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

                                    FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2003

                                       OR

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

For the transition period from __________________ to ________________________

Commission file number:   1-6494

                            INDIANA GAS COMPANY, INC.
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

                   INDIANA                                35-0793669
---------------------------------------------    ----------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identificaiton No.)
or organization)

   20 N.W. Fourth Street, Evansville, Indiana                  47708
-----------------------------------------------  -----------------------------
    (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: 812-491-4000
Securities registered pursuant to Section 12(b) of the Act:

           Title of each class        Name of each exchange on which registered
------------------------------------  ------------------------------------------
                  None                                 None



Securities registered pursuant to Section 12(g) of the Act:

      Title of each class             Name of each exchange on which registered
----------------------------------   -------------------------------------------
             None                                       None


<PAGE>


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

Indicate by check mark 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 registrant's 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. |X|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes__. No |X|.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of June
30, 2003, was zero. All shares outstanding of the Registrant's common stock were
held by Vectren Utility Holdings, Inc.

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

Common Stock - Without Par Value     815.001            March 1, 2004
--------------------------------     -------            -------------
           Class                 Number of Shares            Date

          Omission of Information by Certain Wholly Owned Subsidiaries

The Registrant is a wholly owned subsidiary of Vectren Utility Holdings, Inc.
and meets the conditions set forth in General Instructions (I)(1)(a) and (b) of
Form 10-K and is therefore filing with the reduced disclosure format
contemplated thereby.

                                   Definitions

AFUDC:  allowance for funds used   MCF/BCF:  millions/billions of cubic feet
   during construction
APB:  Accounting Principles Board  MDth/MMDth: thousands /millions of dekatherms

EITF:  Emerging Issues Task Force  MMBTU:  millions of British thermal units
FASB:  Financial Accounting        OUCC:  Indiana Office of the Utility Consumer
   Standards Board                   Counselor
FERC:  Federal Energy Regulatory   SFAS:  Statement of Financial Accounting
   Commission                        Standards
IDEM:  Indiana Department of       USEPA:  United States Environmental
   Environmental Management          Protection Agency
IURC:  Indiana Utility Regulatory  Throughput:  combined gas sales and gas
   Commission                        transportation volumes








<PAGE>


                                Table of Contents

Item                                                                        Page
Number                                                                    Number
                                     Part I

 1     Business(A)...........................................................4
 2     Properties ...........................................................5
 3     Legal Proceedings.....................................................5
 4     Submission of Matters to Vote of Security Holders(A)..................5

                                     Part II

 5     Market for the Company's Common Equity, Related Stockholder Matters, and
       Issuer Purchases of Equity Securities (A)............................ 5
 6     Selected Financial Data(A)............................................6
 7     Management's Discussion and Analysis of Results of Operations and
       Financial Condition(A)................................................6
 7A    Qualitative and Quantitative Disclosures About Market Risk...........14
 8     Financial Statements and Supplementary Data..........................16
 9     Change in and Disagreements with Accountants on Accounting and
       Financial Disclosure.................................................38
 9A    Controls and Procedures..............................................38

                                    Part III

 10    Directors and Executive Officers of the Registrant (A)...............39
 11    Executive Compensation (A)...........................................39
 12    Security Ownership of Certain Beneficial Owners and Management and
       Related Stockholder Matters (A)......................................39
 13    Certain Relationships and Related Transactions (A)...................39
 14    Principal Accountant Fees and Services...............................40

                                     Part IV

 15    Exhibits(A), Financial Statement Schedules, and Reports on Form 8-K..40
       Signatures...........................................................47

(A) - Omitted or amended as the Registrant is a wholly-owned subsidiary of
     Vectren Utility Holdings, Inc. and meets the conditions set forth in
     General Instructions (I)(1)(a) and (b) of Form 10-K and is therefore filing
     with the reduced disclosure format contemplated thereby.

                              Access to Information

Vectren Corporation makes available all SEC filings and recent annual reports
free of charge, including those of its wholly owned subsidiaries, through its
website at www.vectren.com, or by request, directed to Investor Relations at the
mailing address, phone number, or email address that follows:

Mailing Address:         Phone Number:        Investor Relations Contact:
P.O. Box 209            (812) 491-4000        Steven M. Schein
Evansville, Indiana                           Vice President, Investor Relations
47702-0209                                    sschein@vectren.com




<PAGE>





                                     PART I

ITEM 1.  BUSINESS
                           Description of the Business

Indiana Gas Company, Inc. (the Company or Indiana Gas), an Indiana corporation,
provides natural gas distribution and transportation services to a diversified
customer base in 49 of Indiana's 92 counties. Indiana Gas is a direct wholly
owned subsidiary of Vectren Utility Holdings, Inc. (VUHI). VUHI is a direct,
wholly owned subsidiary of Vectren Corporation (Vectren). Indiana Gas generally
does business as Vectren Energy Delivery of Indiana, Inc.

Vectren, an Indiana corporation, is an energy and applied technology holding
company headquartered in Evansville, Indiana. Vectren was organized on June 10,
1999, solely for the purpose of effecting the merger of Indiana Energy, Inc.
(Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of
Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free
exchange of shares and has been accounted for as a pooling-of-interests in
accordance with Accounting Principles Board (APB) Opinion No. 16 "Business
Combinations."

Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding
company for its three operating public utilities: Indiana Gas, formerly a wholly
owned subsidiary of Indiana Energy, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. Both Vectren and VUHI are exempt from registration pursuant to
Section 3(a)(1) and 3(c) of the Public Utility Holding Company Act of 1935.

Investment in the Gas Distribution Assets of The Dayton Power and Light Company

On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company for approximately $471 million, including
transaction costs, as a tenancy in common through two separate wholly owned
subsidiaries. Vectren Energy Delivery of Ohio, Inc. (VEDO) holds a 53% undivided
ownership interest in the assets, and Indiana Gas holds a 47% undivided
ownership interest. VEDO is the operator of the assets, and these assets are
referred to as "the Ohio operations." Indiana Gas' ownership is accounted for
using the equity method in accordance with APB Opinion No. 18, "The Equity
Method of Accounting for Investments in Common Stock" and is included in
investment in the Ohio operations, and its interest in the results of operations
is included in equity in earnings of the Ohio operations. The Ohio operations
provide natural gas distribution and transportation services to 17 counties in
west central Ohio, including counties surrounding Dayton.

Prior to 2003, the Ohio operations was a significant subsidiary as defined by
Rule 3-09 of Regulation S-X because the Company's investment exceeded 20% of its
total assets. As discussed in Note 2 to the financial statements, the Company
collects an estimated cost of removal of its utility plant through depreciation
rates established by regulatory proceedings. Prior to 2003, cost of removal was
a component of utility plant accumulated depreciation. In 2003, for both Indiana
Gas and the Ohio operations, cost of removal has been reclassified to a
non-current liability in accordance with SEC interpretations, and prior periods
have been reclassified to conform to this presentation. Upon reclassification,
the Ohio operations is no longer a significant subsidiary, as defined, and would
not have been in 2002 or 2001. Therefore, information required by Rule 3-09 is
not included in this filing. Summarized financial data of the Ohio operations as
required by Rule 4-08(g) of Regulation S-X is included in Note 3 to the
financial statements. The financial statements are included in Part II, "Item 8
Financial Statements and Supplementary Data".

The narrative description of the business, competition and personnel sections
were intentionally omitted. See the table of contents of this Annual Report on
Form 10-K for explanation.



<PAGE>


ITEM 2.   PROPERTIES

Indiana Gas owns and operates four active gas storage fields located in Indiana
covering 58,290 acres of land with an estimated ready delivery from storage
capability of 5.2 BCF of gas with maximum peak day delivery capabilities of
119,160 MCF per day. Indiana Gas also owns and operates three liquefied
petroleum (propane) air-gas manufacturing plants located in Indiana with the
ability to store 1.5 million gallons of propane and manufacture for delivery
33,000 MCF of manufactured gas per day. In addition to its company owned storage
and propane capabilities, Indiana Gas has contracted for 17.2 BCF of storage
with a maximum peak day delivery capability of 404,614 MCF per day. Indiana Gas
has the ability to meet a total annual demand, utilizing all of its assets
across various pipelines, of 131.1 BCF with a maximum peak day delivery
capability of 1,068,740 MCF per day. Indiana Gas' gas delivery system includes
11,771 miles of distribution and transmission mains, all of which are in Indiana
except for pipeline facilities extending from points in northern Kentucky to
points in southern Indiana so that gas may be transported to Indiana and sold or
transported by Indiana Gas to ultimate customers in Indiana.

The Ohio operations own and operate three liquefied petroleum (propane) air-gas
manufacturing plants and a cavern for propane storage, all of which are located
in Ohio. The plants and cavern can store 7.5 million gallons of propane, and the
plants can manufacture for delivery 51,047 MCF of manufactured gas per day. In
addition to its propane delivery capabilities, the Ohio operations have
contracted for 13.1 BCF of storage with a maximum peak day delivery capability
of 280,667 MCF per day. The Ohio operations have the ability to meet a total
annual demand, utilizing all of its assets across various pipelines, of 57.9 BCF
with a maximum peak day delivery capability of 477,974 MCF per day. The Ohio
operations' gas delivery system includes 5,216 miles of distribution and
transmission mains, all of which are located in Ohio.

ITEM 3.  LEGAL PROCEEDINGS

The Company is party to various legal proceedings arising in the normal course
of business. In the opinion of management, there are no legal proceedings
pending against the Company that are likely to have a material adverse effect on
its financial position or results of operations.

ITEM 4.  Submission of Matters to Vote of Security Holders

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

                                     PART II

ITEM 5.   MARKET FOR COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
          ISSUER PURCHASES OF EQUITY SECURITIES

All of the outstanding shares of Indiana Gas' common stock are owned by VUHI.
Indiana Gas' common stock is not traded. There are no outstanding options or
warrants to purchase Indiana Gas' common equity or securities convertible into
Indiana Gas' common equity. Additionally, Indiana Gas has no plans to publicly
offer any of its common equity.

Dividends Paid to Parent

During 2003, Indiana Gas paid dividends to its parent company of $7.3 million in
each of the first three quarters, and no dividends were paid in the fourth
quarter.

During 2002, Indiana Gas paid dividends to its parent company of $6.9 million,
$7.7 million, $7.7 million, in the first, second, and third quarters,
respectively, and no dividends were paid in the fourth quarter.

On January 28, 2004, the board of directors declared a dividend $6.6 million
payable to its parent company on March 1, 2004.

ITEM 6.  SELECTED FINANCIAL DATA

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

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

Pursuant to General Instructions I(2)(a) of Form 10-K, the following analysis of
the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations. The following
discussion and analysis should be read in conjunction with the financial
statements and notes thereto.

                   Executive Summary of Results of Operations

In 2003, earnings were $31.5 million as compared to $34.5 million in 2002 and
$3.3 million in 2001. The $3.0 million decrease in 2003 compared to 2002 was
primarily due to increased operating expenses, partially offset by weather that
was near normal in 2003 and 6% colder than the prior year.

Earnings increased $31.2 million in 2002 compared to 2001. The year ended
December 31, 2001, included nonrecurring merger, integration, and restructuring
costs totaling $11.7 million after tax. The increase also reflects improved
margins and lower operating costs. These resulted from favorable weather and
lower gas prices and the related reduction in costs incurred in 2001.

Indiana Gas generates revenue primarily from the delivery of natural gas
services to its customers. The primary source of cash flow results from the
collection of customer bills and the payment for goods and services procured for
the delivery of gas services. Results are impacted by weather patterns in its
service territory and general economic conditions both in its service territory
as well as nationally.

The Company has in place a disclosure committee that consists of senior
management as well as financial management. The committee is actively involved
in the preparation and review of the Company's SEC filings.

                           Nonrecurring Items in 2001

Merger & Integration Costs

Merger and integration related costs incurred during 2001 totaled $0.6 million.
These costs relate primarily to transaction costs, severance, and other merger
and acquisition integration activities. As a result of merger and integration
activities, management retired certain information systems in 2001. Accordingly,
the useful lives of these assets were shortened to reflect this decision. These
information system assets are owned by VUHI, and the fees allocated by VUHI for
the use of these systems is reflected in other operating expenses. As a result
of the shortened useful lives, additional fees were incurred by the Company,
resulting in additional other operating expense of $9.6 million for the year
ended December 31, 2001. In total, merger and integration related costs incurred
during 2001 were $10.2 million ($6.3 million after tax). Merger and integration
activities resulting from the 2000 merger forming Vectren were completed in
2001.

Restructuring Costs

As part of continued cost saving efforts, in June 2001, the Company's management
and board of directors approved a plan to restructure, primarily, its regulated
operations. The restructuring plan included the elimination of certain
administrative and supervisory positions in its utility operations and corporate
office. Charges of $5.4 million were expensed in June 2001 as a direct result of
the restructuring plan. Additional charges of $3.3 million were incurred during
the remainder of 2001 primarily for consulting fees, employee relocation, and
duplicate facilities costs. In total, the Company incurred restructuring charges
of $8.7 million ($5.4 million after tax) in 2001. These charges were comprised
of $3.2 million for employee severance, related benefits and other employee
related costs, $4.0 million for lease termination fees related to duplicate
facilities and other facility costs, and $1.5 million for consulting and other.
The restructuring program was completed during 2001, except for the departure of
certain employees impacted by the restructuring which occurred during 2002 and
the final settlement of the lease obligation which has yet to occur.

                            Significant Fluctuations

Gas Operating Margin

Margin generated from the sale of natural gas to residential and commercial
customers is seasonal and impacted by weather patterns in its service territory.
Margin generated from sales to industrial and other contract customers is
impacted by overall economic conditions. In general, operating margin is not
sensitive to variations in gas costs. It is, however, impacted by the collection
of state mandated taxes which fluctuate with gas costs and also some level of
fluctuation in volumes sold. Following is a discussion and analysis of margin
generated from regulated utility operations.

