8,000)     (5,300)
   Dividends paid                         (30,482)    (28,353)    (27,725)
   Reduction in preferred stock           -           -           (91)
   Change in environmental improvement
   funds held by trustee                  (272)       (188)       6,884
   Payments on partnership obligations    -           -           (3,256)
   Change in notes payable                20,129      1,900       9,127
   Contribution of nonregulated
   subsidiaries                           -           (12,145)    -
   Other                                  526         533         620
     Net cash used in financing
     activities                           (10,394)    (46,253)    (19,741)
NET DECREASE IN CASH AND
 CASH EQUIVALENTS                         (2,013)     (6,707)     (18,226)
CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                      3,127       9,834       28,060
CASH AND CASH EQUIVALENTS
 AT END OF PERIOD                       $ 1,114    $  3,127    $  9,834
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>



<PAGE>  39
<TABLE>
<CAPTION>
BALANCE SHEETS
<S>                                               <C>           <C>
At December 31 (in thousands)                     1997          1996
ASSETS
UTILITY PLANT, at original cost:
   Electric                                    $  1,091,349  $  1,047,717
   Gas                                            141,646       131,796
                                                  1,232,995     1,179,513
   Less accumulated provision for depreciation    557,631       524,104
                                                  675,364       655,409
   Construction work in progress                  32,241        25,849
    Net utility plant                             707,605       681,258
OTHER INVESTMENTS AND PROPERTY:
   Environmental improvement funds
    held by trustee                               4,102         3,830
   Nonutility property and other                  1,552         1,552
    Total other investments and property          5,654         5,382
CURRENT ASSETS:
   Cash and cash equivalents                      1,114         3,127
   Receivables, less allowance of $327,581
    and $214,956, respectively                    32,281        32,491
   Accrued unbilled revenues                      22,320        34,744
   Inventories                                    32,504        31,190
   Current regulatory assets                      11,749        13,687
   Other current assets                           1,443         4,975
    Total current assets                          101,411       120,214
Other Assets:
   Unamortized premium on reacquired debt         4,704         5,184
   Postretirement benefits other than pensions    3,263         5,541
   Demand side management programs                24,467        22,757
   Allowance inventory                            2,093         -
   Deferred charges                               15,266        11,989
    Total other assets                            49,793        45,471
TOTAL                                          $  864,463    $  852,325
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>




<PAGE> 40
<TABLE>
<CAPTION>
<S>                                               <C>        <C>
At December 31 (in thousands)                     1997          1996
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock                                   $  78,258     $  78,258
Retained Earnings                                 228,570       213,688
   Total common shareholders' equity              306,828       291,946
Cumulative Nonredeemable Preferred
 Stock of Subsidiary                              11,090        11,090
Cumulative Redeemable Preferred
 Stock of Subsidiary                              7,500         7,500
Cumulative Special Preferred
 Stock of Subsidiary                              924           924
Long-Term Debt, net of current maturities         238,707       251,355
   Total capitalization, excluding bonds
    subject to tender (see Statements
    of Capitalization)                            565,049       562,815
CURRENT LIABILITIES:
Current Portion of Adjustable Rate Bonds
 Subject to Tender                                31,500        31,500
Current Maturities of Long-Term Debt and
 Interim Financing:
   Maturing long-term debt                        12,695        295
   Notes payable                                  31,643        32,400
   Notes payable to associated company            20,886        -
     Total current maturities of long-term
     debt and interim financing                   65,224        32,695
Other Current Liabilities:
   Accounts payable                               27,066        27,338
   Dividends payable                              123           123
   Accrued taxes                                  5,925         8,713
   Accrued interest                               4,635         4,572
   Refunds to customers                           1,155         2,722
   Other accrued liabilities                      16,018        29,650
     Total other current liabilities              54,922        73,118
     Total current liabilities                    151,646       137,313
Other Liabilities:
   Accumulated deferred income taxes              114,493       116,373
   Accumulated deferred investment tax
    credits, being amortized over lives
    of property                                   20,249        21,706
   Regulatory income tax liability                -             1,613
   Postretirement benefits other
    than pensions                                 11,271        10,084
   Other                                          1,755         2,421
   Other liabilities                              147,768       152,197
TOTAL                                          $  864,463    $  852,325
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>


<PAGE> 41
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
<S>                                               <C>           <C>
At December 31 (in thousands)                     1997          1996
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 23,630,568           $  78,258     $  78,258
Retained Earnings, $2,194,121 restricted as
to payment of cash dividends on common stock      228,570       213,688
  Total common shareholders' equity               306,828       291,946
PREFERRED STOCK
Cumulative, $100 par value, authorized
 800,000 shares, issuable in series:
Nonredeemable
   4.8% Series, outstanding 85,895 shares,
   callable at $110 per share                     8,590         8,590
   4.75% Series, outstanding 25,000 shares,
   callable at $101 per share                     2,500         2,500
   Total nonredeemable preferred stock            11,090        11,090
Redeemable
   6.50% Series, outstanding 75,000 shares,
   redeemable at $100 per share
   December 1, 2002                               7,500         7,500
SPECIAL PREFERRED STOCK
Cumulative, no par value, authorized 5,000,000
shares, issuable in series: 8-1/2% series, outstanding
9,237 shares redeemable at $100 per share         924           924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds                              238,420       251,114
Notes payable                                     1,000         1,000
Unamortized debt premium and discount, net        (713)         (759)
   Total long-term debt                           238,707       251,355
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
   2015, Series B, presently 4.05%                31,500        31,500
TOTAL CAPITALIZATION, including bonds
 subject to tender                             $  596,549    $  594,315
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>



<PAGE>42
<TABLE>
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
<S>                                       <C>        <C>       <C>
Year Ended December 31 (in thousands)     1997         1996       1995

Balance, January 1                      $ 213,688    $ 236,617 $  218,424
Net income                                45,363       42,841     45,918
                                          259,051      279,458    264,342
Dividend of Nonregulated
 Subsidiaries to Parent                   -            37,418     -
Preferred Stock Dividends                 1,097        1,097      1,099
Common Stock Dividends                    29,384       27,255     26,626
                                          30,481       65,770     27,725
Balance, December 31 (See Statements
 of Capitalization for restriction)     $ 228,570    $ 213,688 $  236,617
<FN>
The accompanying Notes to Consolidated Financial Statements are
 an integral part of these statements.
</FN>
</TABLE>



<PAGE> 43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1   Summary of Significant Accounting Policies

SIGCORP AND SIGECO

PRINCIPLES OF CONSOLIDATION  Effective January 1, 1996, a
new holding company, SIGCORP, Inc. (SIGCORP), became the
parent of Southern Indiana Gas and Electric Company
(SIGECO), a regulated gas and electric utility which
accounts for over 90% of SIGCORP's net income, and four of
SIGECO's former wholly-owned subsidiaries:  Energy Systems
Group, Inc. (ESGI), Southern Indiana Minerals, Inc. (SIMI),
Southern Indiana Properties, Inc.(SIPI)  and ComSource, Inc.
(ComSource).  All of the shares of SIGECO's common stock
were exchanged on a one-for-one basis for shares of SIGCORP,
while all of SIGECO's debt securities and all of its
outstanding shares of preferred stock remain securities of
SIGECO and were unaffected.  The 1995 financial statements
of SIGECO include the results of its former wholly-owned
subsidiaries.  During the fourth quarter of 1996, four
additional nonregulated subsidiaries were formed: SIGCORP
Energy Services, Inc. (Energy), SIGCORP Capital, Inc.
(Capital), SIGCORP Fuels, Inc. (Fuels) and SIGCORP Power
Marketing, Inc. (Power).  During the third quarter of 1997,
SIGCORP Communications Services, Inc. (Communications) was
formed.

SIGECO is a regulated gas and electric utility and engaged
principally in the production, purchase, transmission,
distribution and sale of electricity and the delivery of
natural gas.  SIGECO serves 122,937 electric customers in
the city of Evansville and 74 other communities and serves
107,278 gas customers in the city of Evansville and 64 other
communities.

ESGI has a one-third ownership in Energy Systems Group, LLC,
an energy-related performance contracting firm serving
industrial and commercial customers.  SIMI processes and
markets coal combustion by-products.  SIPI invests in
leveraged leases of real estate and equipment, real estate
partnerships and joint ventures and private placement
subordinated debt instruments.  Cash balances are invested
in marketable securities.  ComSource markets
telecommunications services.  Energy was established to
market energy and related services and is currently
providing natural gas, pipeline management, storage service
and other natural gas-related services to SIGECO, other
utilities and endusers.  Capital is the primary financing
vehicle for SIGCORP's nonregulated subsidiaries.  Fuels was
formed to provide coal and related services to SIGECO and
other customers.  Power, not yet active, was formed to
procure electric power supplies for SIGECO and other
customers, and will market SIGECO's excess electric
generation capacity.  Communications was formed to undertake
telecommunications related strategic initiatives.  All
significant intercompany transactions are eliminated.

