UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                         
                              WASHINGTON, D.C. 20549
                                         
                                    FORM 10-Q
                                         
   (Mark One)
   (X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
    
   For the quarterly period ended   December 31, 1996
                                  ---------------------
                                        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  1-7727
                          -----------------------------------------------------
    
                       CONNECTICUT NATURAL GAS CORPORATION
   ----------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter)
    
    
               Connecticut                                        06-0383860
   ----------------------------------------------------------------------------
     (State or other jurisdiction of                         (I.R.S. Employer
      incorporation or organization)                        Identification No.)
    
   100 Columbus Boulevard, Hartford, Connecticut                        06103
   ----------------------------------------------------------------------------
     (Address of principal executive offices)                        (Zip Code)
    
    
                                  (203) 727-3000
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               (Registrant's telephone number, including area code)
                                         
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   (Former name, former address and former fiscal year, if changed since last   
   report).
    
        Indicate by check mark whether the registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Securities Exchange Act
   of 1934 during the preceding 12 months (or for such shorter period that the
   registrant was required to file such reports), and (2) has been subject to
   such filing requirements for the past 90 days.     Yes   X   No 
                                                          -----    -----
        Indicate the number of shares outstanding of each of the issuer's
   classes of common stock, as of the latest practicable date (applicable only
   to Corporate Issuers).   Number of shares of common stock outstanding as of
   the close of business on January 28, 1997:  10,634,496.
    
    <PAGE>
    
    
    
    
    
    
                               FINANCIAL STATEMENTS
                                         
                       CONNECTICUT NATURAL GAS CORPORATION
                                         
                                         
                                         
                                         
        The condensed financial statements included herein have been prepared
   by the Company, without audit, pursuant to the rules and regulations of the
   Securities and Exchange Commission.  Certain information and footnote
   disclosures normally included in financial statements prepared in accordance
   with generally accepted accounting principles have been condensed or omitted
   pursuant to such rules and regulations.  Although the Company believes that
   the disclosures are adequate to make the information presented not
   misleading, it is suggested that these condensed financial statements be
   read in conjunction with the financial statements and the notes thereto
   included in the Company's latest annual report on Form 10-K.  In the opinion
   of the Company, all adjustments necessary to present fairly the consolidated
   financial position of the Connecticut Natural Gas Corporation as of December
   31, 1996 and 1995 and the results of its operations and its cash flows for
   the three months and twelve months ended December 31, 1996 and 1995 have
   been included.  The results of operations for such interim periods are not
   necessarily indicative of the results for the full year.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    <PAGE>
<TABLE>
<CAPTION>
                                                                    "UNAUDITED"
                        CONNECTICUT NATURAL GAS CORPORATION
                                         
                           CONSOLIDATED BALANCE SHEETS
                              (Thousands of Dollars)
    
   <S>                                          <C>         <C>          <C>
    
                                                 Dec. 31,   Sept. 30,     Dec. 31, 
                     ASSETS                        1996        1996         1995   
                     ------                     ---------   ---------    --------- 
   Plant and Equipment:
      Regulated energy                          $ 407,837   $ 403,862    $ 391,297 
      Unregulated energy                           60,726      60,515       64,021 
      Construction work in progress                 4,276       6,417        3,645 
                                                ---------   ---------    --------- 
                                                  472,839     470,794      458,963 
      Less-Allowance for depreciation             148,194     145,042      137,106 
                                                ---------   ---------    --------- 
                                                  324,645     325,752      321,857 
                                                ---------   ---------    --------- 

   Investments, at equity                          10,673       9,914        5,859 
                                                ---------   ---------    --------- 
   Current Assets:
      Cash and cash equivalents                     1,436       8,515          874 
      Accounts and notes receivable                41,596      29,852       42,503 
      Allowance for doubtful accounts              (5,025)     (4,819)      (4,844)
      Accrued utility revenue                      16,375       4,180       21,663 
      Inventories                                  13,992      15,968       11,333 
      Prepaid expenses                              3,708      10,920        2,170 
                                                ---------   ---------    --------- 
                                                   72,082      64,616       73,699 
                                                ---------   ---------    --------- 
   Deferred Charges and Other Assets:
      Unrecovered future taxes                     44,812      44,812       49,210 
      Recoverable transition costs                  2,128       2,858        4,210 
      Other assets                                 20,263      19,027       20,845 
                                                ---------   ---------    --------- 
                                                   67,203      66,697       74,265 
                                                ---------   ---------    --------- 
                                                $ 474,603   $ 466,979    $ 475,680 
                                                =========   =========    ========= 
</TABLE>
    <PAGE>
<TABLE>
<CAPTION>
    