Gas Utility margin and throughput by customer type follows:

                                           Year Ended December 31,
------------------------------------------------------------------------------
(In thousands)                       2003           2002             2001
------------------------------------------------------------------------------
  Residential                     $ 144,034      $ 135,092        $ 128,838
  Commercial                         42,615         43,182           39,068
  Contract                           26,379         26,671           26,481
  Other                               4,512          2,080            1,481
------------------------------------------------------------------------------
       Total gas utility margin   $ 217,540      $ 207,025        $ 195,868
==============================================================================
Volumes in MDth:
  Sold to residential &
  commercial customers               68,316         63,423           58,474
  Transported & sold to
  contract customers                 51,290         54,818           53,411
------------------------------------------------------------------------------
       Total throughput             119,606        118,241          111,885
==============================================================================

Gas operating margin for the year ended December 31, 2003, of $217.5 million
increased $10.5 million, or 5%, compared to 2002. It is estimated that weather
near normal for the year and 6% colder than the prior year, contributed $5.4
million in increased residential and commercial margin and was the primary
contributor to increased throughput. The remaining increase is attributable to
$2.9 million in higher utility receipts taxes on higher per unit gas costs and
volumes sold, and a $2.5 million increase in miscellaneous revenues due to an
increased number of customer reconnects and related fees. These increases are
partially offset by the negative effect of high gas prices on customer usage.

Gas operating margin for the year ended December 31, 2002, of $207.0 million
increased $11.2 million, or 6% compared to 2001. The increase is primarily due
to weather 6% cooler for the year and 31% colder in the fourth quarter. The
effects of primarily colder weather resulted in an overall 6% increase in total
throughput.

Gas cost fluctuations have impacted customer usage during the years ended
December 31, 2003, 2002, and 2001. The average cost per dekatherm of gas
purchased in those years was $6.53 in 2003, $4.71 in 2002, and $5.86 in 2001.



<PAGE>


Operating Expenses

Other Operating

For the year ended December 31, 2003, other operating expenses increased $6.8
million compared to 2002. The increase is principally caused by increased
distribution and transmission operating expenses, customer service initiative
costs, and higher insurance premiums. In addition, uncollectible accounts
expense has increased $1.3 million compared to the prior year due principally to
higher gas costs.

Other operating expenses decreased $17.5 million for the year ended December 31,
2002, when compared to 2001. The decrease results primarily from lower charges
for the use of corporate assets which had useful lives shortened as a result of
the merger and lower gas prices in 2002 compared to 2001.

Depreciation & Amortization

Depreciation and amortization increased $2.6 million in 2003 compared to 2002
and in 2002 compared to 2001. The increases are due to depreciation of normal
utility plant additions to upgrade existing transmission and distribution
facilities.

Income Tax

For the year ended December 31, 2003, federal and state income taxes increased
$4.0 million in 2003 compared to 2002 and increased $13.2 million in 2002
compared to 2001. The 2003 increase results primarily from an increased
effective tax rate that reflects an increase in the Indiana state income tax
rate from 4.5 % to 8.5% and other changes in the effective tax rate recognized
in 2002. The increase in 2002 compared to 2001 is principally due to higher
pre-tax earnings.

Taxes Other Than Income Taxes

Taxes other than income taxes increased $1.8 million in 2003 compared to 2002
and decreased $0.7 million in 2002 compared to 2001. The changes are principally
due to utility receipts taxes, which fluctuate with revenues.

Other Income (Expense)

Equity in Earnings of the Ohio Operations

As described in the financial statements included in Part II "Item 8 Financial
Statements and Supplementary Data", Indiana Gas has a 47% undivided interest in
the Ohio operations. Equity in earnings of the Ohio operations represents
Indiana Gas' portion of the Ohio operations' net income. The financing costs
associated with VEDO's 53% ownership interest are not included in the Ohio
operations' equity in earnings. Earnings in 2003 were comparable to 2002.
Earnings increased in 2002 compared to 2001 as a result of colder weather and
lower gas prices. Earnings in 2002 also increased due the discontinuance of
amortization of goodwill embedded in the investment pursuant to SFAS 142.
Such amortization approximated $1.5 million after tax in 2001.

Other income (expense) - net

Other income (expense) - net decreased $1.6 million in 2003 compared to 2002 and
increased $1.2 million in 2002 compared to 2001. In both 2003 and 2001, the
Company contributed $1.2 million to low income heating assistance programs
pursuant to IURC orders. The 2003 contribution is the result of a settlement
agreement involving transactions with ProLiance Energy, LLC (Proliance), a
nonregulated energy marketing affiliate of Vectren. The 2001 contribution is the
result of a settlement agreement regarding disallowed gas procurement costs
incurred in the 2000-2001 heating season.



<PAGE>


Interest Expense

Interest expense decreased $3.3 million in 2003 compared to 2002 and decreased
$3.6 million in 2002 compared to 2001. Lower average interest rates on
adjustable rate debt and lower debt levels contributed to the decreases in 2003
and 2002. Results also include permanent financing transactions executed during
2003 whereby short term borrowings due to VUHI and $34.8 million of higher
coupon third party debt were replaced with $125 million in equity and $37.1
million in long term debt payable to VUHI.

                             Rate Case Proceedings

On March 19, 2004, Indiana Gas (d/b/a Vectren Energy Delivery of Indiana, Inc.)
filed a petition with the IURC to adjust its base rates and charges for its gas
distribution business in a 49-county region covering central and southeastern
Indiana. If the filing is approved, Indiana Gas expects to increase its base
rates by approximately $47 million to cover the ongoing cost of operating,
maintaining and expanding the approximately 12,000-mile distribution and storage
system used to serve more than 525,000 customers. If approved, the typical
residential customer that uses natural gas to heat his/her home would see a bill
increase of about 7 percent.

The petition only addresses Indiana Gas' "non-gas" costs which are incurred to
build, operate and maintain the pipes, other equipment and systems that are used
to deliver gas. The filing also includes a normal temperature adjustment (NTA)
mechanism to reduce the impact on customer bills caused by the variations in
weather. With the NTA, historic average temperatures serve as the basis for
computing customers' bills, thereby smoothing out the effects of significant
temperature fluctuations.

The timing and ultimate outcome of this regulatory initiative is uncertain.

                          Critical Accounting Policies

Management is required to make judgments, assumptions, and estimates that affect
the amounts reported in the financial statements and the related disclosures
that conform to accounting principles generally accepted in the United States.
Note 2 to the financial statements describes the significant accounting policies
and methods used in the preparation of the financial statements. Certain
estimates used in the financial statements are subjective and use variables that
require judgment. These include the estimates to perform asset impairment tests.
The Company makes other estimates in the course of accounting for unbilled
revenue, the effects of regulation, and intercompany allocations that are
critical to the Company's financial results but that are less likely to be
impacted by near term changes. Other estimates that significantly affect the
Company's results, but are not necessarily critical to operations, include
depreciation of utility plant and the allowance for doubtful accounts, among
others. Actual results could differ from these estimates.

Asset Impairment Tests

The Company's 47% ownership interest in the Ohio operations is accounted for
using the equity method of accounting. The remaining 53% ownership interest also
resides within Vectren's consolidated group. The investment in the Ohio
operations was tested for impairment in accordance with APB No. 18 "The Equity
Method of Accounting for Investments in Common Stock." This test was performed
while Vectren performed an impairment analysis of its goodwill, including that
related to the acquisition of the Ohio operations, as required by SFAS 142. An
impairment test performed in accordance with APB 18 requires that the carrying
value of the investment be examined for other than temporary declines in value.
While making such examination, the Company considered various factors including
that no impairment was recognized by Vectren when it performed an impairment
analysis of its Gas Utility Services operating segment which includes the
operations of Indiana Gas and the Ohio operations. Vectren performed this
analysis using a discounted cash flow model. Based on these factors, the Company
determined there was no impairment of its investment in the Ohio operations.

The use of a discounted cash flow model requires significant judgment in
applying a discount rate, growth assumptions, company expense allocations, and
longevity of cash flows. A 100 basis point increase in the discount rate or a
10% decrease in the cash flow growth assumption utilized in the cash flow
analysis would not have changed the results of the analysis in 2003 or 2002.

Unbilled Revenues

To more closely match revenues and expenses, the Company records revenues for
all gas delivered to customers but not billed at the end of the accounting
period. The Company uses actual units billed during the month to allocate
unbilled units. Those allocated units are multiplied by rates in effect during
the month to calculate unbilled revenue at balance sheet dates. While certain
estimates are used in the calculation of unbilled revenue, the method these
estimates are derived is not subject to near-term changes.

Regulation

At each reporting date, the Company reviews current regulatory trends in the
markets in which it operates. This review involves judgment and is critical in
assessing the recoverability of regulatory assets as well as the ability to
continue to account for its activities based on the criteria set forth in SFAS
No. 71 "Accounting for the Effects of Certain Types of Regulation" (SFAS 71).
Based on the Company's current review, it believes its regulatory assets are
probable of recovery. If all or part of the Company's operations cease to meet
the criteria of SFAS 71, a write-off of related regulatory assets and
liabilities could be required. In addition, the Company would be required to
determine any impairment to the carrying value of its utility plant and other
regulated assets. In the unlikely event of a change in the current regulatory
environment, such write-offs and impairment charges could be significant.

Intercompany Allocations

Support Services

Vectren and certain subsidiaries of Vectren provide corporate, general and
administrative services to the Company including legal, finance, tax, risk
management, and human resources, which includes charges for restricted stock
compensation and for pension and other postretirement benefits not directly
charged to subsidiaries. These costs have been allocated using various
allocators, primarily number of employees, number of customers and/or revenues.
Allocations are based on cost. Management believes that the allocation
methodology is reasonable and approximates the costs that would have been
incurred had the Company secured those services on a stand-alone basis. The
allocation methodology is not subject to near term changes.

Pension and Other Postretirement Obligations

Vectren satisfies the future funding requirements of its pension and other
postretirement plans and the payment of benefits from general corporate assets.
An allocation of expense is determined by Vectren's actuaries, comprised of only
service cost and interest on that service cost, by subsidiary based on headcount
at each measurement date, which occurs on September 30. These costs are directly
charged to individual subsidiaries. Other components of costs (such as interest
cost and asset returns) are charged to individual subsidiaries through the
corporate allocation process discussed above. Neither plan assets nor the FAS
87/106 liability is allocated to individual subsidiaries since these assets and
obligations are derived from corporate level decisions. Further, Vectren
satisfies the future funding requirements of plans and the payment of benefits
from general corporate assets. Management believes these direct charges when
combined with benefit-related corporate charges discussed in "support services"
above approximate costs that would have been incurred if the Company accounted
for benefit plans on a stand-alone basis.

Vectren estimates the expected return on plan assets, discount rate, rate of
compensation increase, and future health care costs, among other things, and
relies on actuarial estimates to assess the future potential liability and
funding requirements of pension and postretirement plans. Vectren used the
following weighted average assumptions to develop 2003 periodic benefit cost: a
discount rate of 6.75%, an expected return on plan assets before expenses of
9.0%, a rate of compensation increase of 4.25%, and a health care cost trend
rate of 10% in 2003 declining to 5% in 2006. During 2003, Vectren reduced the
discount rate and rate of compensation increase by 75 basis points to value 2003
ending pension and postretirement obligations due to a decline in benchmark
interest rates. The Company also lengthened to 2009 the time in which the health
care trend rate declines to 5% primarily due to increases in healthcare costs.
In addition, the Company reduced its 2004 expected return on plan assets 50
basis points from that used to estimate 2003 expense due to recent lower
investment returns and lower interest rates. Future changes in health care
costs, work force demographics, interest rates, or plan changes could
significantly affect the estimated cost of these future benefits that are
allocated to VUHI and its subsidiaries.

                 Impact of Recently Issued Accounting Guidance

SFAS 143

In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of
a liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The Company adopted this statement on
January 1, 2003. The adoption was not material to the Company's results of
operations or financial condition.

The Company collects an estimated cost of removal of its utility plant through
depreciation rates established by regulatory proceedings. As of December 31,
2003, and 2002, such removal costs approximated $124 million and $114 million,
respectively. In 2002, the cost of removal has been included in Other removal
costs, which is in non-current liabilities. In 2003, the Company
re-characterized other removal costs to Regulatory liabilities upon adoption of
SFAS 143.

SFAS 149

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and
clarifies the accounting guidance on (1) derivative instruments (including
certain derivative instruments embedded in other contracts) and (2) hedging
activities that fall within the scope of FASB Statement No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities." SFAS 149 amends
SFAS 133 to reflect decisions that were made (1) as part of the process
undertaken by the Derivatives Implementation Group (DIG), which necessitated
amending SFAS 133, (2) in connection with other projects dealing with financial
instruments, and (3) regarding implementation issues related to the application
of the definition of a derivative. SFAS 149 also amends certain other existing
pronouncements which will result in more consistent reporting of contracts that
are derivatives in their entirety or that contain embedded derivatives that
warrant separate accounting. SFAS 149 is effective (1) for contracts entered
into or modified after June 30, 2003, with certain exceptions and (2) for
hedging relationships designated after June 30. The guidance is to be applied
prospectively. The adoption did not have a material effect on the Company's
results of operations or financial condition.

SFAS 150

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" (SFAS 150).
SFAS 150 requires issuers to classify as liabilities the following three types
of freestanding financial instruments: mandatorily redeemable financial
instruments, obligations to repurchase the issuer's equity shares by
transferring assets, and certain obligations to issue a variable number of
shares. SFAS 150 was effective immediately for financial instruments entered
into or modified after May 31, 2003; otherwise, the standard was effective for
all other financial instruments at the beginning of the Company's third quarter
of 2003. In October 2003, the FASB issued further guidance regarding mandatorily
redeemable stock which is effective January 1, 2004, for the Company. The
adoption of SFAS 150 on January 1, 2004, did not affect the Company's results of
operations or financial condition.

FASB Interpretation (FIN) 45

In November 2002, the FASB issued FIN 45. FIN 45 clarifies the requirements for
a guarantor's accounting for and disclosure of certain guarantees issued and
outstanding and that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligations it has undertaken.
The initial recognition and measurement provisions were applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
Since that date, the adoption has not had a material effect on the Company's
results of operations or financial condition.

