PROMISSORY NOTE
                               FOR LONG-TERM LOANS


$50,000,000                                                   October 19, 2001


         FOR VALUE RECEIVED, Indiana Gas Company, Inc., an Indiana corporation
and an Ohio corporation ("Borrower") hereby promises to pay to VECTREN UTILITY
HOLDINGS, INC., an Indiana corporation ("Lender"), in same day funds at its
principal offices in Evansville, Indiana, or at such other place Lender may from
time to time designate, the principal sum of Fifty Million Dollars
($50,000,000), together with interest thereon from the date hereof until paid in
full, all without relief from valuation or appraisement laws. Interest shall be
charged on the unpaid outstanding balance of this Note at a rate per annum equal
to the rate paid and to be paid by Lender with respect to the borrowings it made
in order to provide funds to Borrower hereunder. Interest on borrowings shall be
due and payable in immediately available funds on the same business day on which
Lender must pay interest on the borrowings it made in order to provide funds to
the Borrower hereunder. The principal hereof shall be due and payable hereunder
at such times and in such amounts and in such installments hereunder as Lender
must pay with respect to the borrowings it made in order to provide funds to
Borrower hereunder. Lender has provided Borrower with a copy of the
documentation evidencing the borrowings made by Lender in order to provide funds
to Borrower hereunder. Borrower's share of the Lender borrowings represents 50%
of the underlying bonds and net proceeds approximate $48.36 million. In the
absence of manifest error, such documentation and the records maintained by
Lender of the amount and term, if any, of borrowings hereunder shall be deemed
conclusive.

         The terms and conditions of the borrowings made by Lender in order to
provide funds to Borrower hereunder, such documentation of which is attached
hereto as Appendix A, are hereby incorporated by reference and made a prt
hereof; provided, however, that the principal sum under this Note shall be in
such amount as set forth in this Note. In the event of any conflict or
inconsistency between the terms of this Note and the terms of the borrowings
made by Lender in order to provide funds to Borrower hereunder, the terms of
this Note shall govern.

         Presentment, notice of dishonor and demand, protest and diligence and
collection and bringing suit are hereby severally waived by Borrower and each
endorser hereby consents that the time for payment of this Note or any
installment hereunder may be extended from time to time without notice by
Lender. No waiver of any default or failure or delay to exercise any right or
remedy by Lender shall operate as a waiver of any other default or of the same
default in the future or as a waiver of any right or remedy with respect to the
same or any other occurrence. No single or partial exercise by Lender of any
right or remedy shall preclude other or further exercises thereof or of any
other right or remedy.

         This Note inures to the benefit of Lender and binds Borrower and
Lender's and Borrower's respective successors and assigns, and the terms
"Lender" and Borrower" whenever occurring herein shall be deemed and construed
to include such respective successors and assigns.

         This Note shall be construed according to, and governed by, the laws of
the State of Indiana.

         This Note is one of the promissory notes referred to in the Financial
Services Agreement, dated January 5th, 2001, between Lender, Borrower and
certain other public utility subsidiaries of Lender to which reference is made
for a statement of additional rights and obligations of the parties hereto.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as
of the date and the year first hereinabove written.



                                             INDIANA GAS COMPANY, INC.



                                              By:   /S/ Jerome A. Benkert, Jr.
                                                   Jerome A. Benkert, Jr.
                                                   Executive Vice President and
                                                   Chief Financial Officer



<PAGE>



                                                                  Appendix A

Refer to the First Supplemental Indenture, dated October 19, 2001, between
Vectren Utility Holdings, Inc., Indiana Gas Company, Inc., Southern Indiana Gas
and Electric Company, Vectren Energy Delivery of Ohio, Inc., and U.S. Bank Trust
National Association. Filed and designated with the Securities and Exchange
Commission in Form 8-K, dated October 19, 2001, File No. 1-16739, as Exhibit
4.2.