    
                                                                    "UNAUDITED"
                       CONNECTICUT NATURAL GAS CORPORATION
                                         
                     CONSOLIDATED BALANCE SHEETS (Concluded)
                                (Thousands of Dollars)
                                         
   <S>                                          <C>         <C>          <C>
                                         
                                                 Dec. 31,   Sept. 30,     Dec. 31, 
         CAPITALIZATION AND LIABILITIES            1996        1996         1995   
         ------------------------------         ---------   ---------    --------- 
   Capitalization:
      Common Stock                              $  33,233   $  33,233    $  31,045 
      Capital in excess of par value               87,402      87,387       74,018 
      Retained Earnings                            51,735      49,026       50,006 
                                                ---------   ---------    --------- 
                                                  172,370     169,646      155,069 
      Unearned compensation -
         Restricted stock awards                   (1,342)       (312)        (358)
      Treasury stock                                    -        (452)        (103)
                                                ---------   ---------    --------- 
         Common stock equity                      171,028     168,882      154,608 
      Preferred stock, not subject to
         mandatory redemption                         899         899          902 
      Long-term debt                              135,474     136,432      149,525 
                                                ---------   ---------    --------- 
                                                  307,401     306,213      305,035 
                                                ---------   ---------    --------- 

   Current Liabilities:
      Current portion of long-term debt            14,069      13,968        3,922 
      Notes payable                                 9,000           -       14,100 
      Accounts payable and accrued expenses        41,221      40,721       41,945 
      Refundable purchased gas costs                3,315       6,012        5,449 
      Accrued liabilities                           3,539       4,479        6,938 
                                                ---------   ---------    --------- 
                                                   71,144      65,180       72,354 
                                                ---------   ---------    --------- 
   Deferred Credits:
      Deferred income taxes                        40,347      40,011       38,482 
      Unfunded deferred income taxes               44,812      44,812       49,210 
      Investment tax credits                        3,148       3,203        3,368 
      Refundable taxes                              3,445       3,445        3,202 
      Other                                         4,306       4,115        4,029 
                                                ---------   ---------    --------- 
                                                   96,058      95,586       98,291 
                                                ---------   ---------    --------- 
                                                $ 474,603   $ 466,979    $ 475,680 
                                                =========   =========    ========= 
</TABLE>
    <PAGE>
<TABLE>
<CAPTION>
                                                                    "UNAUDITED"
                       CONNECTICUT NATURAL GAS CORPORATION
                                         
                         CONSOLIDATED STATEMENTS OF INCOME                     

                 (Thousands of dollars except for per share data)              


                                                    Three Months Ended
                                                       December 31, 
                                               -----------------------------
   <S>                                          <C>               <C> 
                                                    1996              1995   
                                                ----------        ---------- 

   Operating Revenues                           $   89,269        $   90,462 
   Less:  Cost of Energy                            50,567            49,072 
          State Gross Receipts Tax                   3,470             3,790 
                                                ----------        ---------- 
   Operating Margin                                 35,232            37,600 
                                                ----------        ---------- 

   Other Operating Expenses:
      Operations & maintenance expenses             13,485            13,498 
      Depreciation                                   4,412             4,383 
      Income taxes                                   5,978             6,430 
      Other taxes                                    1,936             1,922 
                                                ----------        ---------- 
                                                    25,811            26,233 
                                                ----------        ---------- 
   Operating Income                                  9,421            11,367 
                                                ----------        ---------- 
   Other Income (Deductions):
      Allowance for equity funds used
        during construction                             49                46 
      Equity in partnership earnings                   851               402 
      Other deductions                                (168)             (219)
      Income Taxes                                    (304)              (42)
                                                ----------        ---------- 
                                                       428               187 
                                                ----------        ---------- 
   Interest and Debt Expense                         3,133             3,380 
                                                ----------        ---------- 
   Net Income                                        6,716             8,174 
   Less-Dividends on Preferred Stock                    16                16 
                                                ----------        ---------- 
   Net Income Applicable to Common Stock        $    6,700        $    8,158 
                                                ==========        ========== 