FIN 46/46-R (Revised in December 2003)

In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable
Interest Entities" (FIN 46). FIN 46 addresses consolidation by business
enterprises of variable interest entities (VIE) and significantly changes the
consolidation requirements for those entities. FIN 46 is intended to achieve
more consistent application of consolidation policies related to VIE's and thus
improves comparability between enterprises engaged in similar activities when
those activities are conducted through VIE's. In December 2003, the FASB
completed its deliberations of proposed modifications to FIN 46 and decided to
codify both the proposed modifications and other decisions previously issued
through certain FASB Staff Positions into one document that was issued as a
revision to the original Interpretation (FIN 46-R). FIN 46-R currently applies
to VIE's created after January 31, 2003, and to VIE's in which an enterprise
obtains an interest after that date. For entities created prior to January 31,
2003, FIN 46 is to be adopted no later than the end of the first interim or
annual reporting period ending after March 15, 2004. Although management is
still evaluating the impact of FIN 46 and related Staff Positions on its
financial position and results of operations, the adoption is not expected to
have a material effect.

Staff Accounting Bulletin No. 104

In December 2003, the SEC published Staff Accounting Bulletin (SAB) No. 104,
"Revenue Recognition". This SAB updates portions of the SEC staff's interpretive
guidance provided in SAB 101 and included in Topic 13 of the Codification of
Staff Accounting Bulletins. SAB 104 deletes interpretative material no longer
necessary and conforms the interpretive material retained because of
pronouncements issued by the FASB's EITF on various revenue recognition topics,
including EITF 00-21, "Revenue Arrangements with Multiple Deliverables." The
Company's adoption of the standard did not have an impact on its revenue
recognition policies.


<PAGE>


     United States Securities and Exchange Commission (SEC) Informal Inquiry

As more fully described in the 2002 financial statements, the Company restated
its annual financial statements for 2000 and 2001, and its 2002 quarterly
results. The Company received an informal inquiry from the SEC with respect to
this restatement. In response, the Company met with the SEC staff and provided
information in response to their requests, with the most recent response
provided on July 26, 2003.

                           Forward-Looking Information

A "safe harbor" for forward-looking statements is provided by the Private
Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of
1995 was adopted to encourage such forward-looking statements without the threat
of litigation, provided those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause the actual results to differ materially from those
projected in the statement. Certain matters described in Management's Discussion
and Analysis of Results of Operations and Financial Condition are
forward-looking statements. Such statements are based on management's beliefs,
as well as assumptions made by and information currently available to
management. When used in this filing, the words "believe," "anticipate,"
"endeavor," "estimate," "expect," "objective," "projection," "forecast," "goal,"
and similar expressions are intended to identify forward-looking statements. In
addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, factors that could cause the
Company's actual results to differ materially from those contemplated in any
forward-looking statements include, among others, the following:

o    Factors affecting utility operations such as unusual weather conditions;
     catastrophic weather-related damage; unusual maintenance or repairs;
     unanticipated changes to gas supply costs, or availability due to higher
     demand, shortages, transportation problems or other developments;
     environmental or pipeline incidents; transmission or distribution
     incidents; or gas pipeline system constraints.
o    Increased competition in the energy environment including effects of
     industry restructuring and unbundling.
o    Regulatory factors such as unanticipated changes in rate-setting policies
     or procedures, recovery of investments and costs made under traditional
     regulation, and the frequency and timing of rate increases.
o    Financial or regulatory accounting principles or policies imposed by the
     Financial Accounting Standards Board; the Securities and Exchange
     Commission; the Federal Energy Regulatory Commission; state public utility
     commissions; state entities which regulate natural gas transmission and
     distribution, natural gas gathering and processing; and similar entities
     with regulatory oversight.
o    Economic conditions including the effects of an economic downturn,
     inflation rates, and monetary fluctuations.
o    Changing market conditions and a variety of other factors associated with
     physical energy and financial trading activities including, but not limited
     to, price, basis, credit, liquidity, volatility, capacity, interest rate,
     and warranty risks.
o    Direct or indirect effects on the business, financial condition or
     liquidity resulting from a change in credit rating, changes in interest
     rates, and/or changes in market perceptions of the utility industry and
     other energy-related industries.
o    Employee or contractor workforce factors including changes in key
     executives, collective bargaining agreements with union employees, or work
     stoppages.
o    Legal and regulatory delays and other obstacles associated with mergers,
     acquisitions, and investments in joint ventures.
o    Costs and other effects of legal and administrative proceedings,
     settlements, investigations, claims, and other matters, including, but not
     limited to, those described in Management's Discussion and Analysis of
     Results of Operations and Financial Condition.
o    Changes in federal, state or local legislature requirements, such as
     changes in tax laws or rates, environmental laws and regulations.

The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions, or other factors affecting such statements.


<PAGE>


ITEM 7A.   QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to various business risks associated with commodity
prices, interest rates, and counter-party credit. These financial exposures are
monitored and managed by the Company as an integral part of its overall risk
management program. The Company's risk management program includes, among other
things, the use of derivatives.

Commodity Price Risk

The Company's regulated operations have limited exposure to commodity price risk
for purchases and sales of natural gas for retail customers due to current
Indiana regulations, which subject to compliance with those regulations, allow
for recovery of the cost of such purchases through natural gas cost adjustment
mechanisms. The Company does not engage in wholesale gas marketing activities
that may expose it to market risk associated with fluctuating natural gas
commodity prices.

Interest Rate Risk

The Company is exposed to interest rate risk associated with its borrowing
arrangements. Its risk management program seeks to reduce the potentially
adverse effects that market volatility may have on interest expense. The
Company's risk management objective is for between 20% and 30% of its total debt
to be exposed to short-term interest rate volatility. However, there are times
when this targeted range of interest rate exposure may not be attained. To
manage this exposure, the Company may use derivative financial instruments. At
December 31, 2003, such debt obligations represented 14% of the Company's total
debt portfolio.

Market risk is estimated as the potential impact resulting from fluctuations in
interest rates on adjustable rate borrowing arrangements exposed to short-term
interest rate volatility. During 2003 and 2002, the weighted average combined
borrowings under these arrangements were $97.2 million and $78.9 million,
respectively. At December 31, 2003, and 2002, combined borrowings under these
arrangements were $64.0 million and $108.2 million, respectively. Based upon
average borrowing rates under these facilities during the years ended December
31, 2003, and 2002, an increase of 100 basis points (1%) in the rates would have
increased interest expense by $1.0 million and $0.8 million, respectively.

Other Risks

The Company's customer receivables from gas sales and gas transportation
services are primarily derived from a diversified base of residential,
commercial, and industrial customers located in Indiana. The Company manages
credit risk associated with its receivables by continually reviewing
creditworthiness and requests cash deposits or refunds cash deposits based on
that review.

Although the Company's operations are exposed to limited commodity price risk,
volatile natural gas prices can result in higher working capital requirements;
increased expenses including unrecoverable interest costs, uncollectible
accounts expense, and unaccounted for gas; and some level of price sensitive
reduction in volumes sold. The Company mitigates these risks by executing
derivative contracts that manage the price of forecasted natural gas purchases.
These contracts are subject to regulation, which allows for reasonable and
prudent hedging costs to be recovered through rates. When regulation is
involved, SFAS 71 controls when the offset to mark-to-market accounting is
recognized in earnings.


<PAGE>



ITEM 8.  Financial Statements and Supplementary Data

              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of Indiana Gas Company, Inc. (Indiana Gas) is responsible for the
preparation of the financial statements and the related financial data contained
in this report. The financial statements are prepared in conformity with
accounting principles generally accepted in the United States and follow
accounting policies and principles applicable to regulated public utilities.

The integrity and objectivity of the data in this report, including required
estimates and judgments, is the responsibility of management. Management
maintains a system of internal control and utilizes an internal auditing program
to provide reasonable assurance of compliance with Company policies and
procedures and the safeguard of assets.

The board of directors of Indiana Gas' parent company, Vectren Corporation,
pursues its responsibility for these financial statements through its audit
committee, which meets periodically with management, the internal auditors, and
the independent auditors, to assure that each is carrying out its
responsibilities. Both the internal auditors and the independent auditors meet
with the audit committee of Vectren Corporation's board of directors, with and
without management representatives present, to discuss the scope and results of
their audits, their comments on the adequacy of internal accounting control and
the quality of financial reporting.


/s/ Niel C. Ellerbrook
-----------------------------------------------
Niel C. Ellerbrook
Chairman & Chief Executive Officer
February 12, 2004


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Shareholder and Board of Directors of Indiana Gas Company, Inc.:

We have audited the accompanying balance sheets of Indiana Gas Company, Inc. as
of December 31, 2003 and 2002, and the related statements of income, common
shareholder's equity, and cash flows for each of the three years in the period
ended December 31, 2003. Our audits also included the financial statement
schedules listed in the Index at Item 15. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, such financial statements present fairly, in all material
respects, the financial position of Indiana Gas Company, Inc. as of December 31,
2003 and 2002, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

As discussed in Note 2-E, effective January 1, 2003, the Company adopted
Statement of Financial Accounting Standards ("SFAS") 143, "Accounting for Asset
Retirement Obligations." As discussed in Note 3, effective January 1, 2002, the
Company adopted SFAS 142, "Goodwill and Other Intangibles."

/s/ DELOITTE & TOUCHE LLP
-----------------------------------------------
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
February 12, 2004


<PAGE>


                            INDIANA GAS COMPANY, INC.
                                 BALANCE SHEETS
                                 (In thousands)



                                                          At December 31,
--------------------------------------------------------------------------------
                                                    2003                 2002
--------------------------------------------------------------------------------
                                     ASSETS
Utility Plant
  Original cost                                $ 1,200,665           $ 1,148,614
  Less:  accumulated depreciation
         & amortization                            404,680               378,565
--------------------------------------------------------------------------------
         Net utility plant                         795,985               770,049
--------------------------------------------------------------------------------
Current Assets
      Cash & cash equivalents                        2,856                 3,729
      Accounts receivable - less reserves of
         $1,940 & $1,399, respectively              45,079                48,446
      Receivables due from other Vectren companies       5                10,754
      Accrued unbilled revenues                     63,582                53,192
      Inventories                                   15,631                13,286
      Recoverable gas costs                         16,140                10,241
      Prepayments & other current assets            70,157                37,090
--------------------------------------------------------------------------------
        Total current assets                       213,450               176,738
--------------------------------------------------------------------------------
Investment in the Ohio operations                  222,020               220,417
Other investments                                    2,930                 2,459
Non-utility property - net                             202                   253
Regulatory assets                                   21,237                18,132
Other assets                                         3,158                 4,207
--------------------------------------------------------------------------------
TOTAL ASSETS                                   $ 1,258,982           $ 1,192,255
================================================================================





















   The accompanying notes are an integral part of these financial statements.


<PAGE>


                            INDIANA GAS COMPANY, INC.
                                 BALANCE SHEETS
                                 (In thousands)

                                                        At December 31,
--------------------------------------------------------------------------------
                                                     2003                 2002
--------------------------------------------------------------------------------
                 LIABILITIES & SHAREHOLDER'S EQUITY

Capitalization
   Common shareholder's equity
   Common stock (no par value)                   $ 367,995             $ 242,995
   Retained earnings                                88,650                79,061
--------------------------------------------------------------------------------
      Total common shareholder's equity            456,645               322,056
--------------------------------------------------------------------------------
   Long-term debt payable to third parties -
     net of current maturities & debt subject
     to tender                                     196,417               228,480

   Long-term debt payable to VUHI                  184,448               147,275

--------------------------------------------------------------------------------
      Total capitalization                         837,510               697,811
--------------------------------------------------------------------------------
Commitments & Contingencies (Notes 3, 4, 7, & 8)

Current Liabilities
   Accounts payable                                 22,973                33,728
   Accounts payable to affiliated companies         51,005                47,255
   Payables to other Vectren companies               5,389                38,818
   Accrued liabilities                              36,530                30,052
   Short-term borrowings from VUHI                  63,974               108,182
   Long-term debt subject to tender                  3,500                     -
   Current maturities of long-term debt             15,000                38,750
--------------------------------------------------------------------------------
      Total current liabilities                    198,371               296,785
--------------------------------------------------------------------------------
Deferred Income Taxes & Other Liabilities
   Deferred income taxes                            63,890                45,601
   Regulatory liabilities & other removal costs    123,646               114,108
   Deferred credits & other liabilities             35,565                37,950
--------------------------------------------------------------------------------
      Total deferred credits & other liabilities   223,101               197,659
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY       $ 1,258,982           $ 1,192,255
================================================================================













   The accompanying notes are an integral part of these financial statements.

<PAGE>


                            INDIANA GAS COMPANY, INC.
                              STATEMENTS OF INCOME
                                 (In thousands)

                                                Year ended December 31,
--------------------------------------------------------------------------------
                                        2003             2002              2001
--------------------------------------------------------------------------------
OPERATING REVENUES                  $ 668,214         $527,443         $569,478
COST OF GAS                           450,674          320,418          373,610
--------------------------------------------------------------------------------
        GAS OPERATING MARGIN          217,540          207,025          195,868
--------------------------------------------------------------------------------
OPERATING EXPENSES
     Other operating                   85,814           78,965           96,468
     Merger & integration costs             -                -              576
     Restructuring costs                    -                -            8,668
     Depreciation & amortization       43,250           40,661           38,053
     Income taxes                      16,054           12,096           (1,074)
     Taxes other than income taxes     16,899           15,084           15,802
--------------------------------------------------------------------------------
         Total operating expenses     162,017          146,806          158,493
--------------------------------------------------------------------------------
OPERATING INCOME                       55,523           60,219           37,375

OTHER INCOME (EXPENSE)
     Equity in earnings of the
           Ohio operations-net of tax   5,817            5,855            2,326
     Other income (expense) - net        (728)             858             (344)
--------------------------------------------------------------------------------
         Total other income             5,089            6,713            1,982
--------------------------------------------------------------------------------
Interest expense                       29,081           32,413           36,062
--------------------------------------------------------------------------------
NET INCOME                           $ 31,531         $ 34,519          $ 3,295
================================================================================

























   The accompanying notes are an integral part of these financial statements.