On May 23, 1997, Energy Systems Group, Inc. (ESGI), IGC
Energy and Citizens By-Products Coal Company formed Energy
Systems Group, LLC (ESG LLC), an equally owned limited
liability corporation.  On June 18, 1997, ESGI contributed
significantly all of its assets and liabilities to ESG LLC
for a one-third interest in ESG LLC.  ESGI's results of
operations through June 18, 1997 are included in other
revenues and the respective operating expense accounts in
SIGCORP's consolidated financial statements, and subsequent
to June 18, 1997, ESGI's share of the pretax earnings and
losses of ESG LLC are included in Other, net.

RECLASSIFICATION  Certain amounts in the prior year
financial statements have been reclassified to conform to
the current year financial statement presentation.

USE OF ESTIMATES  The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

<PAGE> 44

REGULATION  The Indiana Utility Regulatory Commission (IURC)
has jurisdiction over all investor-owned gas and electric
utilities in Indiana.  The Federal Energy Regulatory
Commission (FERC) has jurisdiction over those investor-owned
utilities that make wholesale energy sales.  These agencies
regulate SIGECO's utility business operations, rates,
accounts, depreciation allowances, services, security issues
and the sale and acquisition of properties.  The financial
statements of SIGECO are based on generally accepted
accounting principles, which give recognition to the
ratemaking and accounting practices of these agencies.


REGULATORY ASSETS  SIGECO is subject to the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation."
Regulatory assets represent probable future revenues to
SIGECO associated with certain incurred costs which will be
recovered from customers through the ratemaking process.

Generally accepted accounting principles for rate regulated
companies also require that regulatory assets which are no
longer probable of recovery through future revenues, at the
balance sheet date, be charged to earnings.  The following
regulatory assets are reflected in the Consolidated Balance
Sheets:

<TABLE>
<CAPTION>
<S>                                                    <C>        <C>
At December 31 (in thousands)                          1997       1996
Regulatory Assets:
     Demand side management program costs            $ 25,069  $  23,359
     Postretirement benefit costs (Note 1)             5,541      7,819
     Unamortized premium on reacquired debt            5,183      5,663
     Regulatory study costs                            337        718
     Fuel and gas costs (Note 1)                       9,129      13,237
                                                       45,259     50,796
     Less current amounts                              11,749     13,687
     Total long-term regulatory assets               $ 33,510  $  37,109
</TABLE>

Refer to the individual footnotes referenced above for
discussion of specific regulatory assets.  See Income Taxes
for regulatory assets and liabilities related to income
taxes.

As of December 31, 1997, the recovery of $26,200,000 of
SIGECO's total regulatory assets is reflected in rates
charged to customers over periods ranging up to 26 years.
SIGECO intends to request recovery of its remaining
regulatory assets in future general rate case filings.

If all or a separable portion of SIGECO's operation becomes
no longer subject to the provisions of SFAS No. 71, a write
off of related regulatory assets would be required, unless
some form of transition cost recovery continues through
rates established and collected for SIGECO's remaining
regulated operations.  In addition, SIGECO would be required
to determine any impairment to the carrying costs of
deregulated plant and inventory assets.

CONCENTRATION OF CREDIT RISK   SIGECO's customer receivables
from gas and electric sales and gas transportation services
are primarily derived from a diversified base of
residential, commercial and industrial customers located in
a southwestern region of Indiana.  SIGECO continually
reviews customers' creditworthiness and requests deposits or
refunds deposits based on that review.  Energy's customer
receivables from gas sales and transportation services are
primarily derived from a diversified base of commercial and
industrial customers located in the midwestern region of the
United States.  Energy investigates the creditworthiness of
its potential customers.  See Note 4 for a discussion of
receivables related to SIPI's leveraged lease investments.

<PAGE> 45

UTILITY PLANT  Utility plant is stated at the historical
original cost of construction.  The cost of repairs and
minor renewals is charged to maintenance expense as
incurred.  Property unit replacements are capitalized and
the depreciation reserve is charged with the cost, less net
salvage, of units retired.

DEPRECIATION  Depreciation of utility plant is provided
using the straight-line method over the estimated service
lives of the depreciable plant.  Provisions for
depreciation, expressed as an annual percentage of the cost
of average depreciable plant in service, were as follows:
<TABLE>
<CAPTION>
<S>                                             <C>       <C>      <C>
                                                1997       1996    1995
Electric                                        3.4%       3.4%    3.8%
Gas                                             3.2%       3.2%    3.3%
</TABLE>

INCOME TAXES  SIGCORP utilizes the liability method of
accounting for income taxes, providing deferred taxes on
temporary differences.  Investment tax credits have been
deferred and are amortized through credits to income over
the lives of the related property.

The components of the net deferred income tax liability are
as follows:
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Deferred Tax Liabilities:
  Depreciation and cost recovery
  timing differences                              $  117,357  $  115,095
  Deferred fuel costs, net                           1,252       4,778
  Leveraged leases                                   31,625      30,702
  Regulatory assets recoverable through
  future rates                                       25,687      25,668
Deferred Tax Assets:
  Unbilled revenue                                   (1,593)     (2,499)
  Regulatory liabilities to be settled
  through future rates                               (25,229)    (27,282)
  Other, net                                         (2,881)     608
Net deferred income tax liability                 $  146,218  $  147,070
</TABLE>

The $852,000 decrease in the net deferred income tax
liability from December 31, 1996 to December 31, 1997, is
due to the current year deferred federal and state income
tax benefit of $3,030,000.  This decrease was partially
offset by a  $2,178,000 increase which resulted primarily
from a change in the net regulatory assets and liabilities.
 <TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Deferred Tax Liabilities:
  Depreciation and cost recovery
  timing differences                              $  117,467  $  115,095
  Deferred fuel costs, net                           1,252       4,778
  Regulatory assets recoverable
  through future rates                               25,687      25,668
Deferred Tax Assets:
  Unbilled revenue                                   (1,593)     (2,499)
  Regulatory liabilities to be settled
  through future rates                               (25,229)    (27,282)
  Other, net                                         (3,091)     613
Net deferred income tax liability                 $  114,493  $  116,373
</TABLE>

The $1,880,000 decrease in SIGECO's net deferred income tax
liability from December 31, 1996 to December 31, 1997, is
due to the current year deferred federal and state income
tax benefit of $3,951,000.  This decrease was partially
offset by a $2,071,000 increase which resulted from a change
in the net regulatory assets and liabilities.

<PAGE> 46

The components of current and deferred income tax expense
are as follows:

<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                        <C>         <C>       <C>
Year Ended December 31 ( in thousands)      1997       1996      1995
Current
   Federal                               $ 24,387   $  8,743   $ 7,031
   State                                   3,961       1,891     1,601
Deferred, net
   Federal                                 (2,858)     10,967    7,771
   State                                   (172)       1,805     1,385
Investment tax credit, net                 (1,457)     (1,443)   (1,556)
Total income tax expense related to net income before
cumulative effect of accounting change     23,861      21,963    16,232
Current income tax expense related to
cumulative effect of accounting change     -           -         3,845
Total income tax expense                 $ 23,861   $  21,963  $ 20,077
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                        <C>         <C>       <C>
Year Ended December 31 ( in thousands)      1997       1996      1995
Current
   Federal                               $ 28,055   $  11,773  $ 9,801
   State                                   4,198       1,934     1,861
Deferred, net
   Federal                                 (3,673)     10,081    6,719
   State                                   (278)       1,689     1,268
Investment tax credit, net                 (1,458)     (1,443)   (1,556)
Income tax expense as shown on
Statements of Income                       26,844      24,034    18,093
Current income tax expense
 included in Other Income                  415         606       (3,030)
Deferred income tax expense
 included in Other Income                  -           -         1,169
Total income tax expense related
 to net income before
cumulative effect of accounting change     27,259      24,640    16,232
Current income tax expense related to
cumulative effect of accounting change     -           -         3,845
Total income tax expense                 $ 27,259   $  24,640  $ 20,077
</TABLE>

A reconciliation of the statutory tax rates to effective
income tax rate is as follows:
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                        <C>         <C>       <C>
Year Ended December 31                     1997        1996      1995
Statutory federal and state rate           37.9%       37.9%     37.9%
Equity portion of allowance for funds
 used during construction                  (0.3)       -         (0.2)
Book depreciation over related tax
 depreciation - nondeferred                1.8         1.7       2.0
Amortization of deferred investment
 tax credit                                (2.1)       (2.2)     (2.4)
Low-income housing credit                  (4.0)       (4.2)     (4.3)
Preferred dividend requirements
 of subsidiary                             0.6         0.6       0.6
Other, net                                 0.2         (0.1)     (2.7)
Effective tax rate                         34.1%       33.7%     30.9%
</TABLE>

<PAGE> 47

<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                        <C>         <C>       <C>
Year Ended December 31                     1997        1996      1995
Statutory federal and state rate           37.9%       37.9%     37.9%
Equity portion of allowance for funds
 used during construction                  (0.3)       -         (0.2)
Book depreciation over related tax
 depreciation - nondeferred                1.8         1.9       2.0
Amortization of deferred investment
 tax credit                                (2.1)       (2.3)     (2.4)
Low-income housing credit                  -           -         (4.3)
Preferred dividend requirements
 of subsidiary                             -           -         0.6
Other, net                                 0.2         (1.0)     (2.7)
Effective tax rate                         37.5%       36.5%     30.9%
</TABLE>

PENSION BENEFITS  SIGECO has trusteed, noncontributory
defined benefit plans which cover eligible full-time regular
employees.  The plans provide retirement benefits based on
years of service and the employee's highest 60 consecutive
months' compensation during the last 120 months of
employment.  The funding policy of SIGECO is to contribute
amounts to the plans equal to at least the minimum funding
requirements of the Employee Retirement Income Security Act
of 1974 (ERISA) but not in excess of the maximum deductible
for federal income tax purposes.  The plans' assets as of
December 31, 1997 consist of investments in interest-bearing
obligations and common stocks.

