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                 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 (FEE REQUIRED)
                              ------------
   For the fiscal year ended September 30, 1996
                             ------------------
                                        OR,
   ( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
                              ---------------
   For the transition period from                 to 
                                  ---------------    ------------------
   Commission file number 1-7727
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                        Connecticut Natural Gas Corporation
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              (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 Blvd.
             P.O. Box 1500
             Hartford, Connecticut                           06144-1500
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   (Address of principal executive offices)                  (Zip code)
    
   Registrant's telephone number, including area code (203) 727-3459
                                                         ---------------
    
   Securities registered pursuant to Section 12(b) of the Act:
                                                     Name of Each Exchange on
              Title of Each Class                        Which Registered
              -------------------                  ----------------------------
       Common Stock - $3.125 Par Value                New York Stock Exchange
   ----------------------------------------        ----------------------------
    
   Securities registered pursuant to Section 12(g) of the Act:
   None
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                                 (Title of Class)
    
   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 (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     
                                                        -----    -----
   State the aggregate market value of the voting stock held by nonaffiliates
   of the registrant.  (The aggregate market value shall be computed by
   reference to the price at which the stock was sold, or the average bid and
   asked prices of such stock, as of a specified date within 60 days prior to
   the date of filing.)
      The aggregate market value of the voting stock held by nonaffiliates
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      of the Registrant on November 1, 1996 was $242,761,466.
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   Indicate the number of shares outstanding of each of the registrant's
   classes of common stock, as of the latest practicable date (applicable only
   to corporate registrants).
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     Number of shares of Common Stock outstanding as of the close of business
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     on December 16, 1996 was 10,634,496.
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                        DOCUMENTS INCORPORATED BY REFERENCE
    <PAGE>
   List hereunder the following documents if incorporated by reference and the
   Part of the Form 10-K into which the document is incorporated:  (1) Any
   annual report to security holders; (2) Any proxy or information statement;
   and (3) Any prospectus filed pursuant to rule 424(b) or (c) under the
   Securities Act of 1933.  The listed documents should be clearly described
   for identification purposes.
      Prospectus/Proxy for the Company's February 1997 Annual
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      Meeting (Part III)
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    <PAGE>
                                      PART I
    
   ITEM 1. BUSINESS
   ----------------
    
     General
     -------
    
     Connecticut Natural Gas Corporation (the Company) is an energy provider
     headquartered in Hartford, Connecticut.  The Company is a Connecticut
     corporation organized in 1848.  At September 30, 1996, the Company
     employed 614 people.  The principal business in which the Company has been
     engaged is the distribution, transportation and sale of natural gas in
     Hartford and 20 other cities and towns in central Connecticut and in
     Greenwich, Connecticut, fully subject to extensive regulation.  Many
     aspects of this traditional business have changed or are expected to
     change as deregulation of the industry occurs.  Latter sections of this
     document address these changes (See, for example, the sections entitled
     "Regulatory Matters" and "Competition.").  The Company also provides
     unregulated energy-related products and services, primarily district
     heating and cooling.  The Company's common stock is traded on the New York
     Stock Exchange, under the symbol CTG.  Previously issued preferred stock
     is traded on the over-the-counter market.
    
     Consolidated gas operating revenues were $292,852,000 for the fiscal year
     ended September 30, 1996 and were derived approximately 52% from
     residential customers, 22% from commercial firm customers, 2% from
     industrial firm customers, 12% from interruptible customers, 11% from off-
     system sales and 1% from the aggregate of transportation of customer-owned
     gas and other gas-related revenues.  There were $2,492,000 of revenues
     from sales to affiliated companies.  The gas distribution business
     contributed 92% of consolidated revenues over the three fiscal years
     ending 1996.  During the fiscal year ended September 30, 1996, the peak-
     day sendout of gas was 254,251,000 cubic feet which occurred on February
     13, 1996.
    
     Segment information for all relevant periods is included in the Notes to
     the Financial Statements filed in Part II, Item 8 of this report.
    
    
     Proposed Holding Company
     ------------------------
    
     In November 1996, the Company announced its intention to reorganize under
     a holding company structure.  Under the proposed restructuring, CTG
     Resources, Inc. 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 which will be required to compete in the rapidly
     deregulated energy marketplace.  Management intends to effect the
     restructuring in 1997, after receiving appropriate shareholder and DPUC
     approvals.  Details of the proposed restructuring can be obtained from the
     CTG Resources, Inc. Prospectus/Proxy filed with the Securities and
     Exchange Commission under Form S-4 on November 15, 1996 (Commission File
     No. 333-16297).
    
    
     Seasonality
     -----------
    
     The Company's operations are seasonal.  Most of the Company's gas revenues
     and related operating expenses occur during the winter heating season,
     October to April.  Natural gas usage in the Company's service area is
     greater for heating purposes in winter and less for cooling in summer. 
     Natural gas usage for nonheating purposes remains steady throughout the
     year.  Accordingly, earnings are highest during the first and second
     quarters of the fiscal year, which begins October 1, and the third and
     fourth quarters frequently show a net loss.  The impact of seasonality on
     cash flows is discussed in Item 7.  Management's Discussion and Analysis
     of Financial Condition and Results of Operations.
    <PAGE>
     The Company's unregulated district heating and cooling businesses
     experience peak loads during the winter heating and summer cooling
     seasons.  The Company's other unregulated energy products and services
     businesses are not subject to significant seasonal influences.
    
    
     Regulatory Jurisdiction
     -----------------------
    
     The Company's gas distribution business is subject to regulation by the
     Connecticut Department of Public Utility Control (DPUC) as to franchises,
     rates, standards of service, issuance of securities, safety practices and
     certain other matters.  Retail sales of gas by the Company and deliveries
     of gas owned by others are made pursuant to rate schedules and contracts
     filed with and subject to DPUC approval.  In general, the firm rate
     schedules provide for reductions in the unit price of gas as greater
     quantities are used.  The rate schedules contain purchased gas adjustment
     provisions as described in Note 1 to the Financial Statements (included in
     Part II, Item 8 herein).
    
     Under Connecticut law, the Company's subsidiaries are not public service
     companies, and hence they are not subject to regulation by the DPUC. 
     However, significant intercompany transactions between the Company and
     subsidiaries are subject to review and/or approval by the DPUC.
    
     The regulation of interstate sales of natural gas is under the
     jurisdiction of the Federal Energy Regulatory Commission (FERC).  The
     Company is subject to the direct jurisdiction of the FERC for any off-
     system sales the Company makes in interstate commerce.  The FERC regulates
     the Company's pipeline gas suppliers and transporters, and the Company
     closely follows and participates in numerous proceedings before FERC. 
     Through a nonregulated subsidiary, TEN Transmission Company (TEN
     Transmission), the Company is a 4.87% equity partner in the Iroquois Gas
     Transmission System Limited Partnership (Iroquois) which is subject to
     regulation by FERC.

    
     Gas Supply
     ---------- 
    
     The Company's current gas supply contract portfolio reflects the results
     of a continuing supply diversification strategy.  The purpose of such a
     strategy is to hold a secure, flexible, best cost gas supply portfolio,
     which allows the Company to respond quickly and appropriately as customer
     needs change.
    
     The Company purchases natural gas on a long-term and seasonal basis from
     producers and, when economics dictate, on a short-term basis in the spot
     market.  Pipeline services purchased include firm and interruptible
     transportation service.  Gas storage service in the northeast and in the
     southeast production area is purchased from both pipelines and storage
     contractors.
    
     The Company's principal and most economical source of gas is pipeline-
     delivered natural gas.  The Company also utilizes liquefied natural gas
     (LNG) and, to a much lesser extent, propane mixed with air (LP-Air).  LNG
     is usually more expensive than natural gas, and LP-Air is virtually always
     more expensive than natural gas.  Therefore, they are used primarily
     during the winter months for peak shaving when the demand for gas is
     greatest and exceeds deliverable supplies of natural gas through the
     pipelines.
    
     The Company currently holds pipeline transportation contracts with
     Algonquin Gas Transmission Company (AGT), CNG Transmission Corporation
     (CNGT), Iroquois Gas Transmission System (IGTS), National Fuel Gas Supply
     Corporation (NFGS), Tennessee Gas Pipeline Company (TGP), Texas Eastern
     Gas Transmission Corporation (TETCO), and Transcontinental Gas Pipeline
     Corporation (TRANSCO).  Supply contracts signed directly with upstream
     producers back these transportation contracts.
    <PAGE>
     The Company has contracted for storage service under which gas available
     during the warmer months of the year is stored underground, out of state,
     for use during the colder winter months of the year and for balancing
     throughout the year.
    
     The gas supply which feeds into the Company's firm transportation rights
     on the interstate pipelines has been contracted for directly with
     producers of natural gas (Direct Producer Contracts).  The Direct Producer
     Contracts are diverse in terms of expiration date, supply location, price,
     flexibility, etc. as part of the Company's gas supply diversification
     strategy.
    
     The Company continues to be very active in the area of purchasing gas
     directly from producers both in the spot market and under long-term
     arrangements.  Currently, the Company purchases all of its gas under such
     arrangements.  Spot market volumes are those purchased under short-term
     arrangements from producers and gas withdrawn from storage which had been
     purchased directly from producers for injection to that storage.  Spot
     market purchases are set by negotiation with the supplier.  
    
     Under FERC Order 636, a pipeline may not terminate service to a long-term
     firm transportation shipper if that customer elects to exercise a "right
     of first refusal" which requires the customer to match the price and
     length terms of another offer to continue to purchase such service
     following the initial contract term expiration.  The price for such
     continued firm transportation service would be capped at the maximum price
     determined as a just and reasonable rate under FERC jurisdiction.
    
     In addition to its pipeline gas supplies, the Company owns an LNG plant in
     Rocky Hill, Connecticut.  This plant has the design capacity to liquefy
     approximately 6,000 MCF per day and store 1,206,000 MCF.  The LNG plant is
     not a source of additional gas, but it permits the Company to liquefy and
     store gas during the summer and to deliver the stored gas during the
     following winter.  The plant has the design capacity to vaporize 60,000
     MCF per day.
    
     LP-Air is a source of peak shaving supply to the Company.  The Company has
     approximately 720,000 gallons of on-site propane storage which can produce
     the equivalent of approximately 8,208 MCF of natural gas per day.
     <PAGE>
     The following table details the Company's current gas supply contract
     portfolio:
      
<TABLE>
<CAPTION>
                             CONNECTICUT NATURAL GAS CORPORATION
                             -----------------------------------
                            CURRENT GAS SUPPLY CONTRACT PORTFOLIO
                            -------------------------------------

    <S>           <C>          <C>              <C>           <C>          <C>
                                                   MAXIMUM      MAXIMUM
                                                    DAILY       ANNUAL
                      RATE                        QUANTITY     QUANTITY      EXPIRATION
       SOURCE       SCHEDULE         TYPE          (MMBTU)      (MMBTU)         DATE
    ------------  -----------   --------------   -----------  -----------   -----------
         AGT         AFT-1      Transportation        87,030   26,925,332    1996-2004
         ANE         ANE-1          Supply            25,000    9,125,000       2007
         BGI          G-1           Supply             2,014      735,110       2003
        CNGT          FTNN      Transportation         6,340    2,314,100       2003
        CNGT         GSSTE          Storage           11,553    1,235,603       2006
        CNGT          GSS           Storage              607       66,755       2000
        IGTS         RTS-2      Transportation        25,000    9,125,000       2012
     Hattiesburg      N/A           Storage           10,000      100,000       2005
        NFGS          EFT       Transportation         1,915      698,975       1997
        NFGS          SS-1          Storage           11,258    1,238,400       1997
        NFGS          FSS           Storage            9,091    1,000,000       1999
        NFGS          FST       Transportation         8,964      986,040       1999
        TETCO         CDS       Transportation        30,000   10,950,000       2000
        TETCO         CDS       Transportation         1,495      545,675       2012
        TETCO         FT-1      Transportation        16,970    6,194,050       2000
        TETCO         FT-1      Transportation        10,571    3,858,415       2000
        TETCO        FSS-1          Storage              851       51,060       2012
        TETCO         SS-1          Storage           27,000    1,783,969       2004
        TETCO         SS-1          Storage              207       14,490       2012
         TGP          FT-A      Transportation        32,652   11,917,980       2000
         TGP          FT-A      Transportation        43,973   16,050,145    2000-2005
         TGP         SS-NE     Storage/Transport       6,174      555,702       2000
         TGP         FS-MA          Storage           13,826      610,003       2000
         TGP         CGT-NE     Transportation           802      292,730       2003
       Transco         FT       Transportation         1,877      685,105       2008

</TABLE>
    
    
    
     Regulatory Matters 
     ------------------
    

     In October 1995, the DPUC issued a final decision on the Company's April
     1995 rate request.  This decision allowed the Company to increase its
     rates $8,900,000 or 3.64%.  This decision also allowed a rate of return on
     equity of 10.76% and provided for adequate recovery of all significant
     items deferred on the balance sheet, pending recovery, at September 30,
     1995.  In addition, the Company was allowed to defer, for consideration in
     future rate proceedings, expenses incurred above annual levels authorized
     in current rates for certain areas including: conservation expenses,
     economic development expenses and expenditures related to postretirement
     benefits.  The treatment given these items in the rate order effectively
     reduces the impact of the shortfall between the rate relief requested and
     the amount which was granted in the final decision.  New rates became
     effective on October 13, 1995.<PAGE>
     Also related to the above docket, and in response to the Department's
     generic review of gas industry unbundling and restructuring issues, the
     Company developed firm transportation rates for commercial and industrial
     customers.  These rates, which became effective April 1, 1996, will enable
     the Company to offer firm transportation services to commercial and
     industrial customers who choose to buy gas from another supplier.  The
     rates were developed such that the Company earns equivalent margins
     whether customers buy gas from the Company or merely utilize the Company's
     distribution system to transport their own purchased gas.