<PAGE>


                            INDIANA GAS COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                                       Year Ended December 31,
--------------------------------------------------------------------------------
                                                   2003       2002       2001
--------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                     $ 31,531   $ 34,519    $ 3,295
  Adjustments to reconcile net income to cash
  from operating activities:
    Depreciation & amortization                    43,250     40,661     38,053
    Deferred income taxes & investment tax
     credits                                       15,483    (14,445)   (22,699)
    Pension & postretirement periodic
     benefit costs                                  1,549      1,690      1,684
    Equity in earnings of the Ohio operations      (5,817)    (5,855)    (2,326)
    Other non-cash charges - net                    6,531      4,542     13,323
    Changes in working capital accounts:
      Accounts receivable, including due from
        Vectren companies & accrued
        unbilled revenue                           (2,347)   (23,449)    69,567
      Inventories                                  (2,345)     1,655     (2,937)
      Recoverable fuel & natural gas costs         (5,899)    16,433     11,422
      Prepayments & other current assets          (33,179)    (1,265)    26,306
      Accounts payable, including to Vectren
        companies & affiliated companies          (40,434)    49,156    (41,913)
      Accrued liabilities                           5,605     (2,773)   (11,812)
    Changes in other assets                         1,049      2,387    (18,713)
    Changes in other liabilities                   (4,830)    (7,135)    (6,674)
--------------------------------------------------------------------------------
    Net cash flows from operating activities       10,147     96,121     56,576
--------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from:
    Additional capital contribution               125,000          -    100,000
    Long-term debt payable to VUHI                 37,140          -    147,270
  Requirements for:
    Retirement of long-term debt                  (53,432)    (6,492)    (7,387)
    Dividends to parent                           (21,942)   (22,340)   (25,938)
  Net change in short-term borrowings,
   including from VUHI                            (44,208)   (26,111)  (218,626)
--------------------------------------------------------------------------------
    Net cash flows from financing activities       42,558    (54,943)    (4,681)
--------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from:
    Distributions from the Ohio operations          4,214      9,002          -
  Requirements for:
    Capital expenditures                          (57,792)   (45,225)   (51,927)
    Other investments                                   -     (1,494)         -
--------------------------------------------------------------------------------
    Net cash flows from investing activities      (53,578)   (37,717)   (51,927)
--------------------------------------------------------------------------------
Net (decrease) increase in cash & cash
  equivalents                                        (873)     3,461        (32)
Cash & cash equivalents at beginning of period      3,729        268        300
--------------------------------------------------------------------------------
Cash & cash equivalents at end of period          $ 2,856    $ 3,729      $ 268
================================================================================

Cash paid during the year for:
  Interest                                       $ 29,591   $ 30,926   $ 32,611
  Income taxes                                     23,120     18,073      5,157



   The accompanying notes are an integral part of these financial statements.

<PAGE>


                            INDIANA GAS COMPANY, INC.
                    STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
                                 (In thousands)

                                                            Accumulated
                                                               Other
                                      Common    Retained   Comprehensive
                                       Stock    Earnings       Loss      Total
--------------------------------------------------------------------------------
Balance at January 1, 2001          $ 142,995   $ 89,525     $     -  $ 232,520

Comprehensive income:
    Net income                                     3,295                  3,295
    Minimum pension liability
     adjustments - net of tax                                 (2,382)    (2,382)
--------------------------------------------------------------------------------
    Total comprehensive income                                              913
--------------------------------------------------------------------------------
Common stock:
    Additional capital contribution   100,000                           100,000
    Dividends to parent                          (25,938)               (25,938)
--------------------------------------------------------------------------------
Balance at December 31, 2001          242,995     66,882      (2,382)   307,495

Comprehensive income:
    Net income                                    34,519                 34,519
    Minimum pension liability
     adjustments-net of tax                                    2,382      2,382
--------------------------------------------------------------------------------
    Total comprehensive income                                           36,901
--------------------------------------------------------------------------------
Dividends to parent                              (22,340)               (22,340)
--------------------------------------------------------------------------------
Balance at December 31, 2002          242,995     79,061           -    322,056

Net income & comprehensive income                 31,531                 31,531
Common stock:
    Additional capital contribution   125,000                           125,000
    Dividends to parent                          (21,942)               (21,942)
--------------------------------------------------------------------------------
Balance at December 31, 2003        $ 367,995   $ 88,650     $     -  $ 456,645
================================================================================


















   The accompanying notes are an integral part of these financial statements.


<PAGE>


                            INDIANA GAS COMPANY, INC.
                        NOTES TO THE FINANCIAL STATEMENTS

1.  Organization and Nature of Operations

Indiana Gas Company,  Inc. (the Company or Indiana Gas), an Indiana corporation,
provides natural gas distribution and  transportation  services to a diversified
customer  base in 49 of Indiana's 92  counties.  Indiana Gas is a direct  wholly
owned subsidiary of Vectren Utility  Holdings,  Inc.  (VUHI).  VUHI is a direct,
wholly owned subsidiary of Vectren Corporation (Vectren). Indiana Gas generally
does business as Vectren Energy Delivery of Indiana, Inc.

Vectren, an Indiana corporation, is an energy and applied technology holding
company headquartered in Evansville, Indiana. Vectren was organized on June 10,
1999, solely for the purpose of effecting the merger of Indiana Energy, Inc.
(Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of
Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free
exchange of shares and has been accounted for as a pooling-of-interests in
accordance with Accounting Principles Board (APB) Opinion No. 16 "Business
Combinations."

Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding
company for its three operating public utilities: Indiana Gas, formerly a wholly
owned subsidiary of Indiana Energy, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. Both Vectren and VUHI are exempt from registration pursuant to
Section 3(a)(1) and 3(c) of the Public Utility Holding Company Act of 1935.

Investment in the Ohio Operations
The Company holds a 47% interest in the Ohio operations and the remaining 53% is
held by Vectren Energy Delivery of Ohio, Inc. (VEDO). VEDO is also a wholly
owned subsidiary of Vectren. The Ohio operations provide natural gas
distribution and transportation services to 17 counties in west central Ohio,
including counties surrounding Dayton. VEDO is the operator of the assets.

Indiana Gas' ownership is accounted for using the equity method in accordance
with APB Opinion No. 18, "The Equity Method of Accounting for Investments in
Common Stock" and is included in investment in the Ohio operations, and its
interest in the results of operations is included in equity in earnings of the
Ohio operations. Additional information on the Company's investment in the Ohio
operations is included in Note 3.

2.  Summary of Significant Accounting Policies

A. Cash & Cash Equivalents
All highly liquid investments with an original maturity of three months or less
at the date of purchase are considered cash equivalents.

B. Inventories
Inventories consist of the following:
                                                            At December 31,
--------------------------------------------------------------------------------
(In thousands)                                          2003              2002
--------------------------------------------------------------------------------
Gas in storage-at LIFO cost                           $ 13,335          $ 12,497
Other                                                    2,296               789
--------------------------------------------------------------------------------
       Total inventories                              $ 15,631          $ 13,286
================================================================================

Based on the average cost of gas purchased during December, the cost of
replacing gas in storage carried at LIFO cost exceeded LIFO cost at December 31,
2003, and 2002, by approximately $22 million and $14 million, respectively. Gas
in storage of the Indiana regulated operations is stated at LIFO. All other
inventories are carried at average cost.

C. Utility Plant & Depreciation
Utility plant is stated at historical cost, including AFUDC. Depreciation of
utility property is provided using the straight-line method over the estimated
service lives of the depreciable assets. The original cost of utility plant,
together with depreciation rates expressed as a percentage of original cost,
follows:

                                           At & For the Year Ended December 31,
--------------------------------------------------------------------------------
(In thousands)                              2003                     2002
--------------------------------------------------------------------------------
                                           Depreciation             Depreciation
                                           Rates as a                Rates as a
                                           Percent of                Percent of
                           Original        Original     Original      Original
                              Cost         Cost           Cost          Cost
--------------------------------------------------------------------------------
Utility plant               $ 1,164,699      3.9%      $ 1,104,811          3.9%
Construction work in
  progress                       35,966        -            43,803           -
--------------------------------------------------------------------------------
    Total original cost     $ 1,200,665                $ 1,148,614
================================================================================


AFUDC represents the cost of borrowed and equity funds used for construction
purposes and is charged to construction work in progress during the construction
period and is included in Other - net in the Statements of Income. The total
AFUDC capitalized into utility plant and the portion of which was computed on
borrowed and equity funds for all periods reported follows:

                             Year Ended December 31,
--------------------------------------------------------------------------------
(In thousands)                           2003             2002             2001
--------------------------------------------------------------------------------
AFUDC - borrowed funds                  $ 106            $ 594             $ 444
AFUDC - equity funds                       19              240               545
--------------------------------------------------------------------------------
      Total AFUDC capitalized           $ 125            $ 834             $ 989
================================================================================


Maintenance and repairs, including the cost of removal of minor items of
property and planned major maintenance projects, are charged to expense as
incurred unless deferral is authorized by a rate order. When property that
represents a retirement unit is replaced or removed, the cost of such property
is charged to Utility plant, with an offsetting charge to Accumulated
depreciation, and Regulatory liabilities for the cost of removal.

D. Impairment Review of Long-Lived Assets
Long-lived assets are reviewed as facts and circumstances indicate that the
carrying amount may be impaired. This review is performed in accordance with
SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets"
(SFAS 144), which the Company adopted on January 1, 2002. SFAS 144 establishes
one accounting model for all impaired long-lived assets and long-lived assets
to be disposed of by sale or otherwise. SFAS 144 requires the evaluation for
impairment involve the comparison of an asset's carrying value to the estimated
future cash flows the asset is expected to generate over its remaining life.
If this evaluation were to conclude that the carrying value of the asset is
impaired, an impairment charge would be recorded based on the difference
between the asset's carrying amount and its fair value (less costs to sell for
assets to be disposed of by sale) as a charge to operations or discontinued
operations.

E. Regulation

SFAS 71
Retail public utility operations affecting Indiana customers are subject to
regulation by the IURC. The Company's accounting policies give recognition to
the rate-making and accounting practices of these agencies and to accounting
principles generally accepted in the United States, including the provisions of
SFAS No. 71 "Accounting for the Effects of Certain Types of Regulation" (SFAS
71). Regulatory assets represent probable future revenues associated with
certain incurred costs, which will be recovered from customers through the
rate-making process. Regulatory liabilities represent probable expenditures by
the Company for removal costs or future reductions in revenues associated with
amounts that are to be credited to customers through the rate-making process.

The Company assesses the recoverability of costs recognized as regulatory assets
and the ability to continue to account for its activities based on the criteria
set forth in SFAS 71. Based on current regulation, the Company believes such
accounting is appropriate. If all or part of the Company's operations cease to
meet the criteria of SFAS 71, a write-off of related regulatory assets and
liabilities could be required. In addition, the Company would be required to
determine any impairment to the carrying value of its utility plant and other
regulated assets.

Regulatory assets consist of the following:

                                                           At December 31,
--------------------------------------------------------------------------------
(In thousands)                                      2003                  2002
--------------------------------------------------------------------------------
Future amounts recoverable from ratepayers:
       Income taxes                                $ 8,915               $ 6,158
       Other                                           113                    -
--------------------------------------------------------------------------------
                                                     9,028                 6,158
Amounts currently recovered through base rates:
       Unamortized debt issue costs & premiums
           paid to reacquire debt                   12,209                11,974
--------------------------------------------------------------------------------
       Total regulatory assets                    $ 21,237              $ 18,132
================================================================================


The $12.2 million currently being recovered through base rates is earning a
return with a weighted average recovery period of 20.8 years. The Company has
rate orders for all deferred costs not yet in rates and therefore believes that
future recovery is probable.

Regulatory liabilities & other removal costs consist of the following:

                                                           At December 31,
--------------------------------------------------------------------------------
 (In thousands)                                   2003                  2002
--------------------------------------------------------------------------------
Cost of removal                               $ 123,646               $      -
Other removal costs                                 -                    114,108
--------------------------------------------------------------------------------
   Total regulatory liabilities & other
     removal costs                            $ 123,646               $  114,108
================================================================================


     SFAS 143 & Other Removal Costs In July 2001,  the FASB issued SFAS No. 143,
     "Accounting for Asset Retirement Obligations" (SFAS 143). SFAS 143 requires
     entities  to record the fair value of a liability  for an asset  retirement
     obligation  in the period in which it is  incurred.  When the  liability is
     initially  recorded,  the  entity  capitalizes  a cost  by  increasing  the
     carrying amount of the related  long-lived  asset. Over time, the liability
     is accreted to its present value,  and the capitalized  cost is depreciated
     over  the  useful  life  of  the  related  asset.  Upon  settlement  of the
     liability,  an entity either settles the obligation for its recorded amount
     or  incurs  a gain  or loss  upon  settlement.  The  Company  adopted  this
     statement  on  January  1,  2003.  The  adoption  was not  material  to the
     Company's results of operations.

The Company collects an estimated cost of removal of its utility plant through
depreciation rates established by regulatory proceedings. As of December 31,
2003, and 2002, such removal costs approximated $124 million and $114 million,
respectively. In 2002, the cost of removal has been included in Other removal
costs, which is in non-current liabilities. In 2003, the Company
re-characterized other removal costs to Regulatory liabilities upon adoption of
SFAS 143.

Refundable or Recoverable Gas Costs
All metered gas rates contain a gas cost adjustment clause that allows the
Company to charge for changes in the cost of purchased gas. The Company records
any under-or-over-recovery resulting from gas adjustment clauses each month in
revenues. A corresponding asset or liability is recorded until the
under-or-over-recovery is billed or refunded to utility customers. The cost of
gas sold is charged to operating expense as delivered to customers.