The components of net pension cost related to these plans
are as follows:

<TABLE>
<CAPTION>
<S>                                       <C>          <C>       <C>
Year Ended December 31 (in thousands)      1997        1996      1995
Service cost - benefits earned
 during the period                      $  2,166    $  2,288   $ 1,700
Interest cost on projected
 benefit obligation                        4,661       4,433     4,044
Actual return on plan assets               (12,638)    (7,409)   (12,243)
Net amortization and deferral              7,143       2,379     8,000
Net pension cost charged to operations,
 construction and other accounts        $  1,332    $  1,691   $ 1,501
</TABLE>

The funded status of the trusteed retirement plans is as
follows:

<TABLE>
<CAPTION>
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Actuarial present value of:
    Vested benefit obligation                     $  (55,038) $  (49,098)
    Accumulated benefit obligation                $  (56,566) $  (50,461)
Projected benefit obligation                      $  (72,914) $  (63,999)
Plan assets at fair value                            76,587      66,011
Excess of plan assets over projected
 benefit obligation                                  3,673       2,012
Remaining unrecognized transitional asset            (2,233)     (2,651)
Prior service cost                                   1,412       1,560
Unrecognized net loss                                (8,117)     (5,797)
Accrued pension liability                         $  (5,265)  $  (4,876)
</TABLE>

The projected benefit obligation at December 31, 1997 and
1996 was determined using an assumed discount rate of 7.0%
and 7.5%, respectively.  For both periods, the long-term
rate of compensation increases was assumed to be 5%, and the
long-term rate of return on plan assets was assumed to be
8%.  The transitional asset is being amortized over
approximately 15, 18 and 14 years for the Salaried, Hourly
and Hoosier plans, respectively.

In addition to the trusteed pension plans discussed above,
SIGECO provides supplemental pension benefits to certain
current and former officers under nonqualified and nonfunded
plans.  Annual service cost related to these benefits is
approximately $300,000.

<PAGE> 48

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS  SIGECO provides
certain postretirement health care and life insurance
benefits for retired employees and their dependents through
fully insured plans.  SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," requires
the expected cost of these benefits be recognized during the
employees' years of service.  As authorized by the IURC,
SIGECO deferred as a regulatory asset the additional SFAS
No. 106 costs accrued over the costs of benefits actually
paid after date of adoption, but prior to inclusion in
rates.  Subsequently, the IURC authorized SIGECO to include
in rates SFAS No. 106 costs and to recover the amounts
previously deferred over a 60-month period.

The components of the net periodic other postretirement
benefit cost are as follows:

<TABLE>
<CAPTION>
<S>                                       <C>        <C>         <C>
Year Ended December 31 (in thousands)     1997       1996        1995
Service cost - benefits earned
 during the period                      $ 890     $  925      $  903
Interest cost on accumulated
 benefit obligation                       2,056      2,028       2,272
Actual return on assets                   (534)      (292)       (107)
Net amortization and deferral             1,172      1,267       1,259
Net periodic postretirement
 benefit cost                             3,584      3,928       4,327
Amortization of prior years' deferred
postretirement benefit obligation         2,278      2,569       549
                                          5,862      6,497       4,876
Deferred postretirement benefit
 obligation                               -          314         2,112
Total charged to operations,
 construction and other accounts        $ 5,862   $  6,183    $  2,764
</TABLE>

The net periodic cost determined under the standard includes
the amortization of the discounted present value of the
obligation at the adoption date, $29,400,000, over a 20-year
period.

Reconciliation of the accumulated postretirement benefit
obligation to the accrued liability for postretirement
benefits is as follows:
<TABLE>
<CAPTION>
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Accumulated other postretirement benefit obligation:
   Retirees                                       $  (11,090) $  (10,041)
   Other fully eligible participants                 (5,717)     (5,916)
   Other active participants                         (14,117)    (13,317)
Total accumulated benefit obligation                 (30,924)    (29,274)
Plan assets at fair value                            7,318       5,205
Excess of accumulated benefit obligation
 over plan assets                                    (23,606)    (24,069)
Unrecognized transition obligation                   22,076      23,547
Unrecognized net gain                                (9,741)     (9,562)
Accrued postretirement benefit liability          $  (11,271) $  (10,084)
</TABLE>

The assumptions used to develop the accumulated
postretirement benefit obligation at December 31, 1997 and
1996 included discount rates of 7.0% and 7.5%, respectively,
and a health care cost trend rate of 8% declining to 4.5% in
2006 and 9% declining to 5% in 2004 at December 31, 1997 and
1996, respectively.  The estimated cost of these future
benefits could be significantly affected by future changes
in health care costs, work force demographics, interest
rates or plan changes.  A 1% increase in the assumed health
care cost trend rate each year would increase the aggregate
service and interest costs for 1997 by $565,000 and the
accumulated postretirement benefit obligation by $5,196,000.

In 1995, SIGECO adopted Voluntary Employee Beneficiary
Association (VEBA) Trust Agreements for the funding of
postretirement health benefits for retirees and their
eligible dependents and beneficiaries.  Annual funding is
discretionary and is based on the projected cost over time
of benefits to be provided to covered persons consistent
with acceptable actuarial methods.  To the extent these
postretirement benefits are funded, the benefits will not be
shown as a liability on SIGECO's financial statements.

<PAGE> 49

CASH FLOW INFORMATION  For the purposes of the Consolidated
Balance Sheets and the Consolidated Statements of Cash
Flows, SIGCORP and SIGECO consider all highly liquid debt
instruments purchased with an original maturity of three
months or less to be cash equivalents.

During 1997, 1996 and 1995, SIGCORP paid interest (net of
amounts capitalized) of $19,888,000, $20,328,000 and
$20,085,000, respectively, and income taxes of $29,552,000,
$12,237,000 and $10,334,000,  respectively.  SIGCORP is
involved in several partnerships which are partially
financed by partnership obligations amounting to $4,563,000
and $6,839,000 at December 31, 1997 and 1996, respectively.
During 1997, 1996 and 1995, SIGECO paid interest (net of
amounts capitalized) of $18,929,000, $19,591,000 and
$20,085,000, respectively, and income taxes of $35,239,000,
$15,746,000 and $10,334,000, respectively.

The following decreases for 1996 in SIGECO's assets and
liabilities were caused by a divide of its nonregulated
subsidiaries to SIGCORP and are noncash in nature.

Deferred income taxes                     (29,783)
Investments in Leveraged Leases           (35,609)
Investments in Partnerships               (25,307)
Partnership obligations                   (9,625)
Other, net                                (3,771)

INVENTORIES  SIGECO accounts for inventories under the
average cost method except for gas in underground storage
which is accounted for under the last-in, first-out (LIFO)
method. Energy accounts for gas in underground storage under
the average cost method.

<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Fuel (coal and oil) for electric generation       $  8,920    $  6,539
Materials and supplies                               14,103      15,614
Emission allowances                                  2,616       -
Gas in underground storage - at LIFO cost            9,046       9,088
                           - at average cost         862         -
Total inventories                                 $  35,547   $  31,241
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                                  <C>         <C>
At December 31 (in thousands)                        1997        1996
Fuel (coal and oil) for electric generation       $  8,920    $  6,539
Materials and supplies                               14,014      15,614
Emission allowances                                  2,616       -
Gas in underground storage - at LIFO cost            9,046       9,088
Total inventories                                 $  34,596   $  31,241
</TABLE>

Based on the December 1997 price of gas purchased, the cost
of replacing SIGECO's current portion of gas in underground
storage at December 31, 1997 exceeded the amount stated on a
LIFO basis by approximately $16,000,000.

OPERATING REVENUES AND FUEL COSTS  SIGECO accrues an
estimate of revenues unbilled for electric and gas service
furnished from the meter reading dates to the end of each
accounting period.  All metered gas rates contain a gas cost
adjustment clause which allows for adjustment in charges for
changes in the cost of purchased gas.  Metered electric
rates typically contain a fuel adjustment clause which
allows for adjustment in charges for electric energy to
reflect changes in the cost of fuel and the net energy cost
of purchased power.  SIGECO also collects through a
quarterly rate adjustment mechanism, the margin on electric
sales lost due to the implementation of demand side
management programs.

<PAGE> 50

SIGECO records any adjustment clause under-or overrecovery
each month in revenues.  A corresponding asset or liability
is recorded until such time as the under-or overrecovery is
billed or refunded to its customers.  The cost of gas sold
is charged to operating expense as delivered to customers
and the cost of fuel for electric generation is charged to
operating expense when consumed.