     In August 1996, the Company filed an application with the Department to
     reopen its 1995 rate case for the limited purpose of expanding firm
     transportation availability to multi-unit residential dwellings (ie, large
     apartment complexes) of six or more units.  To this point transportation
     was only available to the Company's commercial and industrial customers. 
     Adoption of this proposal will help the Company to compete in this market
     relative to alternate fuels.  The DPUC is expected to rule on the
     application in the first quarter of fiscal 1997.

     The Local Gas Distribution Companies ("LDCs") pass on to firm customers
     any increases or decreases in gas costs from those reflected in tariff
     charges under purchased gas adjustment provisions ("PGA").  In February
     1996, the Department initiated a review of the PGA.  The purpose of the
     generic review is to determine the appropriateness of the PGA mechanism in
     light of emerging competition and the evolution of "unbundling" of
     services provided by LDCs and the pipelines.  The three Connecticut LDCs
     participated in the proceeding.  The Company filed testimony and exhibits
     in support of maintaining the PGA but modifying it to reflect pricing to
     specific classes of customers.  A decision is expected to be issued by the
     DPUC in the second quarter of fiscal 1997.
    
     In August 1996, the Company filed a petition with the DPUC to rule on
     extending its meter test cycle program.  Current regulation requires the
     Company to remove and test all meters that have been in the field for ten
     years.  The Company has requested that this period be extended to twenty
     years, noting improved quality and accuracy in current metering
     technology.  The DPUC has not yet issued a schedule in this docket.

     As discussed earlier, the Company is seeking to reorganize as a holding
     company.  As a part of this process, the Company must obtain approval of
     its intent from the DPUC.  Hearings were held in October 1996, and DPUC
     approval was received in a decision issued November 27, 1996.
    
     In August 1995, the DPUC initiated a management audit of the Company which
     was performed by an independent management consulting firm.  A final
     report containing the firm's findings, conclusions and recommendations was
     issued in November 1996.  The overall results of the findings are being
     reviewed by management.  However, management does not expect any
     sigificant changes in operations or costs in order to implement the
     report's suggestions.

    
     Environmental Considerations
     ----------------------------
    
     The Company has not experienced and does not anticipate any significant
     problem in complying with laws and regulations pertinent to its business
     concerned with protecting the environment.  Additional information
     regarding environmental considerations is included in the Management's
     Discussion and Analysis of Financial Condition and Results of Operations,
     filed in Part II, Item 7 of this report, and the Notes to the Financial
     Statements, filed in Part II, Item 8 of this report.
    
    <PAGE>
     Subsidiary Operations (Consolidated)
     ------------------------------------
    
     At September 30, 1996, consolidated subsidiaries of the Company included
     CNG Realty Corp. (CNGR) and The Energy Network, Inc. (TEN).
    
     CNGR, formed in 1977, is a single purpose corporation which owns the
     Operating and Administrative Center located on a 7-acre site in downtown
     Hartford, CT.  This facility is leased to the Company.  CNGR engages in no
     other business activity.  At September 30, 1996, CNGR had an investment in
     plant of approximately $17,394,000 and no revenues from unaffiliated
     businesses for the year then ended.
    
     TEN was incorporated in 1982 and is an unregulated company engaged in the
     operations described in the following paragraphs.  TEN and its wholly-
     owned subsidiary, The Hartford Steam Company (HSC), provide district
     heating and cooling (DHC) services to a number of large buildings in
     Hartford, CT.  TEN's wholly-owned subsidiary, TEN Transmission (formerly
     ENI Transmission Company - a wholly-owned subsidiary of the Connecticut
     Natural Gas Corporation) owns the Company's share of Iroquois.  ENServe,
     Incorporated (ENServe), a wholly-owned subsidiary of TEN, offers energy
     system operating and maintenance services.  ENI Gas Services, Inc. (ENI
     Gas), a wholly-owned subsidiary of TEN, owns the Company's one-third
     interest in KBC Energy Services of New England.  ENI's other nonregulated
     operating divisions offer energy equipment rentals, property rentals and
     financing services and own a 3,000 square foot building in Hartford, CT.  
    
     TEN Transmission was formed in 1986 to own the Company's share of
     Iroquois.  Iroquois operates a natural gas pipeline which transports
     Canadian natural gas into the states of New York, Massachusetts and
     Connecticut.  In April 1996 the Company acquired an additional 2.47%
     ownership interest in Iroquois for an investment of approximately
     $5,200,000.  The Company's total share of Iroquois is now 4.87%.  At
     September 30, 1996, TEN Transmission's investment in Iroquois amounted to
     $8,884,000.  The Company, together with all other partners in Iroquois,
     has entered into a Capital Contribution Support Agreement (agreement) to
     support a one-year, renewable letter of credit which was issued to
     Iroquois.  TEN Transmission's support obligation under this agreement
     amounts to 4.87% of the outstanding principal on the letter of credit at
     any time and was approximately $1,600,000 at September 30, 1996.  TEN
     Transmission recorded income of $1,121,000 related to Iroquois during
     fiscal 1996.  
    
     HSC, incorporated in Connecticut in 1961, owns and operates a central
     production plant and distribution system for the processing and
     distribution of steam for heating and chilled water for cooling to a
     number of offices, stores and other large buildings in downtown Hartford,
     CT.  HSC's investment in its plant and distribution system was
     approximately $41,532,000 as of September 30, 1996.  Revenues were
     $15,984,000 for the fiscal year then ended, including $412,000 from
     affiliated companies.
    
     HSC chills its own water supply for district cooling.  Through September
     30, 1995, HSC purchased its steam supply for district heating and for the
     production of chilled water from two local cogeneration facilities.  One
     steam facility was located on the Company's premises in Hartford, and was
     owned by an unrelated third party, the Hacogen Corporation (Hacogen).  The
     steam supply agreement with Hacogen was terminated, effective September
     30, 1995.  In October 1995, HSC resumed producing more costly steam from
     its existing boilers which are located on the Company's premises and are
     currently providing adequate steam supply for customer requirements.  The
     nonregulated operations are currently assessing the district heating and
     cooling operations to determine future cost control and operational
     options.
    <PAGE>

    
     The second steam supply facility is owned by the Downtown Cogeneration
     Associates Limited Partnership ("DCA"), which sells steam to HSC under a
     twenty-year contract.  TEN is a 50% partner in the DCA with two unrelated
     third parties.  The DCA owns and operates a four(4)-megawatt cogeneration
     facility on the roof of a downtown Hartford office complex.  Electricity
     generated from this unit is sold to The Connecticut Light and Power
     Company under a twenty-year contract expiring in 2007.  As of September
     30, 1996, TEN had an investment in DCA of approximately $921,000.  During
     fiscal 1996, TEN provided cogeneration management and consulting services
     to DCA.  Fees earned for these services for the fiscal year ended
     September 30, 1996, were $162,000.
    
     The Capitol Area System (CAS) is a district heating and cooling system
     serving a section of the City of Hartford, CT.  TEN owns the distribution
     system and purchases hot and chilled water from a third party.  TEN also
     provides marketing services to this third party.  TEN's investment in the
     CAS was approximately $16,948,000 as of September 30, 1996.  Revenues were
     $4,845,000 for the fiscal year then ended, including $4,371,000 from sales
     of hot and chilled water, $82,000 from marketing services provided and
     $392,000 from affiliated companies.
    
     The energy equipment rentals division owns natural gas water heaters and
     natural gas conversion burners which it leases to customers in the
     residential market.  TEN's investment in such rental equipment was
     approximately $1,608,000 as of September 30, 1996, and revenues were
     $635,000 for the fiscal year then ended.  There were no revenues from
     affiliated companies.
    
     Through fiscal 1995, this division was gradually being phased out through
     attrition.  During fiscal 1996 the unregulated operations reevaluated the
     equipment rentals opportunity and renewed efforts to market rentals of
     water heaters and conversion burners throughout the Company's service
     territory.  In conjunction with this decision, the unregulated operations
     began to offer financing services for this and larger, commercial
     equipment, through a newly organized financing division.  TEN's investment
     for equipment for the financing division was approximately $5,000 as of
     September 30, 1996.  There were no revenues from financing operations for
     the fiscal year ended September 30, 1996.
    
     Through the last quarter of fiscal 1996, the property management operation
     owned and managed a 42,000 square foot building in Greenwich, CT. 
     Approximately 50% of the building is occupied by the regulated gas
     operations of the Company as an operating and administrative center
     servicing the Greenwich area.  The remaining 50% was leased to
     unaffiliated businesses.  This property was sold to an unrelated party in
     the last quarter of fiscal 1996.  Rental revenues were approximately
     $333,000 for the fiscal year ended September 30, 1996, including $318,000
     from affiliated companies.
    
     ENServe offers energy system management services and energy conservation
     services to residential, commercial and industrial customers throughout
     Connecticut.  ENServe's investment in its plant was approximately $152,000
     as of September 30, 1996.  Revenues were $1,571,000 for the fiscal year
     then ended.  There were no revenues from affiliated companies.
    
     ENI Gas was formed to own the Company's interest in the KBC Energy
     Services of New England partnership ("KBC").  KBC markets natural gas
     supplies, other energy sources and energy management related services on a
     nonregulated basis to commercial and industrial end users, primarily in
     New England.  As of September 30, 1996, ENI Gas had an investment in KBC
     of approximately $126,000.
    
    <PAGE>
     Competition
     -----------
    
     In recent years, the natural gas industry has undergone structural changes
     in response to Federal regulatory policy intended to increase competition. 
     In 1992, FERC issued Order 636, which required all interstate gas
     pipelines to provide "unbundled," or separate, gas transportation and
     storage services and to discontinue their bundled merchant sales
     operations, which included the gas acquisition function.  Similarly, the
     Company was required by the DPUC to offer firm transportation rate tariffs
     to nonresidential customers, which became effective April 1, 1996.  The
     impact of the FERC Order 636 and the resulting deregulation of the gas
     industry has continued to heighten competition and has changed the nature
     of the Company's business.
    
     The Company has historically distributed and sold natural gas to its
     customers without substantial competition from other gas utilities,
     cooperatives or other providers of natural gas.  The impact of industry
     deregulation at the local level, as a result of FERC Order 636, is
     increasing competitive pressures as other providers of gas seek
     opportunities to make gas sales to the Company's customers.
    
     The Company also competes with suppliers of oil, electricity, coal,
     propane and other fuels for cooking, heating, air conditioning and other
     purposes.  Competition is greatest among the Company's large commercial
     and industrial customers who have the capability to use alternative fuels. 
     The Company has attempted to minimize the volatile effect of this price-
     sensitive load through the use of flexible rate schedules which allow gas
     pricing to meet alternative-fuel competition; as oil prices fluctuate, so
     do the Company's revenues from this class of customers.  Further, the
     transportation rate tariffs offered by the Company are designed to recover
     a margin on each transaction that is comparable to the margin that the
     Company would have received if it were making a bundled sale that included
     transportation services and the commodity.
    
     The Company's unregulated subsidiaries may compete with other unregulated
     entities in the provision of unregulated energy and other products and
     services to the Company's natural gas customers and to others.
    
     The unregulated operations own and operate district heating and cooling
     systems (collectively referred to as DHC) which distribute and sell steam,
     hot and chilled water to office complexes and other large buildings in the
     City of Hartford.  Prior to the potential customer's selection of the
     heating and/or cooling technology to be used, DHC competes with suppliers
     of oil, electricity, coal, propane and natural gas.  Once DHC has been
     selected, the competition from alternate fuels is diminished because of
     the cost of the equipment necessary to utilize an alternative fuel. 
     However, both new and existing DHC customers may elect to install their
     own equipment rather than to be served by the Company's unregulated
     operations.  At such time, the Company competes with providers of other
     fuels to supply the energy for the customer's DHC operation.
    
    
     Franchises
     ----------
    
     The Company holds franchises, granted by the Legislature of the State of
     Connecticut, and other consents which it considers to be valid and
     adequate to enable it to carry on its operations, substantially as now
     carried on, in each of the communities which it serves.
     