   Income Per Average Share of
      Common Stock                              $     0.63        $     0.82 
                                                ==========        ========== 

   Dividends Per Share of Common Stock          $     0.38        $     0.37 
                                                ==========        ========== 
   Average Common Shares Outstanding
      During the Period                         10,623,137         9,931,279 
                                                ==========        ========== 
</TABLE>
    
    <PAGE>
<TABLE>
<CAPTION>
                        CONNECTICUT NATURAL GAS CORPORATION         "UNAUDITED"
    
                         CONSOLIDATED STATEMENTS OF INCOME                     

                 (Thousands of dollars except for per share data)               
    
                                                    Twelve Months Ended
                                                       December 31, 
                                               -----------------------------
   <S>                                          <C>               <C>
                                                    1996              1995   
                                                ----------        ---------- 

   Operating Revenues                           $  314,170        $  289,116 
   Less:  Cost of Energy                           176,670           154,953 
          State Gross Receipts Tax                  11,390            11,861 
                                                ----------        ---------- 
   Operating Margin                                126,110           122,302 
                                                ----------        ---------- 

   Operating Expenses:
      Operations & maintenance expenses             58,242            54,863 
      Depreciation                                  17,794            17,146 
      Income taxes                                  13,912            11,680 
      Other taxes                                    7,604             7,464 
                                                ----------        ---------- 
                                                    97,552            91,153 
                                                ----------        ---------- 
   Operating Income                                 28,558            31,149 
                                                ----------        ---------- 
   Other Income (Deductions):
      Allowance for equity funds used
        during construction                            148               121 
      Equity in partnership earnings                 2,486             1,059 
      Other income (deductions)                        189              (938)
      Nonrecurring items                               892             3,624 
      Income Taxes                                  (1,267)           (1,763)
                                                ----------        ---------- 
                                                     2,448             2,103 
                                                ----------        ---------- 
   Interest and Debt Expense                        13,469            14,143 
                                                ----------        ---------- 
   Net Income                                       17,537            19,109 
   Less-Dividends on Preferred Stock                    63                63 
                                                ----------        ---------- 
   Net Income Applicable to Common Stock        $   17,474        $   19,046 
                                                ==========        ========== 

   Income Per Average Share of
      Common Stock                              $     1.69        $     1.92 
                                                ==========        ========== 

   Dividends Per Share of Common Stock          $     1.51        $     1.48 
                                                ==========        ========== 
   Average Common Shares Outstanding
      During the Period                         10,328,158         9,931,279 
                                                ==========        ========== 
</TABLE>
    <PAGE>
<TABLE>
<CAPTION>
    
                                                                    "UNAUDITED"
                        CONNECTICUT NATURAL GAS CORPORATION                    

                       CONSOLIDATED STATEMENTS OF CASH FLOWS                   

                              (Thousands of Dollars)                           

    
    
                                                  Three Months Ended 
                                                     December 31, 
                                                 ----------------------
   <S>                                             <C>          <C>
                                                     1996         1995   
                                                     ----         ----   

   Cash Flows from Operations                      $ (7,186)    $ (3,411)
                                                   --------     -------- 

   Cash Flows from Investing Activities:
      Capital expenditures                           (3,623)      (4,004)
      Other investing activities                        210          (96)
                                                   --------     -------- 
      Net cash used in investing activities          (3,413)      (4,100)
                                                   --------     -------- 
   Cash Flows from Financing Activities:
      Dividends paid                                 (4,007)      (3,691)
      Issuance of common stock                            -            - 
      Other stock activity, net                        (616)          (2)
      Principal retired on long-term debt              (857)        (864)
      Short-term debt                                 9,000        9,900 
                                                   --------     -------- 
      Net cash provided by
         financing activities                         3,520        5,343 
                                                   --------     -------- 
   Decrease in Cash and
      Cash Equivalents                               (7,079)      (2,168)
   Cash and Cash Equivalents at
      Beginning of Period                             8,515        3,042 
                                                   --------     -------- 
   Cash and Cash Equivalents at
      End of Period                                $  1,436     $    874 
                                                   ========     ========
</TABLE>
 <PAGE>
<TABLE>
<CAPTION>
     