NEW ACCOUNTING PRONOUNCEMENTS  In February 1997, the
Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS 128), and Statement of Financial Accounting
Standards No. 129, "Disclosure of Information about Capital
Structure" (SFAS 129).  SFAS 128 specifies the computation,
presentation and disclosure requirements for earnings per
share for entities with publicly held common stock.  SFAS
129 was issued in conjunction with the FASB's earnings per
share project and incorporated related disclosure
requirements from APB Opinion No. 10, "Disclosure of Long-Term
Obligations," and Statement of Financial Accounting
Standards No. 47, "Disclosure of Long-Term Obligations."
Both statements are effective for fiscal years ending after
December 15, 1997.  SIGCORP adopted the statements for year
end 1997 (see Note 7 Capital Stock).

In June 1997, FASB issued Statements of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," and No.
131, "Disclosures about Segments of an Enterprise and
Related Information," effective for periods beginning after
December 15, 1997.  These statements do not affect the
accounting recognition or measurement of transactions, but
rather require expanded disclosures regarding financial
results.  SIGCORP will adopt these standards in 1998 as
required by the FASB.

Note 2  Rate and Regulatory Matters

SIGCORP and SIGECO

GAS MATTERS  On September 7, 1995, SIGECO petitioned the
IURC seeking a general increase in gas rates.  On July 3,
1996, the IURC issued its order, effective July 15, 1996,
granting a 7.3%, or $4.8 million, increase in annual
revenues.

ELECTRIC MATTERS  On June 21, 1995, the IURC approved the
third of three planned general electric rate increases
related to SIGECO's Clean Air Act Compliance project
(primarily the addition of a sulfur dioxide scrubber to
serve Culley Units 2 and 3), which began commercial
operation February 1995.  The third adjustment also covered
certain nonscrubber-related operating costs such as
additional costs incurred for postretirement benefits other
than pensions beginning in 1993, and the recovery of demand
side management program expenditures.  The effective dates
and impact on annual electric revenues of the three
adjustments are summarized below:
<TABLE>
<CAPTION>
<S>                  <C>                 <C>              <C>
                                         Additional
                     Effective           Annual           Revenue
                     Date                Revenues         Increase
Adjustment 1         October 1, 1993     $1.8 million     1.0%
Adjustment 2         June 29, 1994        4.2 million     2.3
Adjustment 3         June 26, 1995        4.5 million     2.1
</TABLE>

On April 10, 1995, SIGECO reached an agreement with its
remaining long-term contract coal supplier, to buy out the
remainder of SIGECO's contractual obligations for $45.5
million, enabling it to acquire lower-priced spot market
coal.   SIGECO estimates the total savings in coal costs
resulting from the buyout, net of total buyout costs, will
approximate $58 million through December 31, 1998, the term
of the original contract.  The net savings are being passed
back to SIGECO's electric customers through the fuel
adjustment clause.

<PAGE> 51

Note 3  Revenues Accounting Change

SIGCORP and SIGECO

Prior to 1995, SIGECO recognized electric and gas revenues
when customers were billed on a cycle billing basis.  The
utility service rendered after monthly meter reading dates
through the end of a calendar month (unbilled revenues)
became a part of operating revenues in the following month.
To more closely match revenues with expenses, effective
January 1, 1995, SIGECO changed its method of accounting to
accrue the amount of revenue for sales unbilled at the end
of each month.  The cumulative effect of the change on prior
years, net of income taxes, is included in net income for
1995.  The effect of the change was to increase 1995 net
income $7.9 million ($.34 per share), of which an increase
of $1.6 million ($.07 per share), was reflected in
operations and an increase of $6.3 million ($.27 per share),
the cumulative effect of the change as of January 1, 1995,
was reported as a separate component of net income.

Note 4  Leveraged Leases

SIGCORP

Southern Indiana Properties, Inc. is a lessor in five
leveraged lease agreements under which an office building, a
part of a reservoir, an interest in a paper mill, a gas
turbine electric generating peaking unit and passenger
railroad cars are leased to third parties.  The economic
lives and lease terms vary with the leases.  The total
equipment and facilities cost was approximately $110,800,000
at December 31, 1997 and 1996, respectively.  The cost of
the equipment and facilities was partially financed by
nonrecourse debt provided by lenders, who have been granted
an assignment of rentals due under the leases and a security
interest in the leased property, which they accepted as
their sole remedy in the event of default by the lessee.
Such debt amounted to approximately  $79,100,000 and
$81,700,000 at December 31, 1997 and 1996, respectively.
SIGCORP's net investment in leveraged leases at those dates
was $11,339,000 and $12,185,000, respectively, as shown:

<TABLE>
<CAPTION>
<S>                                             <C>            <C>
At December 31 (in thousands)                   1997           1996
Minimum lease payments receivable             $ 63,877       $ 65,363
Estimated residual value                        29,073         29,073
Less unearned income                            49,986         51,549
Investment in lease financing
receivables and loan                            42,964         42,887
Less deferred taxes arising from
 leveraged leases                               31,625         30,702
Net investment in leveraged leases            $ 11,339       $ 12,185
</TABLE>


<PAGE> 52
Note 5  Short-Term Financing

SIGCORP and SIGECO

SIGECO has trust demand note arrangements totaling
$17,000,000 with several banks, of which $15,000,000 was
utilized at December 31, 1997.  Funds are also borrowed
periodically from banks on a short-term basis, made
available through lines of credit.  SIGCORP has available
lines of credit totaling $63,350,000 at December 31, 1997 of
which $26,368,000 was utilized at that date; included in
these amounts, SIGECO has available lines of credit totaling
$29,000,000 at December 31, 1997 of which $16,643,000 was
utilized at that date.

<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                     <C>          <C>         <C>
At December 31 (in thousands)           1997         1996        1995
Notes Payable
   Balance at year end               $  41,368    $  38,750   $  30,500
   Weighted average interest rate
   on year end balance                  6.21%        5.94%       6.09%
   Average daily amount outstanding
   during the year                   $  11,510    $  24,430   $  16,790
   Weighted average interest rate
   on average daily amount
   outstanding during the year          6.08%        5.74%       6.32%
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                     <C>          <C>         <C>
At December 31 (in thousands)           1997         1996        1995
Notes Payable
   Balance at year end               $  52,529    $  32,400   $  30,500
   Weighted average interest rate
   on year end balance                  6.31%        5.94%       6.09%
   Average daily amount outstanding
   during the year                   $  19,777    $  24,428   $  16,790
   Weighted average interest rate
   on average daily amount
   outstanding during the year          6.13%        5.74%       6.32%
</TABLE>

Note 6  Long-Term Debt

SIGCORP and SIGECO

The annual sinking fund requirement of SIGECO's first
mortgage bonds is 1% of the greatest amount of bonds
outstanding under the Mortgage Indenture.  This requirement
may be satisfied by certification to the Trustee of unfunded
property additions in the prescribed amount as provided in
the Mortgage Indenture.  SIGECO intends to meet the 1998
sinking fund requirement by this means and, accordingly, the
sinking fund requirement for 1998 is excluded from current
liabilities on the balance sheet.  At December 31, 1997,
$259,419,000 of SIGECO's utility plant remained unfunded
under SIGECO's Mortgage Indenture.

Several of SIGCORP's partnership investments have been
financed through obligations with such partnerships.
Additionally, SIGCORP's investments in leveraged leases have
been partially financed through notes payable to banks.  Of
the amount of first mortgage bonds, notes payable and
partnership obligations outstanding at December 31, 1997,
the following amounts mature in the five years subsequent to
1997:

                          SIGCORP         SIGECO
1998                      $14,539,000     $12,400,000
1999                       47,097,000      45,500,000
2000                       1,054,000       500,000
2001                       873,000         600,000
2002                       3,000,000       3,000,000

In addition, $31,500,000 of adjustable rate pollution
control series first mortgage bonds could, at the election
of the bondholder, be tendered to SIGECO in May 1998.  If
SIGECO's agent is unable to remarket any bonds tendered at
that time, SIGECO would be required to obtain additional
funds for payment to bondholders.  For financial statement
presentation purposes those bonds subject to tender in 1998
are shown as current liabilities.