    <PAGE>
   ITEM 2. PROPERTIES
   ------------------
    
     At September 30, 1996, the Company owns gas distribution mains, a natural
     gas liquefaction plant, propane gas storage tanks, metering stations, gas
     service connections, meters, regulators and other equipment necessary for
     the operation of a gas distribution system.  Substantially all of the
     Company's properties are subject to the lien of the Indenture of Mortgage
     and Deed of Trust securing its first mortgage bonds.  The properties, in
     management's opinion, are maintained in good operating condition.  The gas
     mains are located principally under public streets, roads and highways.
    
     TEN owns a distribution system located in the Capitol area of Hartford, CT
     for the distribution of hot water for heating and chilled water for
     cooling.  This property was financed with industrial revenue, variable
     rate, tax exempt demand bonds secured by a letter of credit with a bank.  
    
     The energy equipment rentals division of TEN owns water heaters and
     conversion burners which it leases to its customers in the residential
     market.
    
     HSC owns a central production plant and distribution system, which
     includes a chilled water storage tank, in downtown Hartford, CT for the
     processing and distribution of steam for heating and chilled water for
     cooling.  The property is subject to a mortgage and collateral security
     agreement which secures debt under HSC's revolving loan agreement.
    
     CNGR owns the Operating and Administrative Center in Hartford which is
     leased by the Company.  The center is subject to the lien of the Mortgage
     Deed under which the CNGR's first mortgage notes are issued.
    
    
   ITEM 3. LEGAL PROCEEDINGS
   -------------------------
    
     In November 1995, certain Connecticut plumbers and HVAC contractors filed
     a class action suit against the Company and the State's two other LDCs,
     claiming that the LDCs engaged in unfair trade practices relating to
     customer service work.  The action alleged that the LDCs unfairly competed
     with licensed plumbers and contractors by performing customer service work
     using customer service employees who did not possess State trade licenses. 
     Previously, the LDC's claimed that the work was performed under a
     statutory exemption enacted in 1965 and amended in 1967.  The Connecticut
     courts have recently upheld an administrative ruling against the LDCs'
     position.
    
     The plumbers and contractors are currently asserting claims for profits
     which they allege were lost during prior years.  There has not been any
     settlement demand or any formal statement of alleged damages.  As a
     result, management cannot estimate the Company's potential exposure
     related to these claims.  The Company is vigorously defending this matter.
    
     In May 1996, Iroquois reached a settlement with State of New York and
     Federal authorities regarding certain environmental allegations asserted
     by them in 1992.  The Company recognized the majority of its proportionate
     share of the $24,000,000 settlement in fiscal 1995 and anticipates no
     further material impact on its financial position or results of operations
     by reason of this settlement.  Iroquois is a partnership of which the
     Company is a 4.87% owner.
     
     The Company is not a party to any other litigation other than ordinary
     routine litigation incident to the operations of the Company or its
     subsidiaries.  In the opinion of management, the resolution of such
     litigation will not have a material adverse effect on the Company's
     financial condition or results of operations.
    
    <PAGE>

    
   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   -----------------------------------------------------------
    
     There were no matters submitted to a vote of security holders during the
     last quarter of the fiscal year ending September 30, 1996.
    
    <PAGE>
   Executive Officers of the Registrant
   ------------------------------------
   All executive officers' terms of office are one year.
    
   Victor H. Frauenhofer                                    Age - 63
   Chairman and Chief Executive Officer and Director
    
     Business experience:
        1996 - Present  Chairman and Chief Executive Officer
        1991 - 1996     Chairman, President and Chief Executive Officer
        1987 - 1991     President and Chief Executive Officer
        1983 - 1987     President and Chief Operating Officer
    
    
   Arthur C. Marquardt                                      Age - 49
   President and Chief Operating Officer (effective December 1, 1996)
    
     Business experience:
        1996 - Present  President and Chief Operating Officer
        1992 - 1996     Senior Vice President - Gas Business Unit,
                            Long Island Lighting Company
        1991 - 1992     Vice President - Strategic Business Planning,
                            Long Island Lighting Company
    
    
   James P. Bolduc                                          Age - 47
   Executive Vice President and Chief Financial Officer
    
     Business experience:
        1996 - Present  Executive Vice President and Chief Financial Officer
        1993 - 1996     Senior Vice President - Financial Services
                            and Chief Financial Officer
        1992 - 1993     Vice President, Consumer Services
        1989 - 1991     Vice President, Distribution and Customer Service
        1987 - 1989     Vice President Corporate, Regulatory
                            and Customer Services
        1985 - 1987     Vice President Diversified Group
    
    
   Reginald L. Babcock                                      Age - 45
   Vice President - Administrative Services and General Counsel and Secretary
    
     Business experience:
        1996 - Present  Vice President - Administrative Services and General
                           Counsel and Secretary
        1993 - 1996     Vice President - Corporate Services and General Counsel
                            and Secretary
        1989 - 1993     Vice President, General Counsel and Secretary
        1985 - 1989     Secretary and Counsel
        1983 - 1985     Assistant Secretary and Counsel
    
    
   Wayne T. Jones                                           Age - 47
   Vice President - Corporate Development
    
     Business experience:
        1996 - Present  Vice President - Corporate Development
        1993 - 1996     Vice President - Planning and Corporate Development
        1992 - 1993     Assistant Vice President, Rates and Regulatory Affairs
        1989 - 1992     Director, Rates, Regulatory Planning and Conservation
        1988 - 1989     Director, Rates and Regulatory Planning
        1987 - 1988     Director, Revenue Requirements and Economic Evaluations
        1987 - 1987     Director of Administrative Services
     <PAGE>
   Executive Officers of the Registrant, (continued)
   ------------------------------------
    
   Edna M. Karanian                                         Age - 36
   Vice President - Energy Procurement and Transportation
    
     Business experience:
        1996 - Present  Vice President - Energy Procurement and Transportation
        1993 - 1996     Assistant Vice President - Energy Planning and
                            Procurement
        1989 - 1993     Director - Energy Planning and Procurement
    
    
   Donald H. Ludington                                      Age - 60
   Vice President - Consumer Services
    
     Business experience:
        1996 - Present  Vice President - Consumer Services
        1993 - 1996     Executive Vice President and General Manager,
                            Energy Networks, Inc.
        1992 - 1993     Vice President and Chief Administrative Officer,
                            Energy Networks, Inc.
        1989 - 1992     Vice President, Energy Networks, Inc.
        1986 - 1989     Assistant Vice President, General Manager -
                            Greenwich Division
        1983 - 1986     Assistant Treasurer
    
    
   Anthony C. Mirabella,                                    Age - 56
   Vice President - Operations and Chief Engineer
    
     Business experience:
        1993 - Present  Vice President - Operations and Chief Engineer
        1992 - 1993     Vice President, Distribution/Engineering Services
                            & Chief Engineer
        1989 - 1991     Vice President & Chief Engineer
        1988 - 1989     Vice President Nonregulated Operations
        1987 - 1988     Vice President Affiliated Resources Corporation
        1985 - 1987     Vice President Business Development Group
    
    
    <PAGE>
                                      PART II
    
    
    
   ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
   -------------------------------------------------------------
            SECURITY HOLDER MATTERS
            -----------------------
    
     The Company's common stock is listed on the New York Stock Exchange.  The
     high and low sales prices for each quarterly period during the years ended
     September 30, 1996 and 1995 were as presented in the table below.  These
     prices are based on the New York Stock Exchange Quarterly Market
     Statistics report.
    

                           QUARTERLY COMMON STOCK PRICES
                           -----------------------------
                                  1996                       1995
                          --------------------       --------------------

     Fiscal Year            High         Low           High         Low
     ---------------       ------       ------        ------       ------

     First Quarter         25 1/8       21 5/8        25 1/4       21 7/8
     Second Quarter        24 1/2       22 3/4        24 5/8       21 1/4

     Third Quarter         24 5/8       21 7/8        25 1/4       21 3/4
     Fourth Quarter        24 1/4       22            22 1/2       21 1/4

    
     There were 9,772 record holders of the Company's common stock at November
     1, 1996.
    
     Under Connecticut law, dividends may be paid out of unreserved and
     unrestricted retained earnings.  Cash dividends are declared on the
     Company's common stock on a quarterly basis, and the total amount of
     dividends declared was $1.50 per share in 1996 and $1.48 per share in
     1995.  Under the most restrictive terms of the open-end indenture securing
     the Company's first mortgage bonds, as amended, retained earnings of
     $46,800,000 were available for dividends at September 30, 1996.  Except
     for certain restrictions relating to the Company's classes of preferred
     stock as to which dividends and sinking fund obligations must be paid
     prior to the payment of common stock dividends, there are no other
     restrictions on the Company's present or future ability to pay such
     dividends.  The Company expects that cash dividends will continue to be
     paid in the future.
    
    <PAGE>
   ITEM 6. SELECTED FINANCIAL DATA
   --------------------------------
    
     FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS
     (Thousands of Dollars)
    
                                 1996     1995      1994      1993     1992 
                                ------   ------    ------    ------   ------ 
   Operating revenues          $315,363  $275,185  $290,662 $265,337  $236,189 

   Net income applicable
     to common stock           $ 18,932  $ 16,957  $ 17,637 $ 16,788  $ 15,197 

   Earnings per share          $   1.87  $   1.71  $   1.85 $   1.76  $   1.75 

   Total assets                $466,979  $465,039  $458,554 $444,585  $397,570 

   Long-term obligations       $136,432  $150,390  $154,193 $137,984  $121,621 
    
   Cash dividends declared
     per common share          $   1.50  $   1.48  $   1.48 $   1.46  $   1.44 
   Dividend payout ratio           80.2%     86.6%     80.0%    83.0%     82.3%

   P/E ratio                         13        13        13       18        13 

   Market price as a %
     of book value -
     year-end                     152.9%    146.8%    162.0%   225.6%    175.2%

    
   (Certain amounts for 1995 and prior years have been reclassified to conform
   with 1996 classifications.)
    
    <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996
       -----------------------------------------
       (Thousands of Dollars Except for Per Share Data)
        
        
       Connecticut Natural Gas Corporation ("the Company") is an energy
       provider engaged in the regulated distribution, sale and transportation
       of natural gas.  Unregulated energy-related products and services,
       including district heating and cooling, energy equipment rentals and
       financing and energy system management and operating services, are
       provided through wholly-owned subsidiaries.
        
       Net income applicable to common stock and earnings per share for the
       fiscal years ended September 30, 1996, 1995 and 1994 were $18,932
       ($1.87),  $16,957 ($1.71) and $17,637 ($1.85), respectively.  Earnings
       for 1996 include a nonrecurring item: the proceeds from the sale of a
       building by the unregulated operations, equivalent to $.05 per share. 
       Earnings in 1995 include two nonrecurring items: a gain of $.24 per
       share relating to a negotiated settlement for the termination of a steam
       supply contract and a charge of $(.05) per share in connection with the
       settlement of legal matters relating to the Company's interest in the
       Iroquois Gas Transmission System ("Iroquois").  Iroquois operates a
       natural gas pipeline which transports Canadian natural gas into New
       York, Massachusetts and Connecticut.
        
       An increase in natural gas rates granted to the Company by the
       Connecticut Department of Public Utility Control ("DPUC"), effective
       October 1995, and a significantly colder winter are the principal
       reasons for the higher earnings reported for fiscal 1996.  Higher
       operating expenses and a higher effective income tax rate somewhat
       offset these benefits to earnings.  Warmer winter heating season weather
       is the principal reason for the lower earnings recorded in fiscal 1995. 
       Higher interest expense also reduced 1995 earnings, but the benefits of
       lower operating expenses and a lower overall effective income tax rate
       partially offset the negative impact to earnings.  Other important
       contributing factors to all years include changes in the mix of sales,
       customer usage, the cost of natural gas and related profit margins.

        
       RESULTS OF OPERATIONS
       ---------------------
        
       New Rates Allowed by DPUC
        
       In October 1995 the DPUC issued a decision which allowed the Company to
       increase its rates $8,900 or 3.64%.  This decision allowed a rate of
       return on equity of 10.76% and provided for recovery of all significant
       items that had been deferred pending recovery. 
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------

       Gas Operating Margin

       Gas operating margin is equal to gas revenues less the cost of gas and
       Connecticut gross revenues tax.  The following table presents revenues,
       gas operating margin and gas commodity and transportation volumes for
       fiscal 1996, 1995 and 1994, respectively:
        
<TABLE>
       <S>                                               <C>             <C>             <C>
                                                           1996            1995            1994   
                                                           ----            ----            ----   

       Gas Revenues                                      $292,852        $254,006        $267,752 
                                                         ========        ========        ======== 
       Gas Operating Margin                              $116,104        $103,267        $109,949 
                                                         ========        ========        ======== 
       Commodity and Transportation
         Volumes (mmcf)
           Firm Gas Sales                                  23,911          21,361          24,260 
           Interruptible Gas Sales                          8,614           8,554           8,463 
           Off-System Gas Sales                            12,435          16,265           9,144 
           Transportation Services                          4,336           7,695           7,325 
                                                          -------         -------         ------- 
              Total                                        49,296          53,875          49,192 
                                                          =======         =======         ======= 
</TABLE>
       Significant changes in weather dramatically impact the contribution to
       operating margin by the firm and interruptible customer classes, due to
       required changes in overall throughput mix among the various customer
       classes and the different per-unit margin contributed by each customer
       class.  Firm sales contribute the highest per-unit operating margin of
       all customer classes.
        