F. Comprehensive Income
Comprehensive income is a measure of all changes in equity that result from the
transactions or other economic events during the period from non-shareholder
transactions. This information is reported in the Statements of Common
Shareholder's Equity. The principal transaction resulting in other comprehensive
income relates to a minimum pension liability adjustment which is a loss of $3.8
million ($2.4 million after tax) in 2001. In 2002, all such liabilities were
transferred to Vectren.

G. Revenues
Revenues are recorded as products and services are delivered to customers. To
more closely match revenues and expenses, the Company records revenues for all
gas delivered to customers but not billed at the end of the accounting period.

H. Utility Receipts Taxes
A portion of utility receipts taxes are included in rates charged to customers.
Accordingly, the Company records these taxes received as a component of
Operating revenues. Utility receipts taxes paid are recorded as a component of
Taxes other than income taxes.

I. Earnings Per Share
Earnings per share are not presented as Indiana Gas' common stock is wholly
owned by Vectren Utility Holdings, Inc.

J. Other Significant Policies
Included elsewhere in these notes are significant accounting policies related to
the investment in the Ohio operations (Note 3), intercompany allocations and
income taxes (Note 4) and derivatives (Note 9).

K. Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 these estimates.

L. Reclassification
Certain prior year amounts have been reclassified in the financial statements
and accompanying notes to conform to 2003 classifications.

3. Investment in the Ohio Operations

The Company's investment in the Ohio operations is accounted for using the
equity method of accounting, and the investment is periodically examined for
other than temporary declines in value. The Company's share of the Ohio
operations after tax earnings is recorded in equity in earnings of the Ohio
operations. Because the Ohio operations is responsible for its income taxes and
is also within Vectren's consolidated tax group, no additional tax provision for
these earnings is included in these financial statements. Dividends are recorded
as a reduction of the carrying value of the investment when received. Goodwill
which is a component of the Company's net investment is accounted for in
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
The Company adopted SFAS 142, as required on January 1, 2002. SFAS 142 changed
the accounting for goodwill from an amortization approach to an impairment-only
approach. As required by SFAS 142, amortization of goodwill ceased on January 1,
2002.

Following is a reconciliation of reported net income to an adjusted net income
that excludes goodwill amortization for year ended December 31, 2001:

-----------------------------------------------------------
(In thousands)                                     2001
-----------------------------------------------------------

Net Income, As Reported                          $ 3,295
Add:  Goodwill amortization in equity in
        earnings of the Ohio operations            1,472
-----------------------------------------------------------
Net Income, As Adjusted                          $ 4,767
===========================================================


Following is summarized financial data of the Ohio operations:

                                             Year Ended December 31,
--------------------------------------------------------------------------------
(In thousands)                      2003               2002               2001
--------------------------------------------------------------------------------
     Operating revenues         $ 341,362           $ 296,123          $ 351,516
     Gas operating margin         102,998              97,808             88,931
     Operating income              11,759              12,153             11,152
     Net income                    12,376              12,457              4,950

                                             At December 31,
-------------------------------------------------------------
(In thousands)                      2003               2002
-------------------------------------------------------------
     Net utility plant          $ 267,968           $ 246,873
     Current assets               130,708             123,144
     Goodwill - net               199,457             199,457
     Other non-current assets       9,970              10,258
-------------------------------------------------------------
     Total assets               $ 608,103           $ 579,732
=============================================================

     Owners' net investment     $ 434,401           $ 435,372
     Current liabilities           93,049              73,761
     Noncurrent liabilities        80,653              70,599
-------------------------------------------------------------
     Total liabilities & owners'
       net investment           $ 608,103           $ 579,732
=============================================================


Contingency Related to Investment in Ohio Operations
There is an Ohio requirement that Ohio gas utilities undergo a biannual audit of
their gas acquisition practices in connection with the gas cost recovery (GCR)
mechanism. In the case of VEDO, the two-year period began in November 2000,
coincident with the Vectren's acquisition of the Ohio operations and
commencement of service in Ohio. The audit provides the initial review of the
portfolio administration arrangement between VEDO and ProLiance. The external
auditor retained by the PUCO staff recently submitted an audit report wherein it
recommended a disallowance of approximately $7 million of previously recovered
gas costs. Vectren believes a large portion of the third party auditor
recommendations is without merit. There are two elements of the recommendations
relating to the treatment of a pipeline refund and a penalty which VEDO does not
oppose. A hearing has been held, and based on its audit report, the PUCO staff
has recommended a $6.1 million disallowance. The Ohio Consumer Counselor has
submitted testimony to support an $11.5 million disallowance. For this PUCO
audit period, any disallowance relating to Vectren's ProLiance arrangement will
be shared by Vectren's joint venture partner. Based on a review of the matters,
Vectren has reserved $1.1 million for its estimated share of a potential
disallowance. It is not currently expected that costs associated with this
matter will have a material adverse effect on Indiana Gas' financial position
or liquidity but an unfavorable outcome could possibly be material to Indiana
Gas' earnings

4. Transactions with Other Vectren Companies

Support Services and Purchases
Vectren and certain subsidiaries of Vectren provided corporate and general and
administrative services to the Company including legal, finance, tax, risk
management, human resources, which includes charges for restricted stock
compensation and for pension and other postretirement benefits not directly
charged to subsidiaries. These costs have been allocated using various
allocators, primarily number of employees, number of customers and/or revenues.
Allocations are based on cost. Indiana Gas received corporate allocations
totaling $58.0 million, $50.6 million, and $63.3 million for the years ended
December 31, 2003, 2002, and 2001, respectively.

Retirement Plans and Other Postretirement Benefits
Vectren has multiple defined benefit pension plans and postretirement plans that
require accounting as described in SFAS No. 87 "Employers' Accounting for
Pensions" and SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," respectively. An allocation of expense is determined by
Vectren's actuaries, comprised of only service cost and interest on that service
cost, by subsidiary based on headcount at each measurement date. These costs are
directly charged to individual subsidiaries. Other components of costs (such as
interest cost and asset returns) are charged to individual subsidiaries through
the corporate allocation process discussed above. Neither plan assets nor the
FAS 87/106 liability is allocated to individual subsidiaries since these assets
and obligations are derived from corporate level decisions. Further, Vectren
satisfies the future funding requirements of plans and the payment of benefits
from general corporate assets. This allocation methodology is consistent with
"multiemployer" benefit accounting as described in SFAS 87 and 106.

For the years ended December 31, 2003, 2002, and 2001, periodic pension costs
totaling $1.2 million, $1.3 million and $1.3 million, respectively, was directly
charged by Vectren to the Company. For the years ended December 31, 2003, 2002,
and 2001, other periodic postretirement benefit costs totaling $0.3 million,
$0.4 million, and $0.4 million, respectively, was directly charged by Vectren to
the Company. As of December 31, 2003 and 2002, $22.2 million and $25.0 million,
respectively, is included in Deferred credits & other liabilities and represents
expense directly charged to the Company that is yet to be funded to Vectren, and
$2.2 million and $3.5 million, respectively, is included in Other assets for
amounts funded in advance to Vectren.

The recently enacted Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (the Medicare Act) provides a prescription drug benefit as well as a
federal subsidy to sponsors of certain retiree health care benefit plans. As
allowed by FASB Staff Position No. 106-1 (FSP 106-1), Vectren has elected to
defer reflecting the effects of the Medicare Act on the accumulated benefit
obligation and net periodic postretirement benefit cost in its 2003 consolidated
financial statements. Vectren's deferral election expires upon the occurrence of
any event that triggers a required remeasurement of plan assets or obligations,
or upon the issuance of specific authoritative guidance on the accounting for
the federal subsidy. Such guidance is pending and when issued could require the
Company to adjust previously reported information. Upon expiration of Vectren's
deferral or the issuance of guidance, Vectren's implementation of the Medicare
Act may impact Indiana Gas' financial statements.

Cash Management and Borrowing Arrangements
The Company participates in a centralized cash management program with Vectren,
other wholly owned subsidiaries, and banks which permits funding of checks as
they are presented. See Note 6 regarding long-term and short-term intercompany
borrowing arrangements.

Guarantees of Parent Company Debt
Vectren's three operating utility companies, Indiana Gas, SIGECO, and VEDO are
guarantors of VUHI's $346 million commercial paper program, of which
approximately $184.4 million is outstanding at December 31, 2003 and VUHI's $550
million unsecured senior notes outstanding at December 31, 2003. The guarantees
are full and unconditional and joint and several, and VUHI has no subsidiaries
other than the subsidiary guarantors.

Equity-Based Incentive Plans
Indiana Gas does not have equity-based compensation plans separate from Vectren.
An insignificant number of Indiana Gas' employees participate in Vectren's
equity-based compensation plans.

Income Taxes
Vectren and subsidiary companies file a consolidated federal income tax return.
For financial reporting purposes, Indiana Gas' current and deferred tax expense
is computed on a separate company basis. The components of income tax expense
and utilization of investment tax credits follow:


                                                Year Ended December 31,
--------------------------------------------------------------------------------
(In thousands)                            2003              2002          2001
--------------------------------------------------------------------------------
Current:
       Federal                        $ (3,127)          $ 24,305       $20,811
       State                             3,698              2,236           814
--------------------------------------------------------------------------------
Total current taxes                        571             26,541        21,625
--------------------------------------------------------------------------------
Deferred:
       Federal                          15,981            (12,332)      (21,048)
       State                               423             (1,188)         (724)
--------------------------------------------------------------------------------
Total deferred taxes                    16,404            (13,520)      (21,772)
--------------------------------------------------------------------------------
Amortization of investment tax credits    (921)              (925)         (927)
--------------------------------------------------------------------------------
       Total income taxes             $ 16,054           $ 12,096      $ (1,074)
================================================================================


A reconciliation of the federal statutory expense to actual income tax expense
follows:

                                                  Year Ended December 31,
--------------------------------------------------------------------------------
(In thousands)                                     2003        2002        2001
--------------------------------------------------------------------------------
Tax at federal statutory rate                   $ 14,618    $ 14,316      $ (83)
State and local taxes, net of federal benefit      2,681         594         58
Amortization of investment tax credit               (921)       (925)      (927)
All other-net                                       (324)     (1,889)      (122)
--------------------------------------------------------------------------------
       Tax at effective rate                    $ 16,054    $ 12,096   $ (1,074)
================================================================================

The liability method of accounting is used for income taxes under which deferred
income taxes are recognized to reflect the tax effect of temporary differences
between the book and tax bases of assets and liabilities at currently enacted
income tax rates. Significant components of the net deferred tax liability
follow:
                                                       At December 31,
--------------------------------------------------------------------------------
 (In thousands)                                     2003                 2002
--------------------------------------------------------------------------------
Non-current deferred tax liabilities (assets):
     Depreciation & cost recovery timing
       differences                                $ 66,655             $ 53,338
     Regulatory assets recoverable through
       future rates                                 11,311               11,703
     Regulatory liabilities to be settled through
       future rates                                 (2,396)              (5,545)
     Employee benefit obligations                  (11,695)             (15,704)
     Other - net                                        15                1,809
--------------------------------------------------------------------------------
         Net non-current deferred tax liability     63,890               45,601
--------------------------------------------------------------------------------
Current deferred tax liability:
     Deferred fuel costs - net                       3,118                2,245
--------------------------------------------------------------------------------
         Net deferred tax liability               $ 67,008             $ 47,846
================================================================================

At December 31, 2003, and 2002, investment tax credits totaling $4.4 million and
$5.4 million, respectively, are included in Deferred credits and other
liabilities. These investment tax credits are amortized over the lives of the
related investments. The Company has no tax credit carryforwards at December 31,
2003. Alternative Minimum Tax credit carryforwards of approximately $5.2 million
were utilized in 2001.



<PAGE>


5. Transactions with Vectren Affiliates

ProLiance Energy, LLC
ProLiance Energy, LLC (ProLiance), a nonregulated energy marketing affiliate of
Vectren and Citizens Gas and Coke Utility (Citizens Gas), provides natural gas
and related services to Indiana Gas, the Ohio operations, Citizens Gas and
others. ProLiance also began providing service to SIGECO in 2002. ProLiance's
primary business is optimizing the gas portfolios of utilities and providing
services to large end use customers.

Transactions with ProLiance
Purchases from ProLiance for resale and for injections into storage for the
years ended December 31, 2003, 2002, and 2001, totaled $451.8 million, $321.6
million, and $396.5 million, respectively. Amounts owed to ProLiance at December
31, 2003, and 2002, for those purchases were $50.7 million and $46.1 million,
respectively, and are included in Accounts payable to affiliated companies in
the Balance Sheets. Amounts charged by ProLiance for gas supply services are
established by supply agreements with each utility.

Other Affiliate Transactions
Vectren has ownership interests in other affiliated companies accounted for
using the equity method of accounting that perform underground construction and
repair, facilities locating, and meter reading services to the Company. For the
years ended December 31, 2003, 2002, and 2001, fees for these services and
construction-related expenditures paid by the Company to Vectren affiliates
totaled $25.4 million, $29.5 million, and $21.1 million, respectively. Amounts
charged by these affiliates are market based. Amounts owed to unconsolidated
affiliates other than ProLiance totaled $0.3 million and $1.1 million at
December 31, 2003, and 2002, respectively, and are included in Accounts payable
to affiliated companies in the Balance Sheets.

6. Borrowing Arrangements & Other Financing Transactions

Short-Term Borrowings
As of December 31, 2003, the Company has no short-term borrowing arrangements
with third parties and relies entirely on the short-term borrowing arrangements
of VUHI for short-term working capital needs. Borrowings outstanding at December
31, 2003 and 2002, were $64.0 million and $108.2 million, respectively. The
intercompany credit line totals $325 million, but is limited to VUHI's available
capacity ($162 million of additional capacity at December 31, 2003) and is
subject to the same terms and conditions as VUHI's commercial paper program.
Short-term borrowings bear interest at VUHI's weighted average daily cost of
short-term funds. See the table below for interest rates and outstanding
balances.