<PAGE> 53

First mortgage bonds, notes payable and partnership
obligations outstanding and classified as long-term are as
follows:

<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                                <C>           <C>
At December 31 (in thousands)                      1997          1996
First Mortgage Bonds due:
    1998, 6-3/8%                                $  -           $ 12,000
    1999, 6%                                       45,000        45,000
    2003, 5.60% Pollution Control Series A         3,945         4,640
    2008, 6.05% Pollution Control Series A         22,000        22,000
    2014, 7.25% Pollution Control Series A         22,500        22,500
    2016, 8-7/8%                                   25,000        25,000
    2023, 7.60%                                    45,000        45,000
    2025, 7-5/8%                                   20,000        20,000
    Adjustable Rate Pollution Control:
    2015, Series A, presently 4.60%                9,975         9,975
    Adjustable Rate Environmental Improvement:
    2023, Series B, presently 6%                   22,800        22,800
    2028, Series A, presently 4.65%                22,200        22,200
Total first mortgage bonds                      $  238,420     $ 251,115
Notes Payable:
    Banks                                       $  -           $ 10,273
    Insurance Company, due 2012, 7.43%             35,000        -
    Tax Exempt, due 2003, 6.25%                    1,000         1,000
Total notes payable                             $  36,000      $ 11,273
Partnership Obligations, due 1999 through
 2003, without interest                         $  2,424       $ 4,563
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                                <C>           <C>
At December 31 (in thousands)                      1997          1996
First Mortgage Bonds due:
    1998, 6-3/8%                                $  -           $ 12,000
    1999, 6%                                       45,000        45,000
    2003, 5.60% Pollution Control Series A         3,945         4,640
    2008, 6.05% Pollution Control Series A         22,000        22,000
    2014, 7.25% Pollution Control Series A         22,500        22,500
    2016, 8-7/8%                                   25,000        25,000
    2023, 7.60%                                    45,000        45,000
    2025, 7-5/8%                                   20,000        20,000
    Adjustable Rate Pollution Control:
    2015, Series A, presently 4.60%                9,975         9,975
    Adjustable Rate Environmental Improvement:
    2023, Series B, presently 6%                   22,800        22,800
    2028, Series A, presently 4.65%                22,200        22,200
Total first mortgage bonds                      $  238,420     $ 251,115
Notes Payable:
    Tax Exempt, due 2003, 6.25%                    1,000         1,000
Total notes payable                             $  1,000       $ 1,000
</TABLE>

<PAGE> 54

Note 7  Capital Stock

SIGCORP and SIGECO

COMMON STOCK  Each outstanding share of SIGCORP's common
stock contains a right which entitles registered holders to
purchase from SIGCORP one-hundredth of a share of SIGCORP's
common stock, at an initial price of $65 per share (Purchase
Price) subject to adjustment.  The rights will not be
exercisable until a party acquires beneficial ownership of
10% of common shares or makes a tender offer for at least
10% of its common shares.  The rights expire December 31,
2005.  If not exercisable, the rights in whole may be
redeemed by SIGCORP at a price of $.01 per right at any time
prior to their expiration.  If at any time after the rights
become exercisable and are not redeemed and SIGCORP is
involved in a merger or other business combination
transaction, proper provision shall be made to entitle a
holder of a right to buy common stock of the acquiring
company having a value of two times such Purchase Price.

On January 21, 1997, the Board of Directors of SIGCORP
approved a split of SIGCORP's issued shares of common stock
without par value on a three-for-two basis.  The stock
split, effective March 27, 1997, increased SIGCORP's
outstanding shares from 15,754,826 to 23,630,568.  Average
common shares outstanding, earnings per share of common
stock and dividends paid per share for all periods presented
reflect the stock split.

SIGECO has a common stock option plan for its key management
employees.  The option price for all stock options is at
least 100% of the fair market value of SIGCORP common stock
at the grant date.  Options generally vest and become
exercisable between one and three years in equal annual
installments beginning one year after the grant date, and
generally expire in 10 years.  The expiration dates for
options outstanding as of December 31, 1997, ranged from
July 13, 2004 to July 14, 2007.  Stock option activity for
the past three years was as follows:

<TABLE>
<CAPTION>
<S>                                      <C>        <C>        <C>
At December 31                           1997       1996       1995
Outstanding at beginning of year         327,901    282,478    230,499
Granted                                  139,348    46,173     54,342
Exercised                                (9,080)    (750)      (2,363)
Outstanding at end of year               458,169    327,901    282,478
Exercisable at end of year               318,821    226,044    113,132
Reserved for future grants at
 end of year                             279,638    418,986    465,159
Average Option Price  - Exercised        $18.42     $18.42     $18.42
                      - Outstanding
                        at end of year   $21.58     $19.43     $18.80
</TABLE>

SIGCORP accounts for stock compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees."  Under Accounting Principles
Board Opinion No. 25, no compensation cost has been
recognized for stock options.  Had compensation cost for
stock options been determined consistent with SFAS No. 123
"Accounting for Stock-based Compensation," net income would
have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                      <C>        <C>        <C>
At December 31                           1997       1996       1995
Net Income:
  As reported                            $46,140    $43,264    $44,819
  Pro forma                               45,998     43,175     44,778

Basic and Diluted Earnings Per Share:
  As reported                            $1.95      $1.83      $1.90
  Pro forma                               1.95       1.83       1.90
</TABLE>

<PAGE> 55
<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                      <C>        <C>        <C>
At December 31                           1997       1996       1995
Net Income Applicable to Common Stock:
  As reported                            $44,266    $41,744    $44,819
  Pro forma                               44,124     41,655     44,778
</TABLE>

The fair value of each option granted used to determine pro
forma net income is estimated as of the date of grant using
the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in the twelve
month periods ended December 31, 1997, 1996 and 1995: risk-free
interest rate of 5.75%, 6.50% and 6.47%, respectively;
expected option term of five years; expected volatilities of
15.65%, 14.69% and 16.25%,  respectively; and dividend rates
of 4.46%, 4.96% and 5.52%, respectively.

EARNINGS PER SHARE  The following table illustrates the
basic and diluted earnings per share calculations.

<TABLE>
<CAPTION>
SIGCORP, Inc.

At December 31(in thousands except for per share amounts)
         1997                    1996                      1995
<S> <C>      <C>    <C>     <C>     <C>    <C>     <C>      <C>    <C>
                    Per                    Per                     Per
    Income   Shares Share   Income  Shares Share   Income   Shares Share
                    Amount                 Amount                  Amount
Basic EPS
  Income before  cumulative
  effect of accounting change

    $46,140  23,631 $1.95   $43,264 23,631 $1.83   $38,525  23,631 $1.63

   Accounting change
    -        -      -       -       -      -       6,294    23,631 0.27
    $46,140  23,631 $1.95   $43,264 23,631 $1.83   $44,819  23,631 $1.90

Diluted EPS
  Effect of dilutive securities
             56                     40                      21
    $46,140  23,687 $1.95   $43,264 23,671 $1.83   $44,819  23,652 $1.90
</TABLE>

Basic earnings per common share were computed by dividing
net income by the weighted average number of shares of
common stock outstanding during the year.  Diluted earnings
per common share were determined using the treasury stock
method for dilutive stock options.  The adoption of SFAS No.
128 had no impact on prior year reported earnings per share.

Options to purchase 139,348 shares of common stock at $26.44
per share were granted in July 1997, but were not included
in the computation of diluted earnings per share because the
exercise price was greater than the average market price of
the common shares.

CUMULATIVE PREFERRED STOCK OF SIGECO  The amount payable in
the event of involuntary liquidation of each series of the
$100 par value preferred stock is $100 per share, plus
accrued dividends.  This nonredeemable preferred stock is
callable at the option of SIGECO as follows: the 4.8% Series
at $110 per share, plus accrued dividends; and the 4.75%
Series at $101 per share, plus accrued dividends.

CUMULATIVE REDEEMABLE PREFERRED STOCK OF SIGECO  The Series
has a dividend rate of 6.50% and is redeemable at $100 per
share on December 1, 2002.  In the event of involuntary
liquidation of this series of $100 par value preferred
stock, the amount payable is $100 per share, plus accrued
dividends.

CUMULATIVE SPECIAL PREFERRED STOCK OF SIGECO  The Cumulative
Special Preferred Stock contains a provision which allows
the stock to be tendered on any of its dividend payment
dates.  On March 8, 1995, SIGECO repurchased 913 shares of
the Cumulative Special Preferred Stock at a cost of $91,300
as a result of a tender within the provision of the
issuance.

<PAGE> 56

Note 8  Ownership of Warrick Unit 4

SIGCORP and SIGECO

SIGECO and Alcoa Generating Corporation (AGC), a subsidiary
of Aluminum Company of America, own the 270 MW Unit 4 at the
Warrick Power Plant as tenants in common.  SIGECO's share of
the cost of this unit at December 31, 1997 is $31,728,000
with accumulated depreciation totaling $23,787,000.  AGC and
SIGECO also share equally in the cost of operation and
output of the unit.  SIGECO's share of operating costs is
included in operating expenses in the Consolidated
Statements of Income.

Note 9  Commitments and Contingencies

SIGCORP and SIGECO

SIGECO presently estimates that approximately $70,000,000
will be expended for construction purposes in 1998,
including those amounts applicable to SIGECO's demand side
management (DSM) programs.  Commitments for the 1998
construction program are approximately $33,032,000 at
December 31, 1997.

Note 10 Lease Obligations

SIGCORP

In 1995, SIMI sold its manufacturing facility and related
equipment for $3,881,000 resulting in no gain or loss and
concurrently entered into an agreement to lease the property
back at $532,000 per year through 2010 under a noncancelable
operating lease. In December 1997, Fuels entered operating
lease agreements for mining equipment.   The aggregate
future minimum rental payments required under the above
leases are as follows:
<TABLE>
<CAPTION>
<S>        <C>                                    <C>
Year Ended December 31 (in thousands)
           1998                                   $ 1,755
           1999                                     2,896
           2000                                     2,896
           2001                                     2,896
           2002                                     2,896
           Thereafter                               5,905
           Total lease payments                   $19,244
</TABLE>

Total rental expense under all operating leases was
$578,454, $558,282 and $238,671 for the years ended December
31, 1997, 1996 and 1995, respectively.