       New, higher firm rates, approved by the DPUC effective October 1995,
       together with significantly colder winter weather, resulted in the
       higher gas operating margin earned in fiscal 1996.
        
       Warmer weather during the fiscal 1995 heating season resulted in lower
       use per customer and reduced sales and operating margin, especially from
       the firm class of customers.
        
       Margin earned above a prescribed target level on interruptible sales is
       refunded to firm ratepayers, as directed by the DPUC.  The October 1995
       rate decision increased the margin sharing target to the current DPUC
       prescribed level of $8,834.  A lower level of interruptible margins was
       subject to refund to firm customers during fiscal 1996.  Higher
       interruptible margins were subject to refund during fiscal 1995.

       Off-system sales permit the Company to market short-term gas supplies
       and transportation services by contract with customers nationwide (See
       "Competitive Environment").  However, these sales volumes contribute the
       smallest per-unit operating margin.  The significance of the off-system
       sales program is that the Company acts as an independent marketer of
       natural gas and transportation, enabling the Company to generate
       operating margin from a source not restricted by the capacity of the
       Company's own distribution system or curtailment limitations driven by
       system demand.  The October 1995 DPUC rate decision established a
       sharing mechanism (i.e., 85% of margin earned is refunded to firm
       ratepayers) for off-system sales, effective in fiscal 1996. 
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
    
        
       Off-system sales are lower in fiscal 1996 for two reasons.  During the
       colder winter the Company chose to be more conservative and selective in
       its off-system sales, pursuing opportunities for better contributions to
       margin rather than higher volume sales.  In the summer months the
       Company first used available gas supplies to fill storage facilities in
       preparation for the coming winter before offering available supply for
       off-system sales.
        
       Transportation services, which are sold under per-unit operating margins
       comparable to those earned on similar gas sales, have contributed to
       overall operating margins each year.  The decrease in transportation
       throughput from 1995 to 1996 reflects the September 30, 1995 closing of
       the Hacogen cogeneration facility, which provided steam, under contract,
       to the unregulated operations.
        
        
       Operating and Maintenance Expenses
        
       The October 1995, rate decision allowed the Company to recover certain
       expenses that had been previously deferred pending the outcome of the
       rate proceedings.  Because of these additional amortizations and
       increases in certain other expense categories, higher operations and
       maintenance expenses were recorded in fiscal 1996.  Increases were
       recorded in the categories of wages and salaries, pension costs,
       employee benefits, conservation program expenses, insurance-related
       costs, regulatory commission and rate proceedings expenses and outside
       purchased services.  The colder fiscal 1996 winter also resulted in
       increased bad debt costs related to the higher sales.  These increases
       were somewhat offset by lower costs incurred for computer hardware
       rentals and maintenance, because of renegotiated contracts, and margins
       generated from service contract activity.

       The Company announced a second voluntary early retirement program
       ("VERO") in September 1996 and 16 employees accepted retirement
       effective December 1, 1996.  The approximately $400 of expenses
       associated with this program were recognized by the Company in the
       fourth quarter of fiscal 1996.  The VERO resulted in an overall 1.5
       percent reduction in the total workforce.
        
       Lower overall operating and maintenance expenses were recorded in fiscal
       1995.  Lower costs were recognized in the areas of labor, because of the
       reduction in the nonunion workforce accomplished in 1994 through a VERO,
       bad debt expense, because of fewer sales due to the warmer weather,
       computer rental and maintenance fees, because of renegotiated contracts,
       employee benefits and pension expenses, because of the absence of
       additional one-time expenses recorded in 1994 related to the VERO, and
       outside purchased services.  Several other expense items were lower in
       1995 because of the absence of write-offs taken in 1994 to recognize
       deferred expenses disallowed in the December 1993 DPUC rate decision. 
       These benefits to operating and maintenance expenses were somewhat
       offset by higher union wages and benefits, from renegotiated contracts,
       and higher corporate insurance expenses.
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------

       Income Taxes
        
       The overall effective income tax rate was higher in fiscal 1996 due to
       the on-going turn around of flow-through book tax depreciation
       differences on older plant and the absence of cost of removal deductions
       taken during 1995.  These higher taxes were considered in the
       determination of the Company's rates in the October 1995 rate decision.
        
       The Company's overall effective tax rate declined from 1994 to 1995, due
       to additional flow-through tax deductions relating to costs of removal
       and a major capitalized information system.
        
       In October 1994 the Company received formal approval from the Internal
       Revenue Service ("IRS") to deduct, for tax purposes, current as well as
       certain prior incurred cost of removal expenses associated with
       retirements of plant and equipment.  During fiscal 1995 and 1994 the
       Company recorded income tax benefits of $1,973 ($.20) and $444 ($.05),
       respectively, related to prior years' cost of removal expenses allowed
       by the IRS.
         
        
       Depreciation
        
       The increase in depreciation reflects the Company's continued investment
       in depreciable plant.  Plant costs continue to increase year to year
       because of price increases for goods and services and higher per-unit
       internal costs associated with the installation of new and replacement
       of existing distribution system mains and services.
        
        
       Other Income/(Deductions)
        
       Nonrecurring income of $892 relates to the unregulated operations' sale
       of land and a building in August 1996.  The net after tax gain was $515,
       equivalent to $.05 per share.  Aside from this item, more Other Income
       was recorded in fiscal 1996 from interest income earned by the
       investment of available cash balances and lower executive insurance
       costs realized from the reconfiguration of certain plans.  This higher
       income was partially offset by increased promotional expenses and
       additional costs related to the  termination of the Company's regulated
       propane service program. 
        
       Two nonrecurring items were recorded in fiscal 1995:  a one-time, after
       tax benefit of $2,379, equivalent to $.24 per share, from the
       termination of a steam supply agreement by the unregulated operations,
       and a charge of $500, or $(.05) per share, to reflect the Company's
       proportionate share of expenses in connection with legal matters related
       to Iroquois.  Aside from these nonrecurring items, the higher level of
       Other Income was recorded in 1995 over 1994 principally because of lower
       promotional advertising expenses associated with certain specific
       programs which were completed in 1994 and more income from merchandise
       sales.  These benefits were partially offset by costs associated with
       the termination of the Company's regulated propane service program.
        
         <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
    
        
       Interest and Debt Expense
        
       Overall, interest expense was lower in fiscal 1996 and higher in 1995. 
       Less interest on long-term debt in fiscal 1996 reflects lower long-term
       debt outstanding, as a result of scheduled sinking fund repayments, and
       lower average interest rates on variable rate long-term debt.  Long-term
       debt interest increased from 1994 to 1995, because of additional debt
       issued to fund construction expenditures. 
        
       Other interest relates primarily to interest on short-term borrowings
       and interest associated with pipeline refunds and deferred gas costs. 
       Short-term interest fluctuated as a result of changes in interest rates,
       short-term cash requirements and conversions to long-term debt.  Only
       limited seasonal short-term borrowings were needed in both 1996 and 1995
       because of available cash from operations.  In fiscal 1996 this resulted
       from higher collections through the purchased gas adjustment ("PGA"),
       which will ultimately be refunded to customers, and available cash on
       hand for working capital from the issue of common stock in June 1996. 
       In fiscal 1996, the Company recorded additional interest expense related
       to merchandise receivables and transition costs.
        
       In fiscal 1995 the proceeds from the October 1994 issue of common stock
       and refunds received from natural gas pipeline companies provided
       additional cash for working capital.  Also, short-term borrowing
       activity, during 1995, was conducted at lower interest rates than in
       1994.  However, higher interest related to the pipeline refunds and
       deferred gas costs offset the benefits of short-term debt interest.
        

       Earnings from Unregulated Operations
        
       The Company's unregulated operations include the Connecticut Natural Gas
       Corporation's wholly-owned unregulated subsidiary:  The Energy Network,
       Inc. ("TEN"), formerly Energy Networks, Inc., and TEN's wholly-owned
       subsidiaries:  The Hartford Steam Company ("HSC"), ENI Gas Services, 
       ENServe, and TEN Transmission Company ("TEN Transmission"), formerly ENI
       Transmission Company.  TEN's Capitol Area Systems division and HSC
       provide district heating and cooling ("DHC") services to a number of
       large buildings in Hartford, CT.  TEN Transmission owns the Company's
       share of Iroquois.  ENServe offers energy system operating and
       maintenance services.  ENI Gas owns the Company's one-third interest in
       KBC Energy Services of New England ("KBC").  TEN's other unregulated
       operating divisions offer energy equipment rentals, property rentals and
       financing services.  
        
       TEN's contribution to net income was $.35, $.49 and $.35 per share in
       1996, 1995 and 1994, respectively.  The $.35 earned in 1996 includes
       $.05 from the sale of a building and land, and the $.49 earned in 1995
       includes $.24 per share from a negotiated settlement for the termination
       of a steam supply contract (See "Other Income/(Deductions)").
        
       Equity in partnership earnings increased from year to year and primarily
       reflects the income contribution from the Company's interest in
       Iroquois, which increased from 2.40% to 4.87% during fiscal 1996 (See
       "Investing Activities").  The earnings per share impact from equity
       investments was $.12, $.06 and $.05 in 1996, 1995 and 1994,
       respectively.
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
    
        
       Earnings from all other unregulated operations, combined, were lower in
       fiscal 1996.  DHC operations have incurred higher operations and 
       maintenance expenses for produced steam.  The impact of these costs was
       somewhat offset by higher winter season steam and hot water sales, as a
       result of the colder weather, and lower average interest rates on
       variable rate long-term debt.  Initial operating losses related to
       energy system operating and maintenance services and to the Company's
       equity in KBC's first-year losses also lowered earnings from general
       unregulated operations in 1996.

       The lower contribution from operations in fiscal 1995 reflects the
       combined impacts of lower steam and chilled water customer load, due to
       weather.  These were partially offset by higher hot water sales from
       additional customer load.  Higher interest rates on variable rate long-
       term debt, start-up expenses related to the establishment of two new
       unregulated ventures and higher expenses related to equipment rentals
       also reduced the unregulated operations' contribution to net income in
       1995.
        
        
       Steam Supply
        
       Through fiscal 1995 one of the unregulated operations' suppliers of
       steam was a cogeneration facility located on the Company's premises and
       owned by an unrelated third party, the Hacogen partnership ("Hacogen"). 
       The steam supply agreement with Hacogen was terminated, effective
       September 30, 1995, to the mutual satisfaction of both parties. 
       According to the terms of the negotiated settlement, the unregulated
       operations received consideration of $9,519, representing the payment of
       all past due amounts owed by Hacogen and certain additional amounts as a
       result of the contract termination:  $4,967 was received as of September
       30, 1995, and the balance was received in December 1995.  The 1995
       pretax, nonrecurring income related to this settlement was $4,124.
        
       In October 1995, the unregulated operations resumed producing more
       costly steam from the existing boilers which are located on the
       Company's premises and are currently providing adequate steam supply for
       customer requirements.  The unregulated operations are reassessing the
       district heating and cooling operations to determine future cost control
       and operational options.
        
        
       LIQUIDITY AND CAPITAL RESOURCES
       -------------------------------
        
       The regulated gas operations are the principal segment of the Company's
       business, and a substantial portion of the Company's cash is obtained
       during the winter heating season.  The Company manages its seasonal cash
       requirements, primarily to fund gas purchases and customer accounts
       receivable, by using cash flows generated from operations and short-term
       financing from lines of credit.
        
       Cash flows from operations have generally been sufficient to satisfy the
       unregulated operations' cash requirements.  Existing credit lines are
       used to balance seasonal variations in available cash resources.
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
        
       Cash Flows from Operating Activities
        
       The cost of gas and volumes of gas sold are the principal factors which
       influence cash flows from operations from year to year.  The price of
       natural gas impacts the amount of purchased gas costs subject to refund
       or recovery through the PGA.  The volumes of gas sold magnify the impact
       of changing prices.
        
       Cash flows from operations funded both investing and financing
       activities in both fiscal 1996 and 1995.  In 1994 cash flows from
       operations together with cash flows from financing activities satisfied
       the needs for cash for investing activities (i.e., to finance
       construction expenditures).
        
       Fiscal 1996 cash flows from operations represent the benefits of higher
       rates and higher operating margins.  Cash flows from operations were
       lower than 1995, because of the absence, in 1996, of the large amount of
       natural gas pipeline refunds that were received in 1995.  Such refunds
       result from pipeline regulatory activity at the federal level and are
       not in the control of the Company.  The proceeds from the June 1996
       issue of Common Stock were used by the regulated operations to fund the
       current year's construction program and for other general working
       capital purposes, reducing the need for short-term financing.
        