                                                    Year ended December 31,
--------------------------------------------------------------------------------
(In thousands)                                2003          2002          2001
--------------------------------------------------------------------------------
Weighted average total outstanding during
  the year due from VUHI (in thousands)     $   97,178    $ 78,903     $ 159,632
Weighted average total outstanding during
  the year payable to third parties
  (in thousands)                            $      -      $    -       $ 112,182
Weighted average interest rates during the year :
       VUHI                                       1.35%      2.02%         5.24%
       Commercial paper                             N/A        N/A         4.65%



<PAGE>


Long-Term Debt
Senior unsecured obligations outstanding and classified as long-term by
subsidiary follow:

                                                            At December 31,
--------------------------------------------------------------------------------
 (In thousands)                                           2003           2002
--------------------------------------------------------------------------------
  Fixed Rate Senior Unsecured Notes Payable to VUHI:
    2011, 6.625%                                       $  98,953       $ 98,920
    2018, 5.75%                                           37,140              -
    2031, 7.25%                                           48,355         48,355
--------------------------------------------------------------------------------
         Total long-term debt payable to VUHI          $ 184,448      $ 147,275
================================================================================

  Fixed Rate Senior Unsecured Notes Payable to
   Third Parties:
    2003, Series F, 5.75%                              $       -       $ 15,000
    2004, Series F, 6.36%                                 15,000         15,000
    2007, Series E, 6.54%                                  6,500          6,500
    2013, Series E, 6.69%                                  5,000          5,000
    2015, Series E, 7.15%                                  5,000          5,000
    2015, Insured Quarterly, 7.15%                        20,000         20,000
    2015, Series E, 6.69%                                  5,000          5,000
    2015, Series E, 6.69%                                 10,000         10,000
    2021, Private Placement, 9.375%, $1,250 due
      annually in 2002                                         -         23,750
    2025, Series E, 6.53%                                 10,000         10,000
    2027, Series E, 6.42%                                  5,000          5,000
    2027, Series E, 6.68%                                  3,500          3,500
    2027, Series F, 6.34%                                 20,000         20,000
    2028, Series F, 6.75%                                      -         13,563
    2028, Series F, 6.36%                                 10,000         10,000
    2028, Series F, 6.55%                                 20,000         20,000
    2029, Series G, 7.08%                                 30,000         30,000
    2030, Insured Quarterly, 7.45%                        49,917         49,917
--------------------------------------------------------------------------------
Total long-term debt outstanding payable to
  third parties                                          214,917        267,230
    Current maturities                                   (15,000)       (38,750)
    Debt subject to tender                                (3,500)             -
--------------------------------------------------------------------------------
      Long-term debt payable to third parties - net of
       current maturities & debt subject to tender     $ 196,417      $ 228,480
================================================================================


Issuances Payable to VUHI in 2003
In 2003, the Company issued $37.1 million of long-term debt payable to VUHI. The
note has terms identical to the terms of notes issued by VUHI in July 2003
through a public offering. Those notes have an interest rate of 5.75% priced at
99.177% to yield 5.80% to maturity and are due August 2018. They have no sinking
fund requirements, and interest payments are due semi-annually. The notes may be
called by VUHI, in whole or in part, at any time for an amount equal to accrued
and unpaid interest, plus the greater of 100% of the principal amount or the sum
of the present values of the remaining scheduled payments of principal and
interest, discounted to the redemption date on a semi-annual basis at the
Treasury Rate, as defined in VUHI's indenture, plus 25 basis points.

Issuances Payable to VUHI in 2001
In 2001, the Company issued $147.3 million of long-term debt payable to VUHI. Of
this amount, $48.4 million has terms that are identical to the terms of notes
issued by VUHI in October 2001 (October Notes) and $98.9 million has terms
identical to the notes issued by VUHI in December 2001 (December Notes), both
through public offerings. The October Notes have an aggregate principal amount
of $100.0 million and an interest rate of 7.25%. The December Notes have an
aggregate principal amount of $250.0 million and an interest rate of 6.625%,
priced at 99.302% to yield 6.69% to maturity.

The issues have no sinking fund requirements, and interest payments are due
quarterly for the October Notes and semi-annually for the December Notes. The
October Notes are due October 2031, but may be called by VUHI, in whole or in
part, at any time after October 2006 at 100% of the principal amount plus any
accrued interest thereon. The December Notes are due December 2011, but may be
called by VUHI, in whole or in part, at any time for an amount equal to accrued
and unpaid interest, plus the greater of 100% of the principal amount of the
notes to be redeemed or the sum of the present values of the remaining scheduled
payments of principal and interest, discounted to the redemption date on a
semi-annual basis at the Treasury Rate, as defined in VUHI's indenture, plus 25
basis points.

Debt Call
During 2003, the Company called two senior unsecured notes. The first note had a
remaining principal amount of $21.3 million, an interest rate of 9.375%, was
originally due in 2021, and was redeemed at 105.525% of the stated principal
amount. The second note had a principal amount of $13.5 million, an interest
rate of 6.75%, was originally due in 2028, and was redeemed at the principal
amount. Pursuant to regulatory authority, the premiums paid to retire the net
carrying value of these notes totaling $1.1 million were deferred as a
regulatory asset. The proceeds to fund the early redemption were received from
VUHI in the form of new long-term debt discussed above and $125 million in
additional equity. To generate the initial proceeds to fund these transactions,
in July 2003, VUHI completed a public offering of long-term debt netting
proceeds of approximately $203 million, and Vectren completed a public offering
of common stock in August 2003 netting proceeds of approximately $163 million.

Other Debt Payments
Other Company debt totaling $17.5 million in 2003, $6.5 million in 2002, and
$7.4 million in 2001 was retired pursuant to normal terms.

Long-Term Debt Sinking Fund Requirements & Maturities
Maturities and sinking fund requirements on long-term debt during the five years
following 2003 (in millions) are $15.0 in 2004, zero in 2005, zero in 2006, $6.5
in 2007, and zero in 2008.

Long-Term Debt Put & Call Provisions
Certain long-term debt issues contain put and call provisions that can be
exercised on various dates before maturity. The put or call provisions are not
triggered by specific events, but are based upon dates stated in the note
agreements. Debt which may be put to the Company during the years following 2003
(in millions) is $3.5 in 2004, $10.0 in 2005, zero in 2006, $20.0 in 2007, zero
in 2008, and $40.0 thereafter. Debt that may be put to the Company within one
year is classified as Long-term debt subject to tender in current liabilities.

Covenants
Borrowing arrangements contain customary default provisions; restrictions on
liens, sale leaseback transactions, mergers or consolidations, and sales of
assets; and restrictions on leverage and interest coverage, among other
restrictions. As of December 31, 2003, the Company was in compliance with all
financial covenants.

7.  Commitments & Contingencies

Commitments
Firm purchase commitments for commodities total (in millions) $50.5 in 2004 and
$10.9 in 2005.

United States Securities and Exchange Commission (SEC) Informal Inquiry
As more fully described in the 2002 financial statements, the Company restated
its annual financial statements for 2000 and 2001, and its 2002 quarterly
results. The Company received an informal inquiry from the SEC with respect to
this restatement. In response, the Company met with the SEC staff and provided
information in response to their requests, with the most recent response
provided on July 26, 2003.

Legal Proceedings
The Company is party to various legal proceedings arising in the normal course
of business. In the opinion of management, there are no legal proceedings
pending against the Company that are likely to have a material adverse effect on
its financial position or results of operations. See Note 8 regarding
environmental matters.

8.  Environmental Matters

In the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas and others may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.

Indiana Gas has identified the existence, location, and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and the IDEM, and a Record of Decision was issued by
the IDEM in January 2000. Although Indiana Gas has not begun an RI/FS at
additional sites, Indiana Gas has submitted several of the sites to the IDEM's
Voluntary Remediation Program (VRP) and is currently conducting some level of
remedial activities, including groundwater monitoring at certain sites, where
deemed appropriate, and will continue remedial activities at the sites as
appropriate and necessary.

In conjunction with data compiled by environmental consultants, Indiana Gas has
accrued the estimated costs for further investigation, remediation, groundwater
monitoring, and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has recorded costs that it reasonably expects to incur
totaling approximately $20.4 million.

The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties (PRP), which serve to limit
Indiana Gas' share of response costs at these 19 sites to between 20% and 50%.

With respect to insurance coverage, Indiana Gas has received and recorded
settlements from all known insurance carriers in an aggregate amount
approximating $20.4 million.

Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.

9.  Derivatives & Other Financial Instruments

Accounting Policy for Derivatives
The Company executes derivative contracts in the normal course of operations
while buying and selling commodities to be used in operations and managing risk.

When an energy contract that is a derivative is designated and documented as a
normal purchase or normal sale, it is exempted from mark-to-market accounting.
Otherwise, energy contracts and financial contracts that are derivatives are
recorded at market value as current or non-current assets or liabilities
depending on their value and on when the contracts are expected to be settled.
The offset resulting from carrying the derivative at fair value on the balance
sheet is charged to earnings unless it qualifies as a hedge or is subject to
SFAS 71. When hedge accounting is appropriate, the Company assesses and
documents hedging relationships between the derivative contract and underlying
risks as well as its risk management objectives and anticipated effectiveness.
When the hedging relationship is highly effective, derivatives are designated as
hedges. The market value of the effective portion of the hedge is marked to
market in accumulated other comprehensive income for cash flow hedges or as an
adjustment to the underlying's basis for fair value hedges. The ineffective
portion of hedging arrangements is marked-to-market through earnings. The offset
to contracts affected by SFAS 71 are marked-to-market as a regulatory asset or
liability. Market value for all derivative contracts is determined using quoted
market prices from independent sources. Following is a more detailed discussion
of the Company's use of mark-to-market accounting related to natural gas
procurement.

The Company's operations have limited exposure to commodity price risk for
purchases and sales of natural gas for retail customers due to current Indiana
regulations which, subject to compliance with those regulations, allow for
recovery of such purchases through natural gas cost adjustment mechanisms.
Although the Company's operations are exposed to limited commodity price risk,
volatile natural gas prices can result in higher working capital requirements,
increased expenses including unrecoverable interest costs, uncollectible
accounts expense, and unaccounted for gas, and some level of price- sensitive
reduction in volumes sold. The Company mitigates these risks by executing
derivative contracts that manage the price of forecasted natural gas purchases.
These contracts are subject to regulation which allows for reasonable and
prudent hedging costs to be recovered through rates. When regulation is
involved, SFAS 71 controls when the offset to mark-to-market accounting is
recognized in earnings. The market value of natural gas procurement derivative
contracts at December 31, 2003, was not significant.

Impact of Adoption of SFAS 133
In June 1998, the FASB issued SFAS 133 which required that every derivative
instrument be recorded on the balance sheet as an asset or liability measured at
its market value and that a change in the derivative's market value be
recognized currently in earnings unless specific hedge criteria are met.

SFAS 133, as amended, required that as of the date of initial adoption, the
difference between the market value of derivative instruments recorded on the
balance sheet and the previous carrying amount of those derivatives be reported
in net income or other comprehensive income, as appropriate. As of and since the
date of adoption on January 1, 2001, the Company has engaged only in limited
derivative activity subject to SFAS 71.

Fair Value of Other Financial Instruments
The carrying values and estimated fair values of the Company's other financial
instruments follow:

                                                  At December 31,
 -------------------------------------------------------------------------------
                                           2003                    2002
                                    ---------------------  ---------------------
 (In thousands)                     Carrying    Est.Fair    Carrying   Est. Fair
                                     Amount       Value      Amount     Value
 --------------------------------  ----------------------  ---------------------
  Long-term debt due to third
   parties                          $ 214,917   $ 227,290   $ 267,230  $ 280,983
  Long-term debt due to VUHI          184,448     200,823     147,275    157,392
  Short-term debt due to VUHI          63,974      63,974     108,182    108,182
--------------------------------------------------------------------------------


Certain methods and assumptions must be used to estimate the fair value of
financial instruments. The fair value of the Company's other financial
instruments was estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for instruments
with similar characteristics. Because of the maturity dates and variable
interest rates of short-term borrowings, its carrying amount approximates its
fair value.

Under current regulatory treatment, call premiums on reacquisition of long-term
debt are generally recovered in customer rates over the life of the refunding
issue or over a 15-year period. Accordingly, any reacquisition would not be
expected to have a material effect on the Company's financial position or
results of operations.

10. Additional Operational & Balance Sheet Information

Other - net in the Statements of Income consists of the following:

                                                 Year ended December 31,
--------------------------------------------------------------------------------
 (In thousands)                          2003             2002            2001
--------------------------------------------------------------------------------
AFUDC                                   $ 125            $ 834          $ 989
Other income                              696              741            655
Other expense                          (1,549)            (717)        (1,988)
--------------------------------------------------------------------------------
    Total other - net                  $ (728)           $ 858         $ (344)
================================================================================

Prepayments and other current assets in the Balance Sheets consist of the
following:

                                                    At December 31,
----------------------------------------------------------------------------
 (In thousands)                                  2003             2002
----------------------------------------------------------------------------
Prepaid gas delivery service                    $45,820          $36,632
Prepaid taxes                                    22,974                -
Other prepayments & current assets                1,363              458
----------------------------------------------------------------------------
   Total prepayments & other current assets    $ 70,157         $ 37,090
============================================================================




<PAGE>


Accrued liabilities in the Balance Sheets consist of the following:
                                                     At December 31,
----------------------------------------------------------------------------
 (In thousands)                                     2003             2002
----------------------------------------------------------------------------
Accrued taxes                                     $10,443          $ 8,106
Refunds to customers & customer deposits           10,362            7,245
Accrued interest                                    4,293            5,689
Deferred income taxes                               3,118            2,245
Other                                               8,314            6,767
----------------------------------------------------------------------------
    Total accrued liabilities                    $ 36,530         $ 30,052
============================================================================


11. Special Charges for 2001

Restructuring & Related Charges
As part of continued cost saving efforts, in June 2001, the Company's management
and the board of directors approved a plan to restructure, primarily, its
regulated operations. The restructuring plan included the elimination of certain
administrative and supervisory positions in its utility operations and corporate
office. Charges of $5.4 million were expensed in June 2001 as a direct result of
the restructuring plan. Additional charges of $3.3 million were incurred during
the remainder of 2001 primarily for consulting fees, employee relocation, and
duplicate facilities costs. In total, the Company incurred restructuring charges
of $8.7 million. These charges were comprised of $3.2 million for employee
severance, related benefits and other employee related costs, $4.0 million for
lease termination fees related to duplicate facilities and other facility costs,
and $1.5 million for consulting and other fees.