<PAGE> 57

Note 11  Segments of Business

SIGCORP and SIGECO

The principal business segments of SIGCORP are the
generation, transmission, distribution and sale of electric
energy by SIGECO and the purchase, transportation,
distribution and sale of natural gas by SIGECO and Energy.
Certain financial information relating to significant
segments of business is presented below:
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                                     <C>           <C>        <C>
Year Ended December 31 (in thousands)   1997          1996       1995
Operating Information-
Operating revenues:
     Electric                         $ 272,545   $  276,479  $  275,495
     Gas                                157,230      97,697      63,203
     Total                              429,775      374,176     338,698
Operating expenses:
     Electric                           194,462      200,788     206,071
     Gas                                145,010      88,355      60,661
     Total                              339,472      289,143     266,732
Operating income:
     Electric                           78,083       75,691      69,424
     Gas                                12,220       9,342       2,542
     Total                            $ 90,303    $  85,033   $  71,966
Other Information-
Depreciation and amortization expense:
     Electric                         $ 36,217    $  35,018   $  35,802
     Gas                                3,979        3,599       3,500
     Total                            $ 40,196    $  38,617   $  39,302
Capital expenditures:
     Electric<F1>                     $ 55,735    $  34,836   $  44,465
     Gas                                12,687       9,099       9,675
     Total                            $ 68,422    $  43,935   $  54,140
Investment Information-
Identifiable assets<F2>:
     Electric                         $ 715,593   $  696,600  $  708,310
     Gas                                156,857      139,030     115,266
     Subtotal                           872,450      835,630     823,576
Other assets                            117,446      117,023     100,405
Total assets                          $ 989,896   $  952,653  $  923,981
<FN>
<F1> Includes $2,340,000, $3,633,000 and $9,051,000 of demand side
 management program expenditures for  1997, 1996 and 1995,
 respectively.
<F2> Utility plant less accumulated provision for depreciation,
inventories, receivables (less allowance), regulatory assets
 and other identifiable assets.
</FN>
</TABLE>

<PAGE> 58
<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
<S>                                     <C>          <C>         <C>
Year Ended December 31 (in thousands)   1997         1996        1995
Operating Information-
Operating revenues:
     Electric                         $ 272,545   $  276,479  $  275,495
     Gas                                85,561       96,251      63,203
     Total                              358,106      372,730     338,698
Operating expenses (including income taxes):
     Electric                           217,747      221,877     223,939
     Gas                                77,447       89,812      60,886
     Total                              295,194      311,689     284,825
Operating income:
     Electric                           54,798       54,602      51,556
     Gas                                8,114        6,439       2,317
     Total                            $ 62,912    $  61,041   $  53,873
Other Information-
Depreciation and amortization expense:
     Electric                         $ 36,217    $  35,018   $  35,802
     Gas                                3,974        3,599       3,500
     Total                            $ 40,191    $  38,617   $  39,302
Capital expenditures:
     Electric <F1>                    $ 55,735    $  34,836   $  44,465
     Gas                                12,687       9,099       9,675
     Total                            $ 68,422    $  43,935   $  54,140
Investment Information-
Identifiable assets <F2>:
     Electric                         $ 715,593   $  696,600  $  708,310
     Gas                                136,030      139,030     115,266
     Subtotal                           851,623      835,630     823,576
Other assets                            12,840       16,695      100,405
Total assets                          $ 864,463   $  852,325  $  923,9816
<FN>
<F1> Includes $2,340,000, $3,633,000 and $9,051,000 of demand side
 management program expenditures for  1997, 1996 and 1995,
 respectively.
<F2> Utility plant less accumulated provision for depreciation,
 inventories, receivables (less allowance), regulatory assets
 and other identifiable assets.
</FN>
</TABLE>

<PAGE>59

Note 12  Disclosures About Fair Value

SIGCORP and SIGECO

Except for the following financial instruments, fair value
of SIGCORP's and SIGECO's financial instruments is
equivalent to carrying value due to their short-term nature.
<TABLE>
<CAPTION>
SIGCORP, Inc.
<S>                              <C>        <C>         <C>        <C>
At December 31 (in thousands)    1997                1996
                                 Carrying  Estimated   Carrying    Estimated
                                 Amount    Fair Value  Amount      Fair Value
Long-Term Debt (including
current portion)              $  318,597 $  381,489  $  293,788  $ 335,771
Partnership Obligations
(including current portion)      4,563      6,163       6,839      8,231
Redeemable Preferred Stock
of Subsidiary                    7,500      8,091       7,500      7,367
</TABLE>

<TABLE>
<CAPTION>
Southern Indiana gas and Electric Company
<S>                              <C>        <C>         <C>        <C>
At December 31 (in thousands)    1997                   1996
                              Carrying      Estimated   Carrying   Estimated
                              Amount        Fair Value  Amount     Fair Value
Long-Term Debt (including
 current portion)             $  283,597 $  341,375  $  283,151  $ 324,325
Redeemable Preferred Stock       7,500      8,091       7,500      7,367
</TABLE>

At December 31, 1997 and 1996, respectively, the fair value
of SIGCORP's debt relating to utility operations exceeded
carrying amounts by $58,000,000 and $41,000,000.
Anticipated regulatory treatment of the excess or deficiency
of fair value over carrying amounts of SIGECO's long-term
debt, if in fact settled at amounts approximating those
above, would dictate that these amounts be used to reduce or
increase SIGECO's rates over a prescribed amortization
period.  Accordingly, any settlement would not result in a
material impact on SIGECO's financial position or results of
operations.

LONG-TERM DEBT  The fair value of SIGECO's long-term debt
was estimated based on the current quoted market rate of
utilities with a comparable debt rating.  Nonutility long-term
debt was valued based upon the most recent debt
financing.

REDEEMABLE PREFERRED STOCK OF SIGECO  The fair value of
SIGECO's redeemable preferred stock was estimated based on
the current quoted market rate of utilities with a
comparable debt rating.

PARTNERSHIP OBLIGATIONS  The fair value of SIGCORP's
partnership obligations was estimated based on the current
quoted market rate of comparable debt.


<PAGE> 60


Note 13  Disclosures about Market Risk

SIGCORP

COMMODITY PRICE RISK Prices of natural gas are subject to
fluctuations resulting from changes in supply and demand.
To reduce price risk caused by these market fluctuations,
Energy has established a policy to back all fixed price
sales transactions longer than one month with similar
purchase obligations.  Since some sales obligations consist
of variable volumes (end user sales), Energy targets planned
consumption and purchases this amount and adds additional
margin to these sales to cover the additional risk.
<TABLE>
<CAPTION>
<S>                                       <C>          <C>
At December 31 (in thousands)            1997
                                         Carrying
                                         Amount         Fair Value
Commodity Position
   Inventory                             $  862      $  723
   Fixed-price obligations to
   purchase gas                             -           5,575
   Fixed-price obligations
   to sell gas                              -           5,428
</TABLE>

<PAGE> 61

Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
SIGCORP, Inc.

Quarter Ended
<S><C>     <C>        <C>       <C>      <C>      <C>     <C>     <C>
   March 31,          June 30,           September 30,    December 31,
   1997     1996      1997      1996     1997     1996    1997    1996
(in thousands except for per share amounts)
Operating Revenues
   $107,572 $117,154 $85,609  $92,022  $108,795  $99,247 $131,261 $96,315
Operating Income
   $23,443  $23,174  $13,497  $17,554  $34,627   $29,336 $14,015   $12,653
Net Income
   $13,113  $13,272  $6,263   $8,837   $19,947   $15,948 $6,817   $5,207
Basic Earnings Per Share
   $0.55    $0.56    $0.27    $0.37    $0.84     $0.67   $  0.29  $0.22
Diluted Earnings Per Share
   $0.55    $  0.56  $0.26    $0.37    $0.84     $0.67   $0.29    $0.22
Average Common Shares Outstanding
   23,631   23,631   23,631   23,631   23,631    23,631  23,631   23,631
</TABLE>

<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Quarter Ended
<S><C>      <C>      <C>      <C>      <C>       <C>     <C>      <C>
   March 31,         June 30,          September 30,     December 31,
   1997     1996     1997     1996     1997      1996    1997     1996
(in thousands)
Operating Revenues
   $98,733  $106,476 $75,399  $83,426  $93,357   $91,095 $90,617  $91,733
Operating Income
   $17,049  $16,330  $11,461  $13,256  $23,723   $20,517 $10,679  $10,938
Net Income
   $12,712  $12,402  $6,617   $8,031   $19,040   $15,368 $5,897   $ 5,943
Average Common Shares Outstanding
   23,631   23,631   23,631   23,631   23,631    23,631  23,631   23,631
</TABLE>

     Information for any one quarterly period is not
indicative of the annual results which may be expected due
to seasonal variations common in the utility industry.
     The quarterly earnings per share may not add to the
total earnings per share for the year due to rounding.