       Cash flows from operations were higher in 1995, primarily because of the
       receipt and retention of natural gas pipeline refunds.  The DPUC allowed
       the Company to retain approximately $16,000 of these refunds to offset
       Federal Energy Regulatory Commission ("FERC") Order No. 636 transition
       costs and certain accounts receivable amounts forgiven for hardship
       customers.  Other refunds are ultimately returned to customers as
       reductions to their bills but provide temporary working capital for the
       regulated gas operations.  The proceeds from the October 1994 issue of
       Common Stock were used by the regulated operations to reduce short-term
       debt, to permanently finance construction expenditures, and for working
       capital in fiscal 1995.  These needs would otherwise have been met by
       cash from operations or by additional short-term financing.
        
        
       Investing Activities
        
       Construction expenditures in 1996, 1995 and 1994 were $24,281, $26,839
       and $27,859, respectively.  The Company estimates its construction
       expenditures for fiscal 1997 to be approximately $25,400 for the
       regulated gas operations.  The future anticipated construction programs
       for the gas operations include an accelerated replacement program for
       certain cast iron and bare steel pipe in the natural gas distribution
       system.  Other construction expenditures from 1997 to 1998 include
       $2,200 for compliance with Clean Air Act requirements for the
       unregulated operations.  The Company plans to fund capital expenditures
       and other commitments through a combination of sources.
        
       As previously noted, the Company acquired an additional 2.47% ownership
       interest in Iroquois for an investment of approximately $5,200 with
       funds from a combination of various sources.
        
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
        
       Financing Activities

       The Company uses short-term debt to finance the seasonal build-up of gas
       inventories and other working capital requirements.  Capital
       expenditures are also temporarily funded with short-term debt.  The
       Company raises short-term funds through the use of available bank lines
       of credit and revolving credit agreements (See Note 8 to the Financial
       Statements).  Long-term debt and equity issues are used in a balanced
       fashion to reduce outstanding short-term debt and to permanently finance
       completed construction.
        
       In July 1996 Moody's Investor Services upgraded the rating of the
       Company's unsecured Medium Term Notes ("MTNs") to A3 from Baa1.  The
       Company has $55,000 of MTNs available for future issue under an existing
       long-term placement program.
        
       In June 1996 the Company sold 700,000 shares of its $3.125 Par Common
       Stock at $23.25 per share.  The Company received net proceeds of $15,557
       which were added to working capital and used by the regulated operations
       to fund the current year's construction program and general operations.
        
       In October 1994 the Company sold 392,200 shares of its $3.125 Par Common
       Stock at $22.75 per share.  The Company received net proceeds of $8,474
       which were used by the regulated operations to retire existing short-
       term borrowings and for working capital.
         
       The Company's $20,000 revolving credit agreement with a large regional
       bank was extended during 1996 until March 31, 1997.
        
       One of the Company's lines of credit with a bank, for $9,000, was
       extended in 1996 to February 1997.
        
        
       Restrictive Covenants
        
       Under the most restrictive terms of the indenture securing the Company's
       First Mortgage Bonds, retained earnings of $46,800 are available for
       dividends at September 30, 1996.  Dividends paid on common and preferred
       stock in fiscal 1995 were $15,500.  The Company is prohibited from,
       among other things, paying dividends on common stock and purchasing,
       redeeming or retiring common stock, if dividends on preferred stock are
       in arrears.
        
        
       Environmental Matters
        
       In the ordinary course of business, the Company may incur costs to clean
       up environmental contaminants related to natural gas activity.  In those
       instances the Company expects that the remediation costs will be
       recoverable in rates.  In the opinion of management, any existing
       environmental issues will not be significant to the future financial
       condition or results of operations of the Company.
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
        
       FERC Order No. 636
        
       The Company began to be billed for transition costs associated with FERC
       Order No. 636 from its pipeline suppliers in June 1993.  Through
       September 30, 1996 the Company has paid and recovered from ratepayers
       $12,142 of an estimated $15,000 of transition costs.
        
       In the opinion of management, the DPUC has allowed the Company a
       sufficient number of recovery mechanisms to provide for the full
       recovery of its estimated transition cost liability.  For this reason,
       management believes that FERC Order 636 transition costs will not have a
       material impact on the Company's financial condition or results of
       operations.
        
        
       Competitive Environment

       The natural gas industry is undergoing structural changes in response to
       Federal regulatory policy intended to increase competition.  In 1992,
       FERC issued Order 636, which required all interstate gas pipelines to
       provide "unbundled" gas transportation and storage services and to
       discontinue their bundled merchant sales operations, which included the
       gas acquisition function.  The impact of the FERC Order 636 deregulation
       of the gas industry has continued to heighten competition and has
       changed the nature of the Company's business.
        
       In the past, the three segments of the natural gas industry had defined
       roles and relationships.  Producers explored, drilled for and processed
       natural gas.  The pipelines purchased natural gas from the producers and
       transported it to local gas distribution companies ("LDCs").  The LDCs
       purchased the gas and transportation services from the pipeline
       companies.
        
       In response to the FERC Order 636, in August 1995, the DPUC issued a
       decision ordering Connecticut LDCs to unbundle certain segments of their
       gas services.  The DPUC approved firm transportation rates for
       commercial and industrial customers, effective April 1, 1996.  With the
       implementation of these new rates for transportation service, the
       Company's commercial and industrial natural gas customers have an
       opportunity to purchase natural gas directly from producers or
       marketers.  The Company, and the other Connecticut LDCs, thus have
       become natural gas transporters and compete with each other and with
       other gas marketers and providers for the sale of natural gas to such
       customers.

       While the above has provided the opportunity for the Company to service
       and supply large commercial and industrial customers outside of its
       franchise area, it has also allowed other gas service companies to have
       access to the Company's customers within its service territory. 
       However, when the Company's customers purchase their gas from other
       suppliers, the Company's distribution system will deliver their
       supplies, for which the Company receives a fee.
        
       The Company's unregulated operations have been subject to the slow
       economic conditions in the Hartford, Connecticut area.  The district
       heating and cooling operations have had to produce more costly steam as
       a result of the 1995 termination of a steam supply contract.  These
       factors may adversely affect the Company's district heating and cooling
       operations' ability to maintain steam, hot and chilled water rates at
       current levels. 
        
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (continued)
       ----------------------------------------------------
        
       Regulatory Proceedings
        
       The LDCs pass on to firm customers any increases or decreases in gas
       costs from those reflected in tariff charges under a PGA.  During fiscal
       1996, the DPUC initiated a review of the need to continue PGA accounting
       for gas costs for all LDCs.  The review was prompted by the partial
       restructuring and the offering of unbundled transportation services that
       began in fiscal 1996.  The LDCs' position is that the PGA should not be
       eliminated because it protects the ratepayers and shareholders from
       fluctuations in the market price of gas.  A decision is expected by the
       second quarter of fiscal 1997.  Management cannot predict the outcome of
       this proceeding and cannot predict the impact, if any, to its future
       results of operations and financial condition.
        

       Legal Proceedings

       In May 1996, Iroquois reached a settlement with State of New York and
       Federal authorities regarding certain environmental allegations asserted
       by them in 1992.  The Company recognized the majority of its
       proportionate share of the $24,000 settlement in fiscal 1995 and
       anticipates no further material impact on its financial position or
       results of operations by reason of this settlement.
        
       In November 1995, certain Connecticut plumbers and HVAC contractors
       filed a class action suit against the Company and the State's two other
       LDCs, claiming that the LDCs engaged in unfair trade practices relating
       to customer service work.  The plumbers and contractors are currently
       asserting claims for profits which they allege were lost during prior
       years.  There has not been any settlement demand or any formal statement
       of alleged damages.  As a result, management cannot estimate the
       Company's potential exposure related to these claims.  The Company is
       vigorously defending this matter.
        
       The Company is not a party to any other litigation other than ordinary
       routine litigation incident to the operations of the Company or its
       subsidiaries.  In the opinion of management, the resolution of such
       litigation will not have a material adverse effect on the Company's
       financial condition or results of operations.
        
        
       Effects of Regulation
        
       The Company's natural gas distribution business is subject to cost-of-
       service regulation by the DPUC.  Based on current regulation and recent
       DPUC decisions, the Company believes that its use of regulatory
       accounting is appropriate and in accordance with the provisions of
       Statement of Financial Accounting Standards No. 71 (See Note 1 to the
       Financial Statements).
        
        <PAGE>
   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1996 (concluded)
       ----------------------------------------------------
        
       Other Tax Matters
        
       The Company has several on-going state tax issues which are being
       reviewed.  In the opinion of management, the outcome of these issues
       will not be significant to the financial condition or results of
       operations of the Company.
        
        
       Proposed Holding Company
        
       In November 1996, the Company announced its intention to reorganize
       under a holding company structure.  Under the proposed restructuring,
       CTG Resources, Inc. 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 which will be required to compete in the rapidly
       deregulated energy marketplace.  Management intends to effect the
       restructuring in 1997, after receiving appropriate shareholder and DPUC
       approvals.  A decision approving the restructuring was received from the
       DPUC in November 1996.
        
        
       NEW ACCOUNTING STANDARDS
        
       In March 1995 the Financial Accounting Standards Board issued Statement
       of Financial Accounting Standards No. 121, "Accounting for the
       Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of"
       ("SFAS No. 121").  This statement requires that long-lived assets be
       reviewed for impairment whenever events indicate that the carrying
       amount of any asset may not be recoverable.  The adoption of SFAS No.
       121 is required in fiscal 1997.  However, based upon current analyses
       and assumptions, the Company does not expect that the adoption will have
       a material impact on its financial condition or results of operations.
        
        
       INFLATION AND CHANGING PRICES
        
       Inflation impacts the prices the Company must pay for operating and
       maintenance expenses and construction costs.  The Company's rate
       schedules for natural gas and DHC sales include provisions that permit
       changes in gas costs and service costs, respectively, to be passed on to
       customers.  The Company attempts to minimize the effects of inflation on
       other costs through cost control, productivity improvements and
       regulatory actions where appropriate.
        
        
        
        
        
        
        
        <PAGE>
       ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
       ----------------------------------------------------
        
       REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
       ----------------------------------------
        
        
       To the Stockholders and The Board of Directors
         of Connecticut Natural Gas Corporation:
        
        
       We have audited the accompanying consolidated balance sheets and
       consolidated statements of capitalization of Connecticut Natural Gas
       Corporation (a Connecticut Corporation) and subsidiaries as of September
       30, 1996 and 1995, and the related consolidated statements of income,
       common stock equity and cash flows for each of the three years in the
       period ended September 30, 1996.  These financial statements and the
       schedule referred to below are the responsibility of the Company's
       management.  Our responsibility is to express an opinion on these
       financial statements based on our audits.
        
       We conducted our audits in accordance with generally accepted auditing
       standards.  Those standards require that we plan and perform the audit
       to obtain reasonable assurance about whether the financial statements
       are free of material misstatement.  An audit includes examining, on a
       test basis, evidence supporting the amounts and disclosures in the
       financial statements.  An audit also includes assessing the accounting
       principles used and significant estimates made by management, as well as
       evaluating the overall financial statement presentation.  We believe
       that our audits provide a reasonable basis for our opinion.
        
       In our opinion, the consolidated financial statements referred to above
       present fairly, in all material respects, the financial position of
       Connecticut Natural Gas Corporation and subsidiaries as of September 30,
       1996 and 1995, and the results of their operations and their cash flows
       for each of the three years in the period ended September 30, 1996, in
       conformity with generally accepted accounting principles.
        
       Our audits were made for the purpose of forming an opinion on the basic
       financial statements taken as a whole.  The schedule listed in the
       schedule index is presented for purposes of complying with the
       Securities and Exchange Commission's rules and is not part of the basic
       financial statements.  This schedule has been subjected to the auditing
       procedures applied in the audits of the basic financial statements and,
       in our opinion, fairly states in all material respects the financial
       data required to be set forth therein in relation to the basic financial
       statements taken as a whole.
        