    
    
    
    
                                                                    "UNAUDITED"
                        CONNECTICUT NATURAL GAS CORPORATION                    

                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)             

                              (Thousands of Dollars)                            

    
                                                  Three Months Ended 
                                                     December 31, 
                                                 ----------------------
   <S>                                             <C>          <C>
                                                     1996         1995   
                                                     ----         ----   

   Schedule Reconciling Earnings to
      Cash Flows from Operations:
      Income                                       $  6,716     $  8,174 
                                                   --------     -------- 
      Adjustments to reconcile income
         to net cash:
         Depreciation and amortization                4,563        4,501 
         Deferred income taxes, net                     281          279 
         Equity in partnership earnings                (851)        (402)
         Cash distributions received from                   
           investments                                  200          240 
      Change in assets and liabilities:                     
         Accounts receivable                        (12,006)     (10,618)
         Accrued utility revenue                    (12,195)     (16,570)
         Inventories                                  1,976        3,178 
         Purchased gas costs                         (2,697)       3,149 
         Prepaid expenses                             7,212        3,925 
         Accounts payable and accrued expenses        2,418       (3,571)
         Other assets/liabilities                    (2,803)       4,304 
                                                   --------     -------- 
           Total adjustments                        (13,902)     (11,585)
                                                   --------     -------- 

      Cash flows from operations                   $ (7,186)    $ (3,411)
                                                   ========     ======== 

   Supplemental Disclosures of Cash Flow
      Information:
   Cash Paid During the Period for:
      Interest (net of amount capitalized)         $  4,936     $  4,078 
                                                   ========     ======== 
      Income taxes                                 $  1,517     $  4,607 
                                                   ========     ======== 
</TABLE>
    <PAGE>
<TABLE>
<CAPTION>
                                                                    "UNAUDITED"
                        CONNECTICUT NATURAL GAS CORPORATION                    

                       CONSOLIDATED STATEMENTS OF CASH FLOWS                   

                              (Thousands of Dollars)                           

    
                                                  Twelve Months Ended
                                                     December 31, 
                                                 ----------------------
   <S>                                             <C>          <C>
                                                     1996         1995   
                                                     ----         ----   

   Cash Flows from Operations                      $ 34,388     $ 45,356 
                                                   --------     -------- 

   Cash Flows from Investing Activities:
      Capital expenditures                          (23,900)     (26,687)
      Nonrecurring Items                                892        4,124 
      Other investing activities                       (913)        (354)
                                                   --------     -------- 
      Net cash used in investing activities         (23,920)     (22,917)
                                                   --------     -------- 
   Cash Flows from Financing Activities:
      Dividends paid                                (15,807)     (14,762)
      Issuance of common stock                       15,557            - 
      Other stock activity, net                        (652)          (7)
      Principal retired on long-term debt            (3,904)      (4,041)
      Short-term debt                                (5,100)      (3,900)
                                                   --------     -------- 
      Net cash used by
         financing activities                        (9,906)     (22,710)
                                                   --------     -------- 
   Increase (Decrease) in Cash and
      Cash Equivalents                                  562         (271)
   Cash and Cash Equivalents at
      Beginning of Period                               874        1,145 
                                                   --------     -------- 
   Cash and Cash Equivalents at
      End of Period                                $  1,436     $    874 
                                                   ========     ======== 


</TABLE>
    
    <PAGE>
<TABLE>
<CAPTION>
    
    
    
                                                                    "UNAUDITED"
                        CONNECTICUT NATURAL GAS CORPORATION                     
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)              
                              (Thousands of Dollars)                            
    
                                                           Twelve Months Ended
                                                     December 31, 
                                                 ----------------------
   <S>                                             <C>          <C>
                                                     1996         1995   
                                                     ----         ----   