The $3.2 million of severance and related costs includes $0.5 million of
deferred compensation payable at various times through 2016. The $4.0 million of
lease termination fees includes $1.0 million of non-cash charges for impaired
leasehold improvements.

Employee severance and related costs are associated with approximately 45
employees. Employee separation benefits include severance, healthcare, and
outplacement services. During 2001, approximately 38 employees had exited the
business. The restructuring program was completed during 2001, except for the
departure of the remaining employees impacted by the restructuring which
occurred during 2002 and the final settlement of the lease obligation which has
yet to occur.

At the beginning of 2002, the remaining accrual related to the restructuring was
$4.0 million. Of that amount, $1.0 million remained accrued for severance, half
of which relates to deferred compensation arrangements, and $3.0 million
remained for lease termination fees. During 2002, the accrual for severance did
not substantially change, and $1.0 million of lease costs were paid. At December
31, 2002, the remaining restructuring accrual was $2.8 million ($0.8 million for
severance and $2.0 million for lease costs). During 2003, $0.2 million was paid
for severance, and the accrual for lease costs did not substantially change. At
December 31, 2003, the remaining restructuring accrual was $2.6 million ($0.6
million for severance and $2.0 million for lease costs). The restructuring
accrual is included in Accrued liabilities.

Merger & Integration Costs
Merger and integration related costs incurred during 2001 totaled $0.6 million.
These costs relate primarily to transaction costs, severance, and other merger
and acquisition integration activities. As a result of merger and integration
activities, management retired certain information systems in 2001. Accordingly,
the useful lives of these assets were shortened to reflect this decision. These
information system assets are owned by VUHI, and the fees allocated by VUHI for
the use of these systems is reflected in other operating expenses. As a result
of the shortened useful lives, additional fees were incurred by the Company,
resulting in additional other operating expense of $9.6 million ($6.0 million
after tax) for the year ended December 31, 2001. Merger and integration
activities resulting from the 2000 merger forming Vectren were completed in
2001.

12. Impact of Recently Issued Accounting Guidance

SFAS 149
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and
clarifies the accounting guidance on (1) derivative instruments (including
certain derivative instruments embedded in other contracts) and (2) hedging
activities that fall within the scope of FASB Statement No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities." SFAS 149 amends
SFAS 133 to reflect decisions that were made (1) as part of the process
undertaken by the Derivatives Implementation Group (DIG), which necessitated
amending SFAS 133, (2) in connection with other projects dealing with financial
instruments, and (3) regarding implementation issues related to the application
of the definition of a derivative. SFAS 149 also amends certain other existing
pronouncements which will result in more consistent reporting of contracts that
are derivatives in their entirety or that contain embedded derivatives that
warrant separate accounting. SFAS 149 is effective (1) for contracts entered
into or modified after June 30, 2003, with certain exceptions and (2) for
hedging relationships designated after June 30. The guidance is to be applied
prospectively. The adoption did not have a material effect on the Company's
results of operations or financial condition.

SFAS 150
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" (SFAS 150).
SFAS 150 requires issuers to classify as liabilities the following three types
of freestanding financial instruments: mandatorily redeemable financial
instruments, obligations to repurchase the issuer's equity shares by
transferring assets, and certain obligations to issue a variable number of
shares. SFAS 150 was effective immediately for financial instruments entered
into or modified after May 31, 2003; otherwise, the standard was effective for
all other financial instruments at the beginning of the Company's third quarter
of 2003. In October 2003, the FASB issued further guidance regarding mandatorily
redeemable stock which is effective January 1, 2004, for the Company. The
adoption of SFAS 150 on January 1, 2004, did not affect the Company's results of
operations or financial condition.

FASB Interpretation (FIN) 45
In November 2002, the FASB issued FIN 45. FIN 45 clarifies the requirements for
a guarantor's accounting for and disclosure of certain guarantees issued and
outstanding and that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligations it has undertaken.
The initial recognition and measurement provisions were applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
Since that date, the adoption has not had a material effect on the Company's
results of operations or financial condition.

FIN 46/46-R (Revised in December 2003)
In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable
Interest Entities" (FIN 46). FIN 46 addresses consolidation by business
enterprises of variable interest entities (VIE) and significantly changes the
consolidation requirements for those entities. FIN 46 is intended to achieve
more consistent application of consolidation policies related to VIE's and thus
improves comparability between enterprises engaged in similar activities when
those activities are conducted through VIE's. In December 2003, the FASB
completed its deliberations of proposed modifications to FIN 46 and decided to
codify both the proposed modifications and other decisions previously issued
through certain FASB Staff Positions into one document that was issued as a
revision to the original Interpretation (FIN 46-R). FIN 46-R currently applies
to VIE's created after January 31, 2003, and to VIE's in which an enterprise
obtains an interest after that date. For entities created prior to January 31,
2003, FIN 46 is to be adopted no later than the end of the first interim or
annual reporting period ending after March 15, 2004. Although management is
still evaluating the impact of FIN 46 and related Staff Positions on its
financial position and results of operations, the adoption is not expected to
have a material effect.

Staff Accounting Bulletin No. 104
In December 2003, the SEC published Staff Accounting Bulletin (SAB) No. 104,
"Revenue Recognition". This SAB updates portions of the SEC staff's interpretive
guidance provided in SAB 101 and included in Topic 13 of the Codification of
Staff Accounting Bulletins. SAB 104 deletes interpretative material no longer
necessary and conforms the interpretive material retained because of
pronouncements issued by the FASB's EITF on various revenue recognition topics,
including EITF 00-21, "Revenue Arrangements with Multiple Deliverables." The
Company's adoption of the standard did not have an impact on its revenue
recognition policies.


<PAGE>

13. Subsequent Event

On March 19, 2004, Indiana Gas (d/b/a Vectren Energy Delivery of Indiana, Inc.)
filed a petition with the IURC to adjust its base rates and charges for its gas
distribution business in a 49-county region covering central and southeastern
Indiana. If the filing is approved, Indiana Gas expects to increase its base
rates by approximately $47 million to cover the ongoing cost of operating,
maintaining and expanding the approximately 12,000-mile distribution and storage
system used to serve more than 525,000 customers. If approved, the typical
residential customer that uses natural gas to heat his/her home would see a bill
increase of about 7 percent.

The petition only addresses Indiana Gas' "non-gas" costs which are incurred to
build, operate and maintain the pipes, other equipment and systems that are used
to deliver gas. The filing also includes a normal temperature adjustment (NTA)
mechanism to reduce the impact on customer bills caused by the variations in
weather. With the NTA, historic average temperatures serve as the basis for
computing customers' bills, thereby smoothing out the effects of significant
temperature fluctuations.

The timing and ultimate outcome of this regulatory initiative is uncertain.


14. Quarterly Financial Data  (Unaudited)

Information in any one quarterly period is not indicative of annual results due
to the seasonal variations common to the Company's utility operations.
Summarized quarterly financial data for 2003 and 2002 follows:

--------------------------------------------------------------------------------
(In thousands)                      Q1             Q2         Q3            Q4
--------------------------------------------------------------------------------

2003
     Results of Operations:
     Operating revenues         $ 295,380    $ 104,846     $ 73,606    $ 194,382
     Gas operating margin          86,396       40,312       27,698       63,134
     Operating income (loss)       32,631        6,175       (2,125)      18,842
     Net income (loss)             30,172       (3,134)     (11,136)      15,629

2002
     Results of Operations:
     Operating revenues         $ 200,201    $  83,953     $ 57,900    $ 185,389
     Gas operating margin          73,441       38,484       28,252       66,848
     Operating income              26,610        7,639          682       25,288
     Net income (loss)             23,591          498       (9,338)      19,768




<PAGE>


ITEM 9.  CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

ITEM 9a.  CONTROLS AND PROCEDURES

                Evaluation of Disclosure Controls and Procedures

As of December 31, 2003, the Company carried out an evaluation under the
supervision and with the participation of the Chief Executive Officer and Chief
Financial Officer of the effectiveness and the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer have concluded that the
Company's disclosure controls and procedures are effective at providing
reasonable assurance that material information relating to the Company required
to be disclosed by the Company in its filings under the Securities Exchange Act
of 1934 (Exchange Act) is brought to their attention on a timely basis.

Disclosure controls and procedures, as defined by the Exchange Act in Rules
13a-15(e) and 15d-15(e), are controls and other procedures of the Company that
are designed to ensure that information required to be disclosed by the Company
in the reports filed or submitted by it under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms. "Disclosure controls and procedures" include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in its Exchange Act reports is accumulated and
communicated to the Company's management, including its principal executive and
financial officers, as appropriate, to allow timely decisions regarding required
disclosure.

              Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2003, there have been no significant
changes to the Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

Internal control over financial reporting is defined by the SEC in Final Rule:
Management's Reports on Internal Control Over Financial Reporting and
Certification of Disclosure in Exchange Act Periodic Reports. The final rule
defines internal control over financial reporting as a process designed by, or
under the supervision of, the registrant's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
registrant's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that: (1) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of the registrant, (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the registrant are being made only in accordance with
authorizations of management and directors of the registrant, and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the registrant's assets that could have a
material effect on the financial statements.

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

Vectren's Corporate Governance Guidelines, its charters for each of its Audit,
Compensation and Nominating and Corporate Governance Committees, and its Code of
Ethics covering Vectren's directors, officers and employees are available on
Vectren's website, www.vectren.com, and a copy will be mailed upon request to
Investor Relations, Attention: Steve Schein, 20 N.W. Fourth Street, Evansville,
Indiana 47708. Vectren intends to disclose any amendments to the Code of Ethics
or waivers of the Code of Ethics on behalf of its directors or officers
including, but not limited to, the principal executive officer, principal
financial officer, principal accounting officer or controller and persons
performing similar functions on Vectren's website at the Internet address set
forth above promptly following the date of such amendment or waiver and such
information will also be available by mail upon request to Investor Relations,
Attention: Steve Schein, 20 N.W. Fourth Street, Evansville, Indiana 47708.

ITEM 11.   EXECUTIVE COMPENSATION

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
           AND RELATED STOCKHOLDER MATTERS

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following tabulation shows the audit and non-audit fees paid to Deloitte &
Touche, LLP (Deloitte) for the years ending December 31, 2003, and December 31,
2002. The fees represent amounts applicable to audits and audit-related and tax
services for all of Vectren Corporation and its subsidiary companies.

--------------------------------------------------------------------------------
                                               2003                    2002
--------------------------------------------------------------------------------
Audit Fees(1)                             $  1,187,950           $    350,000
Audit-Related Fees(2)                          234,000                135,555
Tax Fees(3)                                     92,000                 73,625
All Other Fees(4)                                   -                      -
--------------------------------------------------------------------------------
Total Fees Paid to Deloitte               $  1,513,950           $    559,180
================================================================================

(1)  Aggregate fees incurred payable to Deloitte for professional services
     rendered for the audit of Vectren's 2003 fiscal year annual financial
     statements and the review of financial statements included in Vectren's
     Forms 10-Q filed during Vectren's 2003 fiscal year. This includes fees
     incurred for audit services related to certain of Vectren's subsidiaries in
     connection with the audit of Vectren's financial statements. The amount
     also includes fees paid to Deloitte for the audits of Vectren's 2000 and
     2001 financial statements and the completion of the audit of the 2002
     financial statements. The 2002 amount relates to the audit of Vectren's
     2002 financial statements and reviews of Vectren's Forms 10-Q filed during
     the 2002 fiscal year.
(2)  Audit related fees consisted principally of consultation on various
     accounting issues in 2003 and 2002, and reviews related to various
     financing transactions completed during 2003.
(3)  Tax fees consisted of fees paid to Deloitte for tax planning and
     review of tax returns of Vectren.
(4)  All Other Fees - None.

Pursuant to its charter, Vectren's Audit Committee is responsible for selecting,
approving professional fees, and overseeing the independence, qualifications and
performance of the independent auditors. The Audit Committee has adopted a
formal policy with respect to the pre-approval of audit and permissible
non-audit services provided by the independent auditors. Pre-approval is
assessed on a case-by-case basis. In assessing requests for services to be
provided by the independent auditors, the Audit committee considers whether such
services are consistent with the auditors' independence, whether the independent
auditors are likely to provide the most effective and efficient service based
upon their familiarity with Vectren, and whether the service could enhance
Vectren's ability to manage or control risk or improve audit quality. The
audit-related, tax, and other services provided by Deloitte in the last fiscal
year and related fees were approved by the Audit Committee in accordance with
this policy.

                                     PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                 List Of Documents Filed As Part Of This Report

Financial Statements

The financial statements and related notes, together with the report of Deloitte
& Touche LLP, appear in Part II "Item 8 Financial Statements and Supplementary
Data" of this Form 10-K.

Supplemental Schedules

For the years ended December 31, 2003, 2002, and 2001, the Company's Schedule II
-- Valuation and Qualifying Accounts Financial Statement Schedules is presented
on page 42. The report of Deloitte & Touche LLP on the schedule may be found in
Item 8.

All other schedules are omitted as the required information is inapplicable or
the information is presented in the Financial Statements or related notes in
Item 8.

List of Exhibits

The Company has incorporated by reference herein certain exhibits as specified
below pursuant to Rule 12b-32 under the Exchange Act.

      Exhibits for the Company attached to this filing filed electronically with
      the SEC are listed on page 43.
      Exhibits for the Company are listed in the Index to Exhibits beginning
      on page 44.

              Reports On Form 8-K During The Last Calendar Quarter

On October 22, 2003, the Company filed a Current Report on Form 8-K with respect
to the release of financial information to the investment community regarding
Vectren Corporation's results of operations, financial position and cash flows
for the three, nine, and twelve month periods ended September 30, 2003. The
financial information was released to the public through this filing.