        
        
        
        
                                                    S/ Arthur Andersen LLP     
                                                -------------------------------
                                                      (ARTHUR ANDERSEN LLP)    
        
        
       Hartford, Connecticut
       November 4, 1996
        
        
        <PAGE>
<TABLE>
<CAPTION>
                                      Consolidated Balance Sheets
                                      September 30, 1996 and 1995
                                        (Thousands of Dollars)
                                                    
                                                Assets
    
    
   <S>                                                             <C>            <C>
                              Assets                                  1996           1995   
                                                                      ----           ----   
   Plant and Equipment:
      Plant in service                                             $ 464,377      $ 451,843 
      Construction work in progress                                    6,417          3,564 
                                                                   ---------      --------- 
                                                                     470,794        455,407 
      Less-Allowance for depreciation                                145,042        133,314 
                                                                   ---------      --------- 
                                                                     325,752        322,093 
                                                                   ---------      --------- 
   Investments, at equity                                              9,914          5,743 
                                                                   ---------      --------- 
   Current Assets:
      Cash and cash equivalents                                        8,515          3,042 
      Accounts receivable (less allowance for
        doubtful accounts of $4,819 in 1996
        and $4,590 in 1995)                                           25,033         26,914 
      Accrued utility revenue                                          4,180          5,093 
      Inventories                                                     15,968         14,511 
      Prepaid expenses                                                10,920          6,095 
                                                                   ---------      --------- 
           Total Current Assets                                       64,616         55,655 
                                                                   ---------      --------- 
   Other Assets:
      Unrecovered future taxes                                        44,812         51,634 
      Recoverable transition costs                                     2,858          4,636 
      Other assets                                                    19,027         25,278 
                                                                   ---------      --------- 
           Total Other Assets                                         66,697         81,548 
                                                                   ---------      --------- 
                                                                   $ 466,979      $ 465,039 
                                                                   =========      ========= 

</TABLE>
    
    
  The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                                Consolidated Balance Sheets (Concluded)
                                      September 30, 1996 and 1995
                                        (Thousands of Dollars) 
                                                    
                                    Capitalization and Liabilities
    

   <S>                                                             <C>            <C>
                  Capitalization and Liabilities                      1996           1995   
                                                                      ----           ----   
   Capitalization (see accompanying statements):
      Common stock equity                                          $ 168,882      $ 150,111 
      Preferred stock, not subject to
         mandatory redemption                                            899            904 
      Long-term debt                                                 136,432        150,390 
                                                                   ---------      --------- 
                                                                     306,213        301,405 
                                                                   ---------      --------- 
   Current Liabilities:
      Current portion of long-term debt                               13,968          3,921 
      Notes payable and commercial paper                                   -          4,200 
      Accounts payable and accrued expenses                           40,721         46,341 
      Refundable purchased gas costs                                   6,012          2,300 
      Accrued taxes                                                        -          2,021 
      Accrued interest                                                 4,479          4,518 
                                                                   ---------      --------- 
           Total Current Liabilities                                  65,180         63,301 
                                                                   ---------      --------- 
   Deferred Credits:
      Deferred income taxes                                           40,011         37,985 
      Unfunded deferred income taxes                                  44,812         51,634 
      Investment tax credits                                           3,203          3,423 
      Refundable taxes                                                 3,445          3,365 
      Other                                                            4,115          3,926 
                                                                   ---------      --------- 
           Total Deferred Credits                                     95,586        100,333 
                                                                   ---------      --------- 
   Commitments and Contingencies                                             
                                                                   ---------      --------- 
                                                                   $ 466,979      $ 465,039 
                                                                   =========      ========= 
</TABLE>

    
   The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                                   Consolidated Statements of Income
                         For the Years Ended September 30, 1996, 1995 and 1994
                           (Thousands of Dollars Except for Per Share Data)
    
   <S>                                                    <C>             <C>            <C>
                                                             1996            1995           1994   
                                                             ----            ----           ----   

   Operating Revenues                                     $ 315,363       $ 275,185      $ 290,662 
   Less:  Cost of energy                                    175,175         147,764        155,547 
          State gross revenues tax                           11,710          11,296         11,863 
                                                          ---------       ---------      --------- 
   Operating Margin                                         128,478         116,125        123,252 
                                                          ---------       ---------      --------- 
   Operating Expenses:
      Operations                                             49,640          45,311         48,361 
      Maintenance                                             8,615           7,917          7,683 
      Depreciation and amortization                          17,765          16,977         15,507 
      Income taxes                                           14,364           9,430         13,353 
      Local property taxes                                    5,277           5,148          5,259 
      Other taxes                                             2,313           2,183          2,177 
                                                          ---------       ---------      --------- 
                                                             97,974          86,966         92,340 
                                                          ---------       ---------      --------- 
   Operating Income                                          30,504          29,159         30,912 
                                                          ---------       ---------      --------- 
   Other Income/(Deductions),
      net of income taxes:
      Allowance for equity funds used
        during construction                                     144             106             21 
      Equity in partnership earnings                          2,037           1,032            868 
      Other income/(deductions)                                 248            (872)        (1,007)
      Nonrecurring items                                        892           3,624              - 
      Income taxes                                           (1,115)         (1,839)          (113)
                                                          ---------       ---------      --------- 
                                                              2,206           2,051           (231)
                                                          ---------       ---------      --------- 
   Interest and Debt Expense, net:
      Interest on long-term debt                             11,825          12,158         10,997 
      Other interest                                          1,585           1,650          1,573 
      Allowance for borrowed funds used
        during construction                                     (96)            (70)           (14)
      Amortization of debt expense                              401             453            422 
                                                          ---------       ---------      --------- 
                                                             13,715          14,191         12,978 
                                                          ---------       ---------      --------- 
   Net Income                                                18,995          17,019         17,703 

   Less-Dividends on Preferred Stock                             63              62             66 
                                                          ---------       ---------      --------- 
   Net Income Applicable to Common Stock                  $  18,932       $  16,957      $  17,637 
                                                          =========       =========      ========= 
</TABLE>
    
    The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                             Consolidated Statements of Income (Concluded)
                         For the Years Ended September 30, 1996, 1995 and 1994
                           (Thousands of Dollars Except for Per Share Data)
    
   <S>                                                    <C>             <C>            <C>
                                                             1996            1995           1994   
                                                             ----            ----           ----   

   Net Income Applicable to Common Stock                  $  18,932       $  16,957      $  17,637 
                                                          =========       =========      ========= 

   Average Common Shares Outstanding
      During the Period                                  10,146,932       9,926,980      9,539,695 
                                                         ==========       =========      ========= 

   Income Per Average Share of
      Common Stock                                        $    1.87       $    1.71      $    1.85 
                                                          =========       =========      ========= 

   Dividend Per Share of Common Stock                     $    1.50       $    1.48      $    1.48 
                                                          =========       =========      ========= 
    
</TABLE>
    
   The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                                 Consolidated Statements of Cash Flows
                         For the Years Ended September 30, 1996, 1995 and 1994
                                        (Thousands of Dollars)
    
   <S>                                                      <C>          <C>          <C>
                                                               1996         1995         1994   
                                                               ----         ----         ----   

   Cash Flows from Operations:                               $ 39,175     $ 53,415     $ 25,708 
                                                             --------     --------     -------- 

   Cash Flows from Investing Activities:
      Capital expenditures                                    (24,281)     (26,839)     (27,859)
      Other investing activities                               (1,338)        (395)      (2,669)
                                                             --------     --------     -------- 
      Net cash used in investing activities                   (25,619)     (27,234)     (30,528)
                                                             --------     --------     -------- 
   Cash Flows from Financing Activities:
      Dividends paid                                          (15,491)     (14,761)     (14,184)
      Issuance of common stock                                 15,557        8,474            - 
      Other stock activity, net                                   (38)          (5)        (763)
      Issuance of long-term debt                                    -            -       20,000 
      Principal retired on long-term debt                      (3,911)      (3,673)      (4,653)
      Short-term debt                                          (4,200)     (14,300)       4,000 
                                                             --------     --------     -------- 
      Net cash provided (used) by
         financing activities                                  (8,083)     (24,265)       4,400 
                                                             --------     --------     -------- 
   Increase (Decrease) in Cash and
      Cash Equivalents                                          5,473        1,916         (420)
   Cash and Cash Equivalents at
      Beginning of Year                                         3,042        1,126        1,546 
                                                             --------     --------     -------- 
   Cash and Cash Equivalents at
      End of Year                                            $  8,515     $  3,042     $  1,126 
                                                             ========     ========     ======== 
    
</TABLE>
    
   The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                           Consolidated Statements of Cash Flows (Concluded)
                         For the Years Ended September 30, 1996, 1995 and 1994
                                        (Thousands of Dollars)
    
   <S>                                                      <C>          <C>          <C>
                                                               1996         1995         1994   
                                                               ----         ----         ----   
   Schedule Reconciling Earnings to
      Cash Flows from Operations:
      Income                                                 $ 18,995     $ 17,019     $ 17,703 
                                                             --------     --------     -------- 
      Adjustments to reconcile income
         to net cash:
         Depreciation and amortization                         17,909       17,216       16,296 
         Provision for uncollectible
           accounts                                             4,600        4,886        6,582 
         Deferred income taxes, net                             1,886          897        8,538 
         Equity in partnership earnings                        (2,037)      (1,032)        (868)
         Cash distributions received from
           investments                                          2,061          336          492 
      Changes in assets and liabilities:
         Accounts receivable                                   (1,640)      (5,571)      (9,047)
         Accrued utility revenue                                  913       (1,379)         918 
         Inventories                                           (1,457)       3,815        2,087 
         Purchased gas costs                                    3,712        6,069       (7,527)
         Prepaid expenses                                      (4,825)       4,012       (6,728)
         Accounts payable and accrued expenses                 (5,902)       7,671         (927)
         Other assets/liabilities                               4,960         (524)      (1,811)
                                                             --------     --------     -------- 
           Total adjustments                                   20,180       36,396        8,005 
                                                             --------     --------     -------- 
      Net cash provided by
         operations                                          $ 39,175     $ 53,415     $ 25,708 
                                                             ========     ========     ======== 



   Supplemental Disclosures of Cash Flow
      Information:
   Cash Paid During the Year for:
      Interest                                               $ 12,193     $ 12,446     $ 11,291 
                                                             ========     ========     ======== 
      Income taxes                                           $ 17,633     $  8,967     $  9,972 
                                                             ========     ========     ======== 


    
</TABLE>
    
      The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                               Consolidated Statements of Capitalization
                                      September 30, 1996 and 1995
                                        (Thousands of Dollars)
  <S>                                                                     <C>            <C>
                                                                             1996          1995   
                                                                             ----          ----   

   Common Stock Equity:
      Common stock, $3.125 par value, authorized
        20,000,000 shares, issued 10,634,496 shares
        in 1996 and 9,934,496 shares in 1995, 
        outstanding 10,620,439 shares in 1996 and
        9,931,279 shares in 1995                                           $ 33,233      $ 31,045 
      Capital in excess of par value                                         87,387        74,018 
      Retained earnings                                                      49,026        45,522 
                                                                           --------      -------- 
                                                                            169,646       150,585 
                                                                           --------      -------- 
      Less:  Unearned compensation - restricted
               stock awards                                                    (312)         (371)
             Treasury stock, 14,057 shares in 1996 and
              3,217 shares in 1995                                             (452)         (103)
                                                                           --------      -------- 
                                                                            168,882       150,111 
                                                                           --------      -------- 

   Preferred Stock, Not Subject to Mandatory
      Redemption:
      $3.125 par value, 8%, noncallable, authorized
        913,832 shares in 1996 and 915,204 shares
        in 1995, issued and outstanding 138,360 shares
        in 1996 and 139,732 shares in 1995, entitled to
        preference on liquidation at $6.25 per share                            432           437 

      $100 par value, callable, authorized 9,999,631
        shares in 1996 and 9,999,634 shares in 1995
        6% Series B, issued and outstanding 4,667
        shares in 1996 and 4,670 shares in 1995                                 467           467 
                                                                           --------      -------- 
                                                                                899           904 
                                                                           --------      -------- 
   Long-Term Debt:
      First Mortgage Bonds -
        8.8% to 9.16%, due 2001 to 2004                                      28,000        30,000 
      Industrial Revenue Demand Bonds -
        1986 and 1988 series,
        weighted average interest rate of
        3.589% in 1996 and 3.857% in 1995, due 2006                          12,100        12,800 
      First Mortgage Notes -
        10.5%, due 2010                                                         999         1,030 
      Secured Notes -
        9.32%, due 1999                                                          10             - 
        6.89%, due 2010                                                      13,510        14,075 
      Secured Term Note, 10.72%, due 1997                                       781         1,406 
      Unsecured Medium Term Notes -
        6.48%, due 1997                                                      10,000        10,000 
        7.61% to 7.82%, due 2002 to 2004                                     20,000        20,000 
        6.85% to 8.12%, due 2012 to 2014                                     30,000        30,000 
        8.96% to 9.1%, due 2016 to 2017                                      30,000        30,000 
        8.49%, due 2024                                                       5,000         5,000 
      Less - Current Maturities                                             (13,968)       (3,921)
                                                                           --------      -------- 
                                                                            136,432       150,390 
                                                                           --------      -------- 
                                                                           $306,213      $301,405 
                                                                           ========      ======== 
</TABLE>
   The accompanying notes are an integral part of these consolidated
 financial statements.
    <PAGE>
<TABLE>
<CAPTION>
                            Consolidated Statements of Common Stock Equity
                         For the Years Ended September 30, 1996, 1995 and 1994
                             (Thousands of Dollars Except for Share Data)
    