   Schedule Reconciling Earnings to
      Cash Flows from Operations:
      Income                                       $ 17,537     $ 19,109 
                                                   --------     -------- 
      Adjustments to reconcile income
         to net cash:
         Depreciation and amortization               17,971       17,365 
         Deferred income taxes, net                   1,888          655 
         Equity in partnership earnings              (2,486)      (1,059)
         Nonrecurring Items                            (892)      (4,124)
         Cash distributions received from                   
           investments                                1,901          240 
      Change in assets and liabilities:                     
         Accounts receivable                          1,572       (2,285)
         Accrued utility revenue                      5,288       (4,525)
         Inventories                                 (2,659)       6,500 
         Purchased gas costs                         (2,134)       5,359 
         Prepaid expenses                            (1,538)         467 
         Accounts payable and accrued expenses           87        3,345 
         Other assets/liabilities                    (2,147)       4,309 
                                                   --------     -------- 
           Total adjustments                         16,851       26,247 
                                                   --------     -------- 

      Cash flows from operations                   $ 34,388     $ 45,356 
                                                   ========     ======== 

   Supplemental Disclosures of Cash Flow
      Information:
   Cash Paid During the Period for:
      Interest (net of amount capitalized)         $ 13,051     $ 12,360 
                                                   ========     ======== 
      Income taxes                                 $ 14,543     $ 12,647 
                                                   ========     ======== 
    
    
    
    
    
    
</TABLE>
    <PAGE>
 
                                                                    "UNAUDITED"

                        CONNECTICUT NATURAL GAS CORPORATION                    

    
                           NOTES TO FINANCIAL STATEMENTS                       

                                December 31, 1996
                              (Thousands of Dollars)
    
    
   (1)  Executive Restricted Stock Plan
    
        On October 1, 1996 41,800 restricted shares of the Company's common
        stock were granted to key employees under the executive restricted
        stock plan.  Restrictions lapse and the shares vest over a two to five
        year period beginning October 1, 1998, as certain performance goals are
        achieved.
    
    
   (2)  Investments
    
        In December 1996 the Company made an additional $107 investment in KBC
        Energy Services of New England ("KBC"), a joint venture partnership
        with Bay State Gas Company and Koch Gas Services Company, bringing the
        Company's total investment to date to $342.  The Company has committed
        to a total potential investment of $1,700 for KBC.  KBC markets natural
        gas supplies, other energy sources and energy management related
        services on an unregulated basis to commercial and industrial end
        users, primarily in New England.
    
    
   (3)  Proposed Holding Company
    
        In November 1996 the Company announced its intention to reorganize
        under a holding company structure wherein CTG Resources, Inc. ("CTG")
        would become the holding company for the regulated and unregulated
        businesses.  Management believes that the proposed restructuring offers
        the best means of providing the Company with the increased flexibility
        to compete in the rapidly changing deregulated energy marketplace.  The
        Connecticut Department of Public Utility Control issued a decision
        approving the Company's reorganization and the formation of the holding
        company on November 27, 1996.  The proposed holding company and
        reorganization are still subject to shareholder approval at the
        Company's Annual Meeting to be held on February 25, 1997.
    
   (4)  Reclassifications

        Certain prior year amounts have been reclassified to conform with
        current year classifications.
    <PAGE>
                                                                    "UNAUDITED"

                       CONNECTICUT NATURAL GAS CORPORATION
                                         
                       MANAGEMENT'S DISCUSSION AND ANALYSIS
                                         
                                DECEMBER 31, 1996
                 (Thousands of Dollars Except Per Share Amounts)
     
    
    
   RESULTS OF OPERATIONS
    
   First quarter 1997 earnings per share were $.63, compared to $.82 recorded
   for the first quarter of fiscal 1996.  Twelve months ended December 31
   earnings were $1.69 in fiscal 1997 and $1.92 in 1996.  The twelve months
   ended December 1996 include nonrecurring earnings of $.05 related to the
   sale of a building and land.  Earnings recorded for the twelve months ended
   December 31, 1995 include a nonrecurring gain of $.24 per share from a
   negotiated settlement for the termination of a steam supply contract and a
   one-time charge of $(.05) per share in connection with legal matters related
   to the Company's 4.87% interest in the Iroquois Gas Transmission System
   partnership (Iroquois).  Without the effect of these two items, earnings per
   share for the twelve months ended periods would be $1.64 and $1.73 in fiscal
   1997 and 1996, respectively.
    