Item 9.      DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

       None

                          PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANTS

      (a) Identification of Directors

          The information required by this item is included
        in SIGCORP, Inc.'s  and Southern Indiana Gas and
        Electric Company's Joint Proxy Statement (the Joint
        Proxy Statement), dated March 23, 1998 definitive
        copies of which were filed with the Commission
        pursuant to Regulation 14A.

      (b) Identification of Executive Officers

          The information required by this item is included
        in Part I, Item 1. - BUSINESS on page 14, to which
        reference is hereby made.

Item 11.  EXECUTIVE COMPENSATION AND TRANSACTIONS

        The information required by this item is included
      in the Joint Proxy Statement, definitive copies of
      which were filed with the Commission pursuant to
      Regulation 14A.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

        The information required by this item is included
      in the Joint Proxy Statement, definitive copies of
      which were filed with the Commission pursuant to
      Regulation 14A.

<PAGE> 62

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information required by this item is included
in the Joint Proxy Statement, definitive copies of which
were filed with the Commission pursuant to Regulation 14A.

                          PART IV

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

(a)  1 and 2) The financial statements, including supporting
schedule, are listed in the Index to Financial Statements,
page 26, filed as part of this report.
(a)  3)    Exhibits:
     SIGCORP and SIGECO
     EX-2(a) Agreement and Plan of Exchange, of common
stock between Southern Indiana Gas and Electric Company and
SIGCORP, Inc., dated February 23, 1995.  (Physically filed
and designated as Exhibit 2(a) in Amendment No. 1 to Form S-4
Registration Statement filed January 20, 1995, File No.
33-57381.)
     SIGCORP
     EX-3(a) Restated Articles of Incorporation of SIGCORP,
Inc. (Physically filed and designated as Exhibit 3(a) in
Amendment No. 1 to Form S-4 Registration Statement, filed
February 23, 1995, File No. 33-57381.)

     EX-3(b) By-Laws of SIGCORP, Inc. .  (Physically filed
and designated as Exhibit 3(b) in Amendment No. 1 to Form S-4
Registration Statement, filed February 23, 1995, File No.
33-57381.)

     EX-4(a) Rights Agreement, between SIGCORP, Inc. and
Continental Stock Transfer & Trust Company, Rights Agent,
dated as of December 31, 1995.  (Physically filed and
designated as Exhibit 4.1 in Form 8-B Registration Statement
filed December 15, 1995, File No. 1-11603.)
     SIGECO
     EX-3(a) Amended Articles of Incorporation as amended
March 26, 1985.  (Physically filed and designated in Form
10-K, for the fiscal year 1985, File No. 1-3553, as Exhibit
3-A.)  Articles of Amendment of the Amended Articles of
Incorporation, dated March 24, 1987.  (Physically filed and
designated in Form 10-K for the fiscal year 1987, File No.
1-3553, as Exhibit 3-A.)  Articles of Amendment of the
Amended Articles of Incorporation, dated November 27, 1992.
(Physically filed and designated in Form 10-K for the fiscal
year 1992,  File No. 1-3553, as Exhibit 3-A).

     EX-3(b) By-Laws as amended through December 18, 1990.
(Physically filed in Form 10-K for the fiscal year 1990,
File No. 1-3553, as Exhibit 3-B.)  By-Laws as amended
through September 22, 1993.  (Physically filed and
designated in Form 10-K for the fiscal year 1993, File No.
1-3553, as EX-3 (b).)  By-Laws as amended through January 1,
1995.  (Physically filed and designated in Form 10-K for the
fiscal year 1995, File No. 1-3553, as EX-3(b).)

     EX-4(a)*  Mortgage and Deed of Trust dated as of April
1, 1932 between Southern Indiana Gas and Electric Company
and Bankers Trust Company, as Trustee, and Supplemental
Indentures thereto dated August 31, 1936, October 1, 1937,
March 22, 1939, July 1, 1948, June 1, 1949, October 1, 1949,
January 1, 1951, April 1, 1954, March 1, 1957, October 1,
1965, September 1, 1966, August 1, 1968, May 1, 1970,
August 1, 1971, April 1, 1972, October 1, 1973, April 1,
1975, January 15, 1977, April 1, 1978, June 4, 1981, January
20, 1983, November 1, 1983, March 1, 1984, June 1, 1984,
November 1, 1984, July 1, 1985, November 1, 1985, June 1,
1986.  (Physically filed and designated in Registration No.
2-2536 as Exhibits B-1 and
B-2; in Post-effective Amendment No. 1 to Registration No.
2-62032 as Exhibit (b)(4)(ii), in Registration No. 2-88923
as Exhibit 4(b)(2), in Form 8-K, File No. 1-3553, dated June
1, 1984 as Exhibit (4), File No. 1-3553, dated March 24,
1986 as Exhibit 4-A, in Form 8-K, File No. 1-3553, dated
June 3, 1986 as Exhibit (4).)  July 1, 1985 and November 1,
1985 (Physically filed and designated in Form 10-K, for the
fiscal year 1985, File No. 1-3553, as Exhibit 4-A.)
November 15, 1986 and

     *Pursuant to paragraph (b)(4)(iii)(a) of Item 601 of
Regulation S-K, SIGECO agrees to furnish to the Commission
on request any instrument with respect to long-term debt if
the total amount of securities authorized thereunder does
not exceed 10% of the total assets of SIGECO, and has
therefore not filed such documents as exhibits to this Form
10-K.

<PAGE> 63

     EX-4(a)  (Continued)
              January 15, 1987.  (Physically filed and
designated in Form 10-K, for the fiscal year 1986, File No.
1-3553, as Exhibit 4-A.)  December 15, 1987.  (Physically
filed and designated in Form 10-K, for the fiscal year 1987,
File No. 1-3553, as Exhibit 4-A.)  December 13, 1990.
(Physically filed and designated in Form 10-K, for the
fiscal year 1990, File No. 1-3553, as Exhibit 4-A.)  April
1, 1993.  (Physically filed and designated in Form 8-K,
dated April 13, 1993, File 1-3553, as Exhibit 4.)  June 1,
1993 (Physically filed and designated in Form 8-K, dated
June 14, 1993, File 1-3553, as Exhibit 4.)  May 1, 1993.
(Physically filed and designated in Form 10-K, for the
fiscal year 1993, File No. 1-3553, as Exhibit 4(a).)

     EX-10.1  Agreement, dated, January 30, 1968, for Unit
No. 4 at the Warrick Power Plant of Alcoa Generating
Corporation ("Alcoa"), between Alcoa and Southern Indiana
Gas and Electric Company.  (Physically filed and designated
in Registration No. 2-29653 as Exhibit 4(d)-A.)

     EX-10.2  Letter of Agreement, dated June 1, 1971, and
Letter Agreement, dated June 26, 1969, between Alcoa and
Southern Indiana Gas and Electric Company.  (Physically
filed and designated in Registration No. 2-41209 as Exhibit
4(e)-2.)

     EX-10.3  Letter Agreement, dated April 9, 1973, and
Agreement dated April 30, 1973, between Alcoa and Southern
Indiana Gas and Electric Company.  (Physically filed and
designated in Registration No. 2-53005 as Exhibit 4(e)-4.)

     EX-10.4  Electric Power Agreement (the "Power
Agreement"), dated May 28, 1971, between Alcoa and Southern
Indiana Gas and Electric Company.  (Physically filed and
designated in Registration No. 2-41209 as Exhibit 4(e)-1.)

     EX-10.5  Second Supplement, dated as of July 10, 1975,
to the Power Agreement and Letter Agreement dated April 30,
1973 - First Supplement.  (Physically filed and designated
in Form 12-K for the fiscal year 1975, File No. 1-3553, as
Exhibit 1(e).)

     EX-10.6  Third Supplement, dated as of May 26, 1978,
to the Power Agreement.  (Physically filed and designated in
Form 10-K for the fiscal year 1978 as Exhibit A-1.)

     EX-10.7  Letter Agreement dated August 22, 1978
between Southern Indiana Gas and Electric Company and Alcoa,
which amends Agreement for Sale in an Emergency of
Electrical Power and Energy Generation by Alcoa and Southern
Indiana Gas and Electric Company dated June 26, 1979.
(Physically filed and designated in Form 10-K for the fiscal
year 1978, File No. 1-3553, as Exhibit A-2.)

     EX-10.8  Fifth Supplement, dated as of December 13,
1978, to the Power Agreement.  (Physically filed and
designated in Form 10-K for the fiscal year 1979, File No.
1-3553, as Exhibit A-3.)

     EX-10.9  Sixth Supplement, dated as of July 1, 1979,
to the Power Agreement.  (Physically filed and designated in
Form 10-K for the fiscal year 1979, File No. 1-3553, as
Exhibit A-5.)

     EX-10.10 Seventh Supplement, dated as of October 1,
1979, to the Power Agreement.  (Physically filed and
designated in Form 10-K for the fiscal year 1979, File No.
1-3553, as Exhibit A-6.)