   <S>                          <C>          <C>     <C>         <C>      <C>             <C>
                                  Common Stock 
                               --------------------   Capital in                  
                                 Number of      Par   Excess of  Treasury    Unearned     Retained
                                  Shares       Value  Par Value    Stock   Compensation   Earnings
                                ----------    ------- ---------- --------  ------------   ---------
   Balance at September 30,
     1993                        9,542,296    $29,820   $66,915    $    -      $   (157)    $39,744 
     Net income after
      preferred dividends                -          -         -         -             -      17,637 
     Purchase of restricted
      stock awards                       -          -         -         -          (728)          - 
     Amortization and
      adjustment of
      restricted shares             (3,217)         -      (258)     (103)          728           - 
     Dividends                           -          -         -         -             -     (14,117)
                                ----------    -------   -------    ------        ------    -------- 
   Balance at September 30,
     1994                        9,539,079     29,820    66,657      (103)         (157)     43,264 
     Public offering               392,200      1,225     7,249         -             -           - 
     Net income after
      preferred dividends                -          -         -         -             -      16,957 
     Amortization and
      adjustment of
      restricted shares                  -          -       112         -          (214)          - 
     Dividends                           -          -         -         -             -     (14,699)
                                ----------    -------   -------    ------        ------    -------- 
   Balance at September 30,
     1995                        9,931,279     31,045    74,018      (103)         (371)     45,522 
     Public offering               700,000      2,188    13,369         -             -           - 
     Net income after
      preferred dividends                -          -         -         -             -      18,932 
     Purchase of restricted
      stock awards                       -          -         -         -           (33)          - 
     Amortization and
      adjustment of
      restricted shares            (10,840)         -         -      (349)           92           - 
     Dividends                           -          -         -         -             -     (15,428)
                                ----------    -------   -------    ------        ------    -------- 
   Balance at September 30,
     1996                       10,620,439    $33,233   $87,387    $ (452)       $ (312)    $49,026 
                                ==========    =======   =======    ======        ======    ======== 
</TABLE>




    
   The accompanying notes are an integral part of these consolidated
 financial statements.
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS
   (In thousands of dollars, except per share amounts)
   September 30, 1996
    
    
   1.  Summary of Significant Accounting Policies:
    
   Principles of consolidation-
    
   The consolidated financial statements represent the Connecticut Natural Gas
   Corporation ("the Company"), including its wholly-owned unregulated
   subsidiaries:  The Energy Network, Inc. ("TEN"), formerly Energy Networks,
   Inc., and CNG Realty Corp. ("CNGR").  All significant intercompany
   transactions and accounts have been eliminated in consolidation.  Certain
   prior year amounts have been reclassified to conform with current year
   presentations.
    
    
   Use of estimates-
    
   The preparation of financial statements in conformity with generally
   accepted accounting principles requires management to make estimates and
   assumptions that affect the reported amounts of assets and liabilities and
   disclosure of contingent assets and liabilities at the date of the
   financial statements and the reported amounts of revenues and expenses
   during the reporting period.  Actual results could differ from those
   estimates.
    
    
   Revenues-
    
   Revenues are recorded based on the amount of product delivered to customers
   through the end of the accounting period.  Regulated gas operations
   revenues are based on rates authorized by the Connecticut Department of
   Public Utility Control ("DPUC").
    
   The Company is required to provide service to residential customers within
   its defined service territory and is precluded by the DPUC from
   discontinuing service to hardship residential customers during a winter
   moratorium period (November - April).
    
   In compliance with Connecticut law, the Company has an accounts receivable
   forgiveness program for qualified hardship natural gas customers.  The
   total payments made by these customers and the energy assistance funds
   received on their behalf are matched by the Company.  Amounts matched are
   deferred and recovered from ratepayers in a future period, in accordance
   with DPUC treatment as outlined in the Company's October 1995 rate decision
   (See Note 2).  At September 30, 1996 and 1995, deferred balances of $2,300
   and $7,500, respectively, are included in other assets pending future
   amortization and recovery from ratepayers.
    
    
   Purchased gas costs-
    
   The Company passes on to its firm customers increases or decreases in gas
   costs from those reflected in its tariff charges.  In accordance with this
   procedure, any current under or over-recoveries of gas costs are charged or
   credited to the cost of gas and included in current assets or liabilities. 
   Such amounts are collected or refunded in subsequent periods under 
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   purchased gas adjustment provisions ("PGA").  During fiscal 1996, the DPUC
   initiated a review of the need to continue to utilize the PGA mechanism for
   all Connecticut natural gas distribution companies (See Note 2).
    
    
   Allowance for funds used during construction-
    
   In the ordinary course of business an allowance for funds used during
   construction ("AFUDC") is calculated on the construction of physical assets
   which exceed a minimum cost threshold and are constructed over an extended
   period of time.  
    
   AFUDC is computed based on the weighted average cost of capital used to
   determine the rates charged to customers, as allowed by the DPUC in the
   October 1995, rate decision, for the regulated operations, and at current
   borrowing rates for the unregulated operations.
    
    
   Plant-
    
   Plant is stated at original cost, which includes indirect costs consisting
   of payroll taxes, pension and other employee benefit costs, general and
   administrative costs, and, for certain long-term construction projects,
   AFUDC.
    
   Substantially all of the plant of the regulated operations is subject to
   the lien of the Indenture of Mortgage and Deed of Trust securing its First
   Mortgage Bonds.  Most properties of the unregulated operations are also
   subject to the liens associated with their term loans or letters of credit
   (See Notes 7 and 8).
    
   During the fourth quarter of fiscal 1996 TEN sold land and a building
   situated thereon.  This resulted in a nonrecurring net gain of $515 or $.05
   per share.
    
    
   Depreciation-
    
   The Company and its subsidiaries, except CNGR, provide depreciation on a
   straight-line basis.  The composite rates applied by the regulated
   operations are 4.1% in 1996 and 4.2% in 1995 and 1994, as approved by the
   DPUC.  The operating and administrative center, owned by CNGR, is being
   depreciated under a DPUC approved sinking fund method through 2010.
    
   The average depreciation rates for unregulated depreciable plant were 3.8%
   in 1996, 3.7% in 1995 and 3.3% in 1994.
    
    
   Cash and cash equivalents-
    
   Cash in excess of daily requirements is invested in short-term interest
   bearing securities with maturities of three months or less.
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   Investments-
    
   In April 1996 the Company acquired an additional 2.47% ownership interest
   in the Iroquois Gas Transmission System Partnership ("Iroquois") for
   approximately $5,200.  The Company's 4.87% investment in Iroquois, which is
   held by TEN's   wholly-owned subsidiary, TEN Transmission Company, amounted
   to $8,884 at September 30, 1996.  Iroquois owns and operates a natural gas
   pipeline which transports Canadian natural gas into New York State,
   Massachusetts and Connecticut.  Iroquois has been the subject of legal
   proceedings since 1992.  These proceedings were settled in 1996 (See Note
   10, "Legal Proceedings").
    
   At September 30, 1996 the Company has an approximately $126 investment in
   KBC Energy Services of New England ("KBC"), a joint venture partnership
   with Bay State Gas Company and Koch Gas Services Company.  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.  During fiscal 1996, the Company sold gas to KBC
   which, in total, was not material to the financial statements.
    
   The Company also has a $921 (50% ownership) investment in the Downtown
   Cogeneration Associates Limited Partnership ("DCA") which owns and operates
   a cogeneration facility in Hartford, Connecticut.  All of the Company's
   investments are accounted for on the equity method of accounting.
    
    
   Inventories-
    
   Gas inventories are stated at their weighted average cost.  Other
   inventories are accounted for using the first-in, first-out or average cost
   method.
    
    
   Accounting for the effects of regulation-
    
   The Company's natural gas distribution business is subject to regulation by
   the DPUC.  The Company prepares its financial statements in accordance with
   the provisions of Statement of Financial Accounting Standards No. 71,
   "Accounting for the Effects of Certain Types of Regulation" ("SFAS No.
   71").  SFAS No. 71 requires a cost-based, rate-regulated enterprise such as
   the Company to reflect the impact of regulatory decisions in its financial
   statements.  In certain circumstances, SFAS No. 71 requires that certain
   costs and/or obligations (such as incurred costs not currently recovered
   through rates, but expected to be so recovered in the future) be reflected
   in a deferred account in the balance sheet and not be reflected in the
   statement of income until matching revenues and/or expenses are recognized. 
   The Company records regulatory assets and liabilities based on prior rate
   orders issued by the DPUC, which provide a mechanism for recovery in
   regulated rates, or on historical rate treatment, which provides evidence
   as to the probability of future rate recovery.
    
   In the application of SFAS No. 71, the Company follows accounting policies
   that reflect the impact of the rate treatment of certain events or
   transactions that are permitted to differ from generally accepted
   accounting principles.  The most significant of these policies include the
   recording of an unfunded deferred income tax liability, with a 
    

    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   corresponding unrecovered receivable, for temporary differences previously
   flowed through to ratepayers, regulated assets pending future recovery,
   regulated assets recovered over time as directed by the DPUC and the method
   of depreciation utilized for certain property.  The DPUC permits recovery
   of depreciation on the operating and administrative center, owned by CNGR,
   under a DPUC-approved sinking fund method through 2010.  The overall impact
   of annual depreciation expense under this method, versus straight line
   depreciation recovery, is not material to the overall statements of income.
    
   It is the Company's policy to continually assess the recoverability of
   costs recognized as regulatory assets and the Company's ability to continue
   to account for its activities in accordance with SFAS No. 71, based on each
   regulatory action and the criteria set forth in SFAS No. 71.  Based on
   current regulation and recent DPUC decisions, the Company believes that its
   use of regulatory accounting is appropriate and in accordance with the
   provisions of SFAS No. 71.
    
   The Company's Consolidated Balance Sheets at September 30, 1996 and 1995
   contain the following amounts solely as a result of the application of SFAS
   No. 71:
    
<TABLE>
   <S>                                                         <C>            <C>
                    Assets/(Liabilities)                         1996           1995   
                    --------------------                         ----           ----   
   Unrecovered Future Taxes                                    $ 44,812       $ 51,634 
   Deferred Income Taxes                                          2,897          1,224 
   Recoverable Transition Costs                                   2,858          4,636 
   Other Postretirement Benefits                                  2,654          2,116 
   Hardship Arrearage Forgiveness                                 2,331          7,536 
   Other Deferred Charges                                         1,554          3,821 
   Revenue Sharing Mechanisms                                    (2,349)        (1,582)
   Refundable Taxes                                              (3,445)        (3,365)
   Pipeline Refunds, Surcharges and Interest                     (4,518)       (10,461)
   Deferred Gas Costs                                            (6,002)        (1,995)
                                                               ---------      ---------
                                                               $ 40,792       $ 53,564 
                                                               =========      =========
</TABLE>
   New accounting standards-
    
   In March 1995 the Financial Accounting Standards Board ("FASB") issued
   Statement of Financial Accounting Standards No. 121, "Accounting for the
   Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of"
   ("SFAS No. 121"). This statement requires that long-lived assets be
   reviewed for impairment whenever events indicate that the carrying amount
   of any asset may not be recoverable.  Adoption of SFAS No. 121 is required
   in fiscal 1997.  However, based upon current analyses and assumptions, the
   Company does not expect that the adoption will have a material impact on
   its financial condition or results of operations.
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (continued)
   In thousands of dollars, except per share amounts)
    
    
   2.  Rate Proceedings:
    
   During fiscal 1996, the DPUC initiated a review of the need to continue PGA
   accounting for gas costs for all Connecticut natural gas distribution
   companies ("LDCs") (See Note 1, "Purchased Gas Costs").  The review is an
   on-going evaluation process to determine whether PGA accounting should be
   discontinued or modified.  The review was prompted by the deregulation at
   the LDCs level and the offering of unbundled services that began in fiscal
   1996.  The LDCs have contended at the DPUC that the PGA should not be
   eliminated, because the market price of gas has not stabilized and is not
   likely to remain stable.  A DPUC decision is expected by the second quarter
   of fiscal 1997.  Management cannot predict the outcome of this proceeding
   and, as such, cannot predict the impact, if any, to future results of
   operations and financial condition.
    
   In October 1995 the DPUC issued a decision which allowed the Company to
   increase its rates $8,900 or 3.64%.  This decision allowed a rate of return
   on equity of 10.76% and provided for recovery of all significant items
   deferred on the balance sheet pending recovery at September 30, 1994. 
   Rates were effective for service rendered on or after October 13, 1995.  As
   part of this decision, the DPUC also approved the Company's Firm
   Transportation rates for Commercial and Industrial Customers, effective
   April 1, 1996.  (See Management's Discussion and Analysis, "Competitive
   Environment")
    
    
   3.  Pension and Employee Benefit Plans:
    
   The Company has noncontributory retirement plans ("Plans") covering
   substantially all employees.  Pension benefits are based on years of
   credited service and employees' average annual earnings, as defined in the
   Plans.  The Company's funding policy is to contribute, annually, an amount
   at least equal to that which will satisfy the minimum funding requirements
   of the Employee Retirement Income Security Act.
    