      Item 7.  Exhibits
               99-1 - Press Release - Vectren Corporation Reports Third Quarter
               2003 Results
               99-2 - Cautionary Statement for Purposes of the "Safe Harbor"
               Provisions of the Private Securities Litigation Reform Act
               of 1995
      Item 12. Results of Operations and Financial Condition


On December 11, 2003, the Company filed a Current Report on Form 8-K with
respect to an analyst meeting where a discussion of Vectren Corporation's
current financial and operating results and plans for the future will occur.

      Item 9.  Regulation FD Disclosure
      Index to Exhibits
               99-1 - Press Release - Vectren Corporation Provides 2004 Earnings
               Guidance
               99- 2 - Cautionary Statement for Purposes of the "Safe Harbor"
               Provisions of the Private Securities Litigation Reform Act
               of 1995

<TABLE>
<CAPTION>

                                   SCHEDULE II
                            Indiana Gas Company, Inc.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


Column A                               Column B       Column C        Column D  Column E
----------------------------------------------------------------------------------------
                                                     Additions
                                                 -----------------
                                       Balance                       Deductions  Balance
                                         at       Charged  Charged      from       at
                                       Beginning     to    to Other   Reserves,  End of
Description                            Of Year   Expenses Accounts      Net       Year
----------------------------------------------------------------------------------------
(In thousands)

VALUATION & QUALIFYING ACCOUNTS:

<S>                                    <C>       <C>       <C>        <C>       <C>
Year 2003-Accumulated provision for
           uncollectible accounts      $ 1,399   $ 6,073   $ -        $ 5,532   $ 1,940
Year 2002-Accumulated provision for
           uncollectible accounts      $   987   $ 4,750   $ -        $ 4,338   $ 1,399
Year 2001-Accumulated provision for
           uncollectible accounts      $ 2,063   $ 7,670   $ -        $ 8,746   $   987


OTHER RESERVES:

Year 2002-Reserve for merger &
           integration charges         $   200   $   -     $ -        $   200   $     -
Year 2001-Reserve for merger &
           integration charges         $ 1,293   $   -     $ -        $ 1,093   $   200

Year 2003-Reserve for restructuring
           costs                       $ 2,787   $   -     $ -        $   216   $ 2,571
Year 2002-Reserve for restructuring
           costs                       $ 3,960   $   -     $ -        $ 1,173   $ 2,787
Year 2001-Reserve for restructuring
           costs                       $   -     $ 5,883   $ -        $ 1,923   $ 3,960

</TABLE>



<PAGE>


                            Indiana Gas Company, Inc.
                                 2003 Form 10-K
                                Attached Exhibits

The following Exhibits were filed electronically with the SEC with this filing.
See Page 44 of this Annual Report on Form 10-K for a complete list of exhibits.

Exhibit
Number     Document

4.5        Promissory Note for Long-Term Loans dated September 1, 2003, between
           Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.

31.1       Chief Executive Officer Certification Pursuant to Section 302 of the
           Sarbanes-Oxley Act of 2002.

31.2       Chief Financial Officer Certification Pursuant to Section 302 of the
           Sarbanes-Oxley Act of 2002.

32.1       Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
           of 2002.




<PAGE>



                                INDEX TO EXHIBITS

2.  Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1     Asset Purchase Agreement dated December 14, 1999 between Indiana Energy,
        Inc. and The Dayton Power and Light Company and Number-3CHK with a
        commitment letter for a 364-Day Credit Facility dated December 16,1999.
        (Filed and designated in Current Report on Form 8-K dated December 28,
        1999, File No. 1-9091, as Exhibit 2 and 99.1.)

3.  Articles of Incorporation and By-Laws
3.1      Amended and Restated Articles of Incorporation of Indiana Gas Company,
         Inc. (Filed and designated in Current Report on Form 10-K filed April
         2, 2001, File No. 1-6494, as Exhibit 3.1.)

3.2      Code of By-Laws of Indiana Gas Company, Inc.  (Filed and designated
         in Current Report on Form 10-K, filed April 2, 2001, File No. 1-6494,
         as Exhibit 3.2.)

4.   Instruments Defining the Rights Of Security Holders, Including Indentures
4.1     Indenture dated February 1, 1991, between Indiana Gas and U.S. Bank
        Trust National Association (formerly know as First Trust National
        Association, which was formerly know as Bank of America Illinois, which
        was formerly know as Continental Bank, National Association. Inc.'s.
        (Filed and designated in Current Report on Form 8-K filed February 15,
        1991, File No. 1-6494.); First Supplemental Indenture thereto dated as
        of February 15, 1991. (Filed and designated in Current Report on Form
        8-K filed February 15, 1991, File No. 1-6494, as Exhibit 4(b).); Second
        Supplemental Indenture thereto dated as of September 15, 1991, (Filed
        and designated in Current Report on Form 8-K filed September 25, 1991,
        File No. 1-6494, as Exhibit 4(b).); Third supplemental Indenture thereto
        dated as of September 15, 1991 (Filed and designated in Current Report
        on Form 8-K filed September 25, 1991, File No. 1-6494, as Exhibit
        4(c).); Fourth Supplemental Indenture thereto dated as of December 2,
        1992, (Filed and designated in Current Report on Form 8-K filed December
        8, 1992, File No. 1-6494, as Exhibit 4(b).); Fifth Supplemental
        Indenture thereto dated as of December 28, 2000, (Filed and designated
        in Current Report on Form 8-K filed December 27, 2000, File No. 1-6494,
        as Exhibit 4.)

4.2     Indenture dated October 19, 2001, among 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 in Form 8-K, dated October 19, 2001,
        File No. 1-16739, as Exhibit 4.1); 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 in Form 8-K, dated October 19, 2001, File
        No. 1-16739, as Exhibit 4.2); Second Supplemental Indenture, among
        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 in Form
        8-K, dated November 29, 2001, File No. 1-16739, as Exhibit 4.1); Third
        Supplemental Indenture, among 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 in Form 8-K, dated July 24, 2003, File No.
        1-16739, as Exhibit 4.1.

4.3     Promissory Note for Long-Term Loans dated October 19, 2001, between
        Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.
        (Filed and designated in Current Report on Form 10-K filed March 29,
        2002, File No. 1-6494, as Exhibit 4.4.)

4.4     Promissory Note for Long-Term Loans dated November 30, 2001, between
        Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.
        (Filed and designated in Current Report on Form 10-K filed March
        29, 2002, File No. 1-6494, as Exhibit 4.5.)

4.5     Promissory Note for Long-Term Loans dated September 1, 2003, between
        Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.
        (Filed herewith.)

10. Material Contracts
10.1    Summary description of Southern Indiana Gas and Electric Company's
        nonqualified Supplemental Retirement Plan (Filed and designated in Form
        10-K for the fiscal year 1992, File No. 1-3553, as Exhibit 10-A-17.)
        First Amendment, effective April 16, 1997 (Filed and designated in Form
        10-K for the fiscal year 1997, File No. 1-3553, as Exhibit 10.29.).

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

10.3    Indiana  Energy,  Inc.  Unfunded  Supplemental  Retirement  Plan for a
        Select Group of  Management  Employees  as amended and  restated
        effective December  1, 1998.  (Filed and  designated  in Form 10-Q for
        the  quarterly period ended December 31, 1998, File No. 1-9091,
        as Exhibit 10-G.)

10.4    Indiana Energy, Inc. Nonqualified Deferred Compensation Plan effective
        January 1, 1999.  (Filed and designated in Form 10-Q for the quarterly
        period ended December 31, 1998, File No. 1-9091, as Exhibit 10-H.)

10.5    Indiana  Energy,  Inc.  Executive  Restricted  Stock Plan as  amended
        and restated  effective  October 1, 1998. (Filed and designated in
        Form 10-K for the fiscal year ended September 30, 1998,  File No.
        1-9091,  as Exhibit 10-O.) First Amendment, effective December 1, 1998
        (Filed and designated in Form 10-Q for the quarterly period ended
        December 31, 1998, File No. 1-9091, as Exhibit 10-I.).

10.6    Indiana Energy, Inc. Director's Restricted Stock Plan as amended and
        restated effective May 1, 1997. (Filed and designated in Form 10-Q for
        the quarterly period ended June 30, 1997, File No. 1-9091, as Exhibit
        10-B.) First Amendment, effective December 1, 1998. (Filed and
        designated in Form 10-Q for the quarterly period ended December 31,
        1998, File No. 1-9091, as Exhibit 10-J.) Second Amendment, Plan
        renamed the Vectren Corporation Directors Restricted Stock Plan
        effective October 1, 2000. (Filed and designated in Form 10-K for the
        year ended December 31, 2000, File No. 1-15467, as Exhibit 10-34.)
        Third Amendment, effective March 28, 2001. (Filed and designated in
        Form 10-K for the year ended December 31, 2000, File No. 1-15467, as
        Exhibit 10-35.) 10.7 Vectren Corporation At Risk Compensation Plan
        effective May 1, 2001. (Filed and designated in Vectren Corporation's
        Proxy Statement dated March 16, 2001, File No. 1-15467, as Appendix
        B.)

10.8    Vectren Corporation Non-Qualified Deferred Compensation Plan, as amended
        and restated effective January 1, 2001. (Filed and designated in Form
        10-K, for the year ended December 31, 2001, File No. 1-15467, as Exhibit
        10.32.)

10.9    Vectren Corporation Employment Agreement between Vectren Corporation
        and Niel C. Ellerbrook dated as of March 31, 2000.  (Filed and
        designated in Form 10-Q for the quarterly period ended June 30, 2000,
        File No. 1-15467, as Exhibit 99.1.)

10.10   Vectren Corporation Employment Agreement between Vectren Corporation
        and Jerome A. Benkert, Jr. dated as of March 31, 2000.  (Filed and
        designated in Form 10-Q for the quarterly period ended June 30, 2000,
        File No. 1-15467, as Exhibit 99.3.)

10.11   Vectren Corporation Employment Agreement between Vectren Corporation
        and Ronald E. Christian dated as of March 31, 2000.  (Filed and
        designated in Form 10-Q for the quarterly period ended June 30, 2000,
        File No. 1-15467, as Exhibit 99.5.)



<PAGE>

10.12   Vectren Corporation Employment Agreement between Vectren Corporation
        and Richard G. Lynch dated as of March 31, 2000. (Filed and designated
        in Form 10-Q for the quarterly period ended June 30, 2000, File No.
        1-15467, as Exhibit 99.8.)

10.13   Vectren Corporation Employment Agreement between Vectren Corporation
        and William S. Doty dated as of April 30, 2001.  (Filed and designated
        in Form 10-K, for the year ended December 31, 2001, File No. 1-15467,
        as Exhibit 10.43.)

10.14   Gas Sales and Portfolio Administration Agreement between Indiana Gas
        Company, Inc. and ProLiance Energy, LLC, effective August 30, 2003.
        (Filed and designated in Form 10-K, for the year ended December 31,
        2003, File No 1-1567, as Exhibit 10.15.)

10.15   Gas Sales and Portfolio Administration Agreement between Vectren
        Energy Delivery of Ohio and ProLiance Energy, LLC, effective October
        31, 2000. (Filed and designated in Form 10-K, for the year ended
        December 31, 2001, File No. 1-15467, as Exhibit 10-24.)

10.16   Formation Agreement among Indiana Energy, Inc., Indiana Gas Company,
        Inc., IGC Energy, Inc., Indiana Energy Services, Inc., Citizens Gas &
        Coke Utility, Citizens Energy Services Corporation and ProLiance Energy,
        LLC, effective March 15, 1996.  (Filed and designated in Form 10-Q for
        the quarterly period ended March 31, 1996, File No. 1-9091, as Exhibit
        10-C.)

21. Subsidiaries of the Company
Intentionally omitted. See the table of contents of this Annual Report on Form
10-K for explanation.

31. Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
Chief Executive Officer Certification Pursuant to Section 302 Of The
Sarbanes-Oxley Act Of 2002 is attached hereto as Exhibit 31.1

Chief Financial Officer Certification Pursuant to Section 302 Of The Sarbanes-
Oxley Act Of 2002 is attached hereto as Exhibit 31.2

32. Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002 is
attached hereto as Exhibit 32.1

99. Additional Exhibits
99.1    Amended and Restated Articles of Incorporation of Vectren Corporation
        effective March 31, 2000. (Filed and designated in Current Report on
        Form 8-K filed April 14, 2000, File No.
        1-15467, as Exhibit 4.1.)

99.2    Amended and Restated Code of By-Laws of Vectren Corporation as of
        October 29, 2003. (Filed and designated in Quarterly Report on Form
        10-Q filed November 13, 2003, File No. 1-15467, as Exhibit 3.1.)

99.3    Shareholders Rights Agreement dated as of October 21, 1999 between
        Vectren Corporation and Equiserve Trust Company, N.A., as Rights Agent.
        (Filed and designated in Form S-4 (No. 333-90763), filed November 12,
        1999, File No. 1-15467, as Exhibit 4.)



<PAGE>


                                   SIGNATURES

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

                                 INDIANA GAS COMPANY, INC.


Dated   February 25, 2004
                                 /s/ Niel C. Ellerbrook
                                 ----------------------
                                 Niel C. Ellerbrook,
                                 Chairman, Chief Executive Officer, and Director

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in capacities and on the dates indicated.

            Signature                    Title                       Date

/s/  Niel C. Ellerbrook         Chairman, Chief Executive      February 25, 2004
---------------------------     Officer, & Director (Principal
     Niel C. Ellerbrook         Executive Officer)



/s/  Jerome A. Benkert, Jr.     Executive Vice President,      February 25, 2004
---------------------------     Chief Financial Officer, &
     Jerome A. Benkert, Jr.     Director (Principal Financial
                                Officer)



/s/  M. Susan Hardwick          Vice President, Controller, &  February 25, 2004
---------------------------     Director (Principal Accounting
     M. Susan Hardwick          Officer)


/s/  Ronald E. Christian        Director                       February 25, 2004
---------------------------
     Ronald E. Christian


/s/  William S. Doty            Director                       February 25, 2004
---------------------------
     William S. Doty