   Lower earnings in the first quarter of fiscal 1997 are the result of the
   warmer weather in the Company's service area in December 1996, the first
   full month of the Company's peak heating season.
    
   The twelve months ended December 1996 earnings reflect a full year of higher
   natural gas rates, granted to the Company by the Connecticut Department of
   Public Utility Control (DPUC) effective in October 1995, and greater equity
   in the earnings of Iroquois, as a result of the Company's increased
   investment, lessened the negative impacts of higher operating expenses and a
   higher effective income tax rate.
    
    
   Operating Margin
    
   Gas operating margin is equal to gas revenues less the cost of gas and
   Connecticut gross revenues tax and was lower in the quarter and higher in
   the twelve months ended December 31, 1996 as compared to 1995.  The
   following table presents the changes in revenues, gas operating margin and
   gas throughput for all periods presented in the statements of income:
    <PAGE>
<TABLE>
<CAPTION>
                             Three Months      Twelve Months
                                Ended              Ended
                             December 31,      December 31,
   <S>                    <C>      <C>      <C>       <C>
                            1996     1995     1996      1995   
                          -------- -------- --------  -------- 
   Gas Revenues           $ 84,279 $ 85,195 $291,936  $267,375 
                          ======== ======== ========  ======== 
   Gas Operating Margin   $ 32,490 $ 33,930 $114,664  $108,684 
                          ======== ======== ========  ======== 
   Commodity and
      Transportation
      Volumes(mmcf):
      Firm Gas Sales         6,815    7,316   23,426    22,289 
      Interruptible Gas
        Sales                2,829    2,501    8,926     8,529 
      Off-System Gas
        Sales                3,247    3,678   12,004    17,213 
      Transportation
        Services             1,160    1,054    4,442     6,795 
                            ------   ------   ------    ------ 
         Total              14,051   14,549   48,798    54,826 
                            ======   ======   ======    ====== 
</TABLE>
    
   First quarter gas operating margin is lower in fiscal 1997 as compared to
   fiscal 1996.  This decline is attributed to lower natural gas sales,
   especially to the firm class of customers, as a result of the warmer
   December 1996 weather.
    
   Higher firm rates approved by the DPUC effective October 1995 are the most
   significant factor supporting the higher gas operating margin realized in
   the twelve months ended December 1996 over the twelve months ended December
   1995.  Colder weather during this period amplified the impact of the higher
   rates as a result of additional on-system gas sales.  Higher gas costs
   associated with interruptible sales have reduced the margins earned on those
   sales in the twelve months ended December 1996, lessening the beneficial
   effects to operating margin from the higher firm rates and colder weather.
    
    
   Operations and Maintenance Expenses
    
   Operations and maintenance expenses remained constant between the comparable
   quarters.  The twelve months ended December 1996 include the one-time costs
   related to a voluntary early retirement program, recorded in September of
   1996, and a full year of new amortizations of previously deferred expenses
   allowed by the DPUC in its October 1995 rate decision.  Together these
   resulted in higher operations and maintenance expenses recorded for the
   twelve months ended December 1996, as compared to the twelve months ended
   December 1995.  Higher expenses were recorded for wages and salaries, bad
   debt expenses, due to higher sales, employee benefits, pensions, insurance
   related costs, regulatory commission and rate proceedings expenses,
   conservation programs and outside purchased services.  Lower expenses were
   recorded for computer hardware rentals and maintenance, because of
   renegotiated contracts, and margins generated by service contract activity.
    
    <PAGE>
   Income Taxes
    
   In the quarter ending December 1996, as compared to the quarter ending
   December 1995, the impact of an overall higher effective tax rate was
   partially offset by lower taxable income.
    
   The on-going turn around of flow-through book tax depreciation differences
   on older plant and the absence of prior periods' cost of removal deductions
   taken during fiscal 1996 have resulted in an overall higher effective income
   tax rate in fiscal 1997 and higher income taxes in the twelve months ended
   December 1996 over the twelve months ended December 1995.
    
   These higher taxes were taken into consideration by the DPUC in determining
   the new natural gas rates allowed in October 1995.  Because of this higher
   effective tax rate the Company will tend to record higher tax expenses in
   the winter quarters and receive a greater tax benefit in the summer months,
   thus reducing net income during the heating season and reducing the net
   losses historically recorded during the summer season.
    