     EX-10.11 Eighth Supplement, dated as of June 1, 1980
to the Electric Power Agreement, dated May 28, 1971, between
Alcoa and Southern Indiana Gas and Electric Company.
(Physically filed and designated in Form 10-K for the fiscal
year 1980, File No. 1-3553, as Exhibit (20)-1.)


<PAGE> 64

     EX-10.13** Agreement dated July 22, 1986 between
Southern Indiana Gas and Electric Company and A. E. Goebel
regarding continuation of employment.  (Physically filed and
designated in Form 10-K for the fiscal year 1992, File No.
1-3553, as Exhibit 10-A-13.)

     EX-10.14** Agreement dated July 25, 1986 between
Southern Indiana Gas and Electric Company and Ronald G.
Reherman regarding continuation of employment.  (Physically
filed and designated in Form 10-K for the fiscal year 1992,
File No. 1-3553, as Exhibit 10-A-14.)

     EX-10.15** Agreement dated July 22, 1986 between
Southern Indiana Gas and Electric Company and James A. Van
Meter regarding continuation of employment.  (Physically
filed and designated in Form 10-K for the fiscal year 1992,
File No. 1-3553, as Exhibit 10-A-15.)

     EX-10.16** Agreement dated February 22, 1989 between
Southern Indiana Gas and Electric Company and J. Gordon
Hurst regarding continuation of employment.  (Physically
filed and designated in Form 10-K for the fiscal year 1992,
File No. 1-3553 as Exhibit 10-A-16.)

     EX-10.17** Summary description of Southern Indiana Gas
and Electric Company's nonqualified Supplemental Retirement
Plan (Physically filed and designated in Form 10-K for the
fiscal year 1992, File No. 1-3553, as Exhibit 10-A-17.)

     EX-10.18** Supplemental Post Retirement Death Benefits
Plan, dated October 10, 1984.  (Physically filed and
designated in Form 10-K for the fiscal year 1992, File No.
1-3553, as Exhibit 10-A-18.)

     EX-10.19** Summary description of Southern Indiana Gas
and Electric Company's Corporate Performance Incentive Plan.
(Physically filed and designated in Form 10-K for the fiscal
year 1992, File No. 1-3553, as Exhibit 10-A-19.)

     EX-10.20** Southern Indiana Gas and Electric Company's
Corporate Performance Incentive Plan as amended for the plan
year beginning January 1, 1994.  (Physically filed and
designated in Form 10-K for the fiscal year 1993, File No.
1-3553, as Exhibit 10-A-20.)

     EX-10.21** Southern Indiana Gas and Electric Company
1994 Stock Option Plan (Physically filed and designated in
Southern Indiana Gas and Electric Company's Proxy Statement
dated February 22, 1994, File No. 1-3553, as Exhibit A.)

     EX-10.22** Summary description of Southern Indiana Gas
and Electric Company's Corporate Performance Incentive Plan
as amended for the plan year beginning January 1, 1997.
(Physically filed and designated in the SIGCORP, Inc. and
Southern Indiana Gas and Electric Company's Joint Proxy
Statement dated March 23, 1998, File No. 1-11603 and File
No. 1-3553, under "Compensation Committee Report On
Executive Compensation", page 9.)

     EX-10.23** Agreement dated September 1, 1997 between
Southern Indiana Gas and Electric Company and Andrew E.
Goebel regarding continuation of employment, which
supercedes such agreement dated July 22, 1986.  (Physically
filed herewith as Exhibit 10.23.)

     EX-10.24** Agreement dated September 1, 1997 between
Southern Indiana Gas and Electric Company and J. Gordon
Hurst regarding continuation of employment, which supercedes
such agreement dated February 22, 1989.  (Physically filed
herewith as Exhibit 10.24.)

     EX-10.25** Agreement dated January 10, 1997 between
Ronald G. Jochum and Southern Indiana Gas and Electric
Company regarding continuation of employment.  (Physically
filed herewith as Exhibit 10.25.)

     EX-10.26** Agreement dated January 10, 1997 between
Southern Indiana Gas and Electric Company and Ronald G.
Reherman regarding continuation of employment, which
supercedes such agreement dated May 6, 1991.  (Physically
filed herewith as Exhibit 10.26.)

     ** Filed pursuant to paragraph (b)(10)(iii)(A) of Item
601 of Regulation S-K.


<PAGE> 65

     EX-10.27** Agreement dated April 16, 1997 between
Southern Indiana Gas and Electric Company and Ronald G.
Reherman regarding supplemental pension and disability
benefits, which supercedes such agreement dated February 1,
1995.  (Physically filed herewith as Exhibit 10.27.)

     EX-10.28** Agreement dated January 10, 1997 between
Southern Indiana Gas and Electric Company and Jeffrey L.
Davis regarding continuation of employment.  (Physically
filed herewith as Exhibit 10.28.)

     EX-10.29** Southern Indiana Gas and Electric Company's
nonqualified Supplemental Retirement Plan as amended,
effective April 16, 1997.  (Physically filed herewith as
Exhibit 10.29.)

     ** Filed pursuant to paragraph (b)(10)(iii)(A) of Item
601 of Regulation S-K.

     SIGECO
     EX-12  Computation of Ratio of Earnings to Fixed
Charges

     SIGCORP
     EX-21  Subsidiaries of the Registrant

     SIGCORP and SIGECO
     EX-24  Power of Attorney

     SIGCORP and SIGECO
     EX-27  Financial Data Schedule

(b)  Reports on Form 8-K

       No Form 8-K reports were filed by SIGCORP  or SIGECO
during the fourth quarter of 1997.


<PAGE> 66

SCHEDULE II
<TABLE>
<CAPTION>
SIGCORP, Inc.
and
Southern Indiana Gas And Electric Company

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<S>                 <C>        <C>       <C>        <C>          <C>
Column A            Column B        Column C        Column D     Column E
                                    Additions
                    Balance    Charged   Charged    Deductions   Balance
                    Beginning  to        to Other   from Re-     End of
Description         of Year    Expenses   Accounts  serves, Net   Year
                               (in thousands)
VALUATION AND QUALIFYING
  ACCOUNTS:

Year 1997 - Accumulated
provision for
uncollectible
accounts            $215       $1,517    $-         $1,404       $328

Year 1996 - Accumulated
provision for
uncollectible
accounts            $138       $910      $-         $833         $215

Year 1995 - Accumulated
provision for
uncollectible
accounts            $231       $581      $-         $675         $138

OTHER RESERVES:
Year 1997 - Reserve for
injuries and
damages             $1,737     $(253)    $356       $793         $1,047

Year 1996 - Reserve for
injuries and
 damages            $1,541     $968      $221<F1>   $993         $1,737

Year 1995 - Reserve for
injuries and
damages             $1,692     $712      $155<F1>   $1,018       $1,541
<FN>
<F1> Charged to construction accounts
</FN>
</TABLE>



<PAGE> 69
                         SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrants have
duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.

Date:  March 27, 1998     SIGCORP, Inc.
                          By R. G. Reherman, Chairman,
                          President and Chief Executive
                          Officer

                    BY     R. G. Reherman
                         R. G. Reherman

                    SOUTHERN INDIANA GAS AND
                     ELECTRIC COMPANY
                    By R. G. Reherman, Chairman

                    BY     R. G. Reherman
                        R. G. Reherman

     Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrants and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                     <C>                             <C>
Signatures              Title                           Date

R. G. Reherman          Chairman, President and Chief
                        Executive Officer
                        of SIGCORP, Inc.
                        (Principal Executive Officer)
                        Chairman of Southern Indiana
                        Gas and Electric Company        March 27, 1998

A. E. Goebel*           Executive Vice President of
                        SIGCORP, Inc. President and
                        Chief Executive Officer
                        of Southern Indiana Gas and
                        Electric Company
                        (Principal Executive Officer)   March 27, 1998

T. L. Burke*            Secretary and Treasurer of
                        SIGCORP, Inc. and
                        Southern Indiana Gas and
                        Electric Company
                        (Principal Financial Officer)   March 27, 1998

S. M. Kerney*           Controller of SIGCORP, Inc. and
                        Southern Indiana Gas and
                        Electric Company
                        (Principal Accounting Officer)  March 27, 1998

John M. Dunn*           )
                        )
John D. Engelbrecht*    )
                        )
Robert L. Koch II*      )
                        )
Donald A. Rausch*       )   Directors of SIGCORP, Inc.
                        )   and Southern Indiana      March 27, 1998
                        )   Gas and Electric
Richard W. Shymanski*                                 )   Company
                        )
Donald E. Smith*        )
                        )
James S. Vinson*        )
                        )
</TABLE>
*By
  (R. G. Reherman, Attorney-in-fact)



SIGCORP
10-K



EXHIBIT INDEX

                                             Sequential
                                             Page Number

Exhibits incorporated by
reference are found on                       62 - 65

EX-21   Subsidiaries of the Registrant       68

EX-24   Power-of-Attorney                    71 - 72

EX-27   Financial Data Schedule              N/A
        (Filed March 6, 1998 with Form 8-K)