    
   Other Income (Deductions)
    
   Lower other deductions recorded in the three months ended December 1996, 
   and higher other income in the twelve months ended December 1996, as
   compared to 1995, primarily reflect the absence of the costs associated with
   terminating the Company's regulated propane service program.  The twelve
   months ended December 1996 also reflects the benefits of lower insurance
   costs realized from the reconfiguration of certain executive plans.
    
    
   Interest and Debt Expense
    
   Lower interest expense recorded in both the three months and twelve months
   ended December 1996, as compared to 1995, reflect lower levels of long-term
   debt outstanding, as a result of scheduled sinking fund payments, and lower
   interest related to pipeline refunds and deferred gas costs.
    
    
   Earnings from Unregulated Operations
    
   Unregulated earnings between the comparable quarters showed no significant
   change from year to year.  Twelve months ended December 1996 and 1995
   unregulated earnings include $.05 and $.24 per share, respectively, from
   nonrecurring items.  These were the sale of a building and land in the
   twelve months ended December 1996 and the settlement related to the
   termination agreement negotiated with a supplier of steam in the twelve
   months ended December 1995.  The twelve months ended December 1995 also
   include included a provision equivalent to $(.05) per share in connection
   with legal matters related to the Company's interest in Iroquois.  Absent
   the impact of these nonrecurring items, unregulated earnings have remained
   stable from year to year in these comparable reporting periods.  Higher
   earnings recorded from an increased partnership interest in Iroquois have
   offset lower contributions to earnings from district heating and cooling
   ("DHC") and other energy services, resulting from increases in operating
   expenses, and the absence of rental income from the building that was sold
   in fiscal 1996.
    
    <PAGE>
   MATERIAL CHANGES IN FINANCIAL CONDITION
    
   Available cash on hand and short-term borrowings provided the necessary cash
   for the Company's operations and construction expenditures during the first
   quarter of both fiscal 1997 and 1996.  
    
   Outgoing cash flows from operations are frequently experienced during the
   first quarter of the fiscal year which begins the winter heating season. 
   This occurs because high winter-heating-season out-going cash requirements
   for natural gas purchases must be satisfied in advance of the future receipt
   of in-coming cash from customer receivables.  This lag between when gas is
   consumed and when payment for it is received creates the need to provide
   cash for operations from other sources.  In fiscal 1997 this cash
   requirement for operations has been even greater because of higher per-unit
   gas costs.
    
   In the twelve months ended December 31, 1996, available cash from
   operations, together with the proceeds from the June 1996 issue of common
   stock, funded both construction and all other financing activities.
    
   Cash flows from investing activities in both the quarter and twelve months
   ending December 31, 1995 reflect the receipt of the balance of the
   settlement amount due from the termination of the steam supply contract with
   the unregulated operations' principal steam supplier.
    <PAGE>
   PART II - OTHER INFORMATION
    
    
   Item 6.  Exhibits and Reports on Form 8-K
   -----------------------------------------
    
   (a)  Exhibits
    
        27        Financial Data Schedule

        99 (i)    Exhibit Index
    
         
   (b)  A report on Form 8-K, dated November 5, 1996, was filed on November 5,
        1996 to file with the Commission, under Item 5. Other Information, the
        contents of a press release issued by the Company on November 5, 1996
        to announce earnings data for the fiscal year ended September 30, 1996
        and to file unaudited financial statements for the fiscal year ended
        September 30, 1996.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    <PAGE>
    
    
    
    
    
    
    
    
    
    
    
                                     SIGNATURE                                 

    
    
    
    
   Pursuant  to  the  requirements of the Securities Exchange Act of 1934,  the

   registrant has duly caused this report to be signed on  its  behalf  by  the

   undersigned thereunto duly authorized.
    
    
                                            CONNECTICUT NATURAL GAS CORPORATION

    
    
    
    
   Date        02/04/97                     By:   S/ Andrew H. Johnson     
       --------------------                 -----------------------------------
                                                    (Andrew H. Johnson)
                                         Treasurer and Chief Accounting Officer
                                                                               
    
                                            (On behalf of the registrant and as
                                                  Chief Accounting Officer)    
    
    
    
    
    
    
    
    
    
    
    
    
    
    <PAGE>