   The assumptions used in determining the pension obligations were:
    
<TABLE>
    <S>                                                   <C>         <C>         <C>
                                                          1996        1995        1994
                                                          ----        ----        ----

    Weighted Average Discount Rate .........              8.25%       8.25%       8.25%
    Rate of Increase in Future Compensation Levels
        ..............................                    4.40%       4.50%       5.00%
    Expected Long-term Rate of Return on Assets
        ..............................                    8.75%       8.95%       8.95%
</TABLE>
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (continued)
   In thousands of dollars, except per share amounts)
    
    
   The following table represents the Plans' funded status and amounts
   included in the balance sheets at September 30, 1996 and 1995:
    
<TABLE>
    <S>                                                          <C>            <C>
                                                                   1996           1995   
                                                                   ----           ----   

    Actuarial present value of benefit obligations:

        Accumulated benefit obligation, including vested
            benefits of $65,411 in 1996 and of $63,321 in
            1995                                                 $ 67,900       $ 65,888 
                                                                 ========       ======== 
        Projected benefit obligation for service rendered
            to date                                              $ 79,645       $ 77,371 
    Assets at fair value, primarily publicly traded stocks
        and bonds                                                  97,697         89,740 
                                                                 --------       -------- 
    Value of assets over the projected benefit obligation
                                                                   18,052         12,369 

    Unrecognized net gain from past experience different
        from that assumed                                         (18,421)       (11,896)
    Prior service cost not yet recognized in net periodic
        pension cost                                                  981          1,097 
    Unrecognized net asset at January 1, 1986 being
        recognized over 15 years                                   (1,398)        (1,704)
                                                                 --------       -------- 
    Accrued pension liability                                    $   (786)      $   (134)
                                                                 ========       ======== 
</TABLE>
    
   Net pension costs included in the statements of income for the years ending
   September 30, include the following components:
<TABLE>
    
       <S>                                         <C>            <C>           <C>
                                                      1996           1995          1994  
                                                      ----           ----          ----  


       Service cost                                $  2,095       $  2,059      $  2,021 
       Interest cost                                  6,183          6,056         5,469 
       Return on plan assets                        (11,503)       (12,474)       (2,597)
       Net amortization and deferral                  3,653          4,919        (4,784)
                                                   --------       --------      -------- 
       Net cost                                    $    428       $    560      $    109 
                                                   ========       ========      ======== 
</TABLE>
    
   The Company also provides its officers with a supplemental retirement plan.
   The actuarially determined accumulated benefit obligation was approximately
   $3,685 at September 30, 1996 and $3,900 at September 30, 1995.  The cost of
   this plan is being accrued over the service lives of the individual
   officers.  Net expense related to this plan was $540 for 1996, $607 for
   1995 and $505 for 1994.  The Company contributes to a trust to fund the
   liability for these supplemental retirement plan benefits.  The trust
   balance included in other assets at September 30, 1996 and 1995 was $3,708
   and $2,922, respectively.
     
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   In September 1996 the Company announced an early retirement program for
   union employees which resulted in the reduction of approximately 1.5% of
   the total workforce through voluntary early retirement.  The approximately
   $400 cost of this program included pension enhancements and other benefits
   and was fully accrued by the Company in the fourth quarter of fiscal 1996. 
    
   In August 1994 the Company announced an early retirement program for
   nonunion employees which resulted in the reduction of approximately 3% of
   the total workforce through voluntary early retirement.  The cost of this
   program of $1,341 included pension enhancements and other benefits and was
   fully recognized by the Company in the fourth quarter of fiscal 1994.
    
   In fiscal 1995 the Company adopted Statement of Financial Accounting
   Standards No. 112, "Employers' Accounting for Postemployment Benefits"
   ("SFAS No. 112") on a prospective basis.  This statement requires employers
   to record any obligation which exists to provide certain benefits to former
   or inactive employees after employment but before retirement.  The effect
   on the Company's financial condition and results of operations of adopting
   SFAS No. 112 was not material.
    
    
   4.  Postretirement Benefits Other Than Pensions:
    
   The Company provides certain health care and life insurance benefits
   through a benefit plan to retired employees.  These benefits are available
   for employees leaving the Company who are otherwise eligible to retire and
   have met specific service requirements.  The Company accounts for these
   costs under Statement of Financial Accounting Standards No. 106,
   "Employers' Accounting for Postretirement Benefits Other Than Pensions"
   ("SFAS No. 106") on a prospective basis.  SFAS No. 106 requires the
   expected cost of postretirement benefits, primarily health care and life
   insurance benefits, to be charged to expense during the years that eligible
   employees render service.
    
   In fiscal 1994, the Company adopted SFAS No. 106 and began amortizing its
   postretirement accumulated benefit obligation over a twenty-year period. 
   Total health care and life insurance costs under SFAS No. 106 were $3,293
   in 1996, $3,274 in 1995 and $2,931 in 1994.  Actual costs charged to
   expense were $2,755 in 1996, $2,143 in 1995 and $1,946 in 1994.  The DPUC
   has approved a five-year phase-in of SFAS No. 106 expenses with an allowed
   annual recovery of $2,755 and deferral of additional SFAS No. 106 expenses
   for future recovery.  At September 30, 1996 and 1995 $2,654 and $2,116,
   respectively, were deferred pending future amortization and recovery.  
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   The following table represents the plan's funded status reconciled to the
   consolidated balance sheets at September 30, 1996 and 1995:
    
<TABLE>
       <S>                                                        <C>            <C>
                                                                    1996           1995   
                                                                    ----           ----   
       Accumulated postretirement benefit obligation of:

           Retirees                                               $ 18,577       $ 18,163 
           Fully eligible to retire active
             employees                                               2,074          3,102 
           Active employees not eligible to retire                   5,977          5,712 
                                                                  --------       -------- 
       Total accumulated postretirement benefit obligation
                                                                    26,628         26,977 
       Less:  Market value of plan assets                            5,695          5,910 
                                                                  --------       -------- 

       Accumulated postretirement benefit obligation in
           excess of plan assets                                    20,933         21,067 
       Unrecognized transition amount                              (16,616)       (17,654)
       Unrecognized net gain/(loss)                                 (1,912)        (3,670)
                                                                  --------       -------- 
       Accrued/(prepaid) postretirement benefit
         obligation                                               $  2,405       $   (257)
                                                                  ========       ======== 
</TABLE>
    
    
   The components of SFAS No. 106 health care and life insurance costs for the
   fiscal years ended September 30, 1996, 1995 and 1994 are:
    
<TABLE>
   <S>                                           <C>            <C>           <C>
                                                   1996           1995          1994   
                                                   ----           ----          ----   
   Service cost                                  $    435       $    398      $    367 
   Interest cost                                    2,164          2,054         1,664 
   Return on plan assets                             (578)          (290)          (81)
   Net amortization                                 1,272          1,112           981 
                                                 --------       --------      -------- 
   Net health care and life insurance costs
                                                 $  3,293       $  3,274      $  2,931 
                                                 ========       ========      ======== 
</TABLE>
    
   For measurement purposes annual rates of increase of 12% and 10% are
   assumed for nonmedicare and medicare eligible retirees, respectively, in
   the per capita cost of covered health care benefits.  The rate is assumed
   to decrease to 6% for both groups in 2003.  The effect of increasing the
   assumed health care cost trend rates by one percentage point in each year
   would increase the accumulated postretirement benefit obligation as of
   September 30, 1996 and 1995 by $1,530 and $1,483, respectively, and the
   aggregate of the service and interest cost for the years ended September
   30, 1996, 1995 and 1994 by $133, $134 and $130, respectively.  The weighted
   average discount rate used in determining the accumulated post retirement
   benefit obligation was 8.25% in 1996, 1995 and 1994 and was determined by
   analyzing the interest rates, as of September 30 of each year, of long-
   term, high quality corporate debt securities having a duration comparable
   to the plan.  The expected long-term rate of return on plan assets was
   7.50% in 1996 and 1995.
    <PAGE>
    NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   The Company has established Employee Benefit Trusts ("VEBA") to pay current
   retiree health care and life insurance benefits and to fund the Company's
   retirement benefit liability.  In fiscal 1996, 1995 and 1994 the Company
   funded $2,896, $5,105 and $1,350, respectively, for SFAS No. 106 costs. 
   The VEBA balances are primarily invested in life insurance policies and
   commingled fixed income and equity mutual funds.
    
    
   5.  Income Taxes:
    
   The following is an analysis of the provision for federal and state income
   taxes:
<TABLE>
<CAPTION>
                                                                       September 30, 
                                                                  ------------------------
    <S>                                                        <C>         <C>         <C>
                                                                 1996        1995        1994  
                                                                 ----        ----        ----  
    Charged to operations:
        Federal:
            Current                                             $9,842      $6,717     $ 3,822 
            Deferred                                             1,082         778       6,098 
                                                               -------     -------     ------- 
                                                                10,924       7,495       9,920 
                                                               -------     -------     ------- 
        State:
            Current                                              3,118       1,751       1,424 
            Deferred                                               543         405       2,230 
                                                               -------     -------     ------- 
                                                                 3,661       2,156       3,654 
                                                               -------     -------     ------- 
        Deferred investment tax credits                           (221)       (221)       (221)
                                                               -------     -------     ------- 
            Total charged to operations                         14,364       9,430      13,353 
                                                               -------     -------     ------- 
    Charged to other income/(deductions):
        Federal:
            Current                                                552       1,478         198 
            Deferred                                               232         (87)       (118)
                                                               -------     -------     ------- 
                                                                   784       1,391          80 
                                                               -------     -------     ------- 
        State:
            Current                                                245         480          77 
            Deferred                                                86         (32)        (44)
                                                               -------     -------     ------- 
                                                                   331         448          33 
                                                               -------     -------     ------- 
            Total charged to other income/(deductions)
                                                                 1,115       1,839         113 
                                                               -------     -------     ------- 
               Total                                           $15,479     $11,269     $13,466 
                                                               =======     =======     ======= 
</TABLE>
    
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   Depreciation for federal income tax purposes is computed using accelerated
   cost recovery methods and different lives as permitted under the Internal
   Revenue Code ("Code").  The DPUC has allowed the Company to normalize taxes
   on accelerated depreciation, as required under the Code, for depreciable
   property additions made by the regulated operations subsequent to 1980. 
   For certain other temporary differences, tax reductions are accounted for
   as a reduction of federal income tax expense in accordance with the flow-
   through method of accounting as required by the DPUC.  Under the
   established ratemaking practices followed by the DPUC, deferred income
   taxes not previously provided for will be collected in customer rates when
   such taxes become payable.
    
   Deferred income taxes result from temporary differences between the
   financial statement carrying amounts and the tax basis of existing assets
   and liabilities. Deferred income taxes are primarily a result of normalized
   plant items and temporary differences related to gas costs.  For the
   regulated operations, deferred investment tax credits are amortized to
   income over the average life of the related property.  The unregulated
   operations provide deferred taxes on all temporary differences, including
   depreciation.
    
   The tax effects of the temporary differences which result in the deferred
   income taxes on the balance sheets at September 30, 1996 and 1995 are:
    
<TABLE>
      <S>                                                                <C>          <C>
                                                                            1996         1995  
                                                                            ----         ----  

      Property, Plant and Equipment                                      $ 43,562     $ 40,192 
      Other, net                                                           (3,551)      (2,207)
                                                                         --------     -------- 
         Deferred Income Taxes                                           $ 40,011     $ 37,985 
                                                                         ========     ======== 
</TABLE>
    
   Effective October 1, 1993, the Company adopted Statement of Financial
   Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
   109").  In accordance with SFAS No. 109, under the caption "Refundable
   Taxes" the balance sheet reflects refundable taxes to ratepayers for
   reductions in the statutory federal income tax rate on normalized plant
   related, temporary differences.  The regulated operations also recognize
   the cumulative deferred income taxes on temporary differences which were
   previously flowed through to ratepayers.  At September 30, 1996 and 1995
   the Company had $44,812 and $51,634, respectively, on the balance sheets as
   an unfunded deferred income tax liability, with a corresponding unrecovered
   receivable, for temporary differences previously flowed through to
   ratepayers.  These amounts have been adjusted for the tax effect of future
   revenue requirements and will be amortized over the life of the related
   depreciable assets concurrent with their recovery in rates.
    
   In October 1994 the Company received formal approval from the Internal
   Revenue Service ("IRS") to deduct, for tax purposes, current as well as
   certain previously incurred cost of removal expenses associated with
   retirements of plant and equipment.  During fiscal 1995 and 1994 the
   Company recorded combined state and federal income tax benefits of $1,973 
     <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   and $444, respectively, related to prior years' cost of removal expenses
   allowed by the IRS.  The total current period combined state and federal
   income tax benefits related to cost of removal that were recorded by the
   Company were $609 in 1996, $368 in 1995 and $449 in 1994.

   A reconciliation of the consolidated federal income tax expense, at the
   statutory tax rate of 35%, to the reported consolidated federal income tax
   expense is as follows:
    
<TABLE>
    <S>                                                    <C>         <C>         <C>
                                                             1996        1995        1994  
                                                             ----        ----        ----  
    Consolidated statutory federal income tax expense      $10,669     $ 8,989     $ 9,619 

    Change in consolidated federal income tax expense
        resulting from:
        Excess book over tax depreciation                    1,724       1,456       1,797 
        Investment tax credits                                (221)       (221)       (221)
        Bad debts                                              175         175         131 
        Tax reserves                                          (500)        200         105 
       Computer software                                       175        (499)       (899)
       Cost of removal                                        (507)     (1,951)       (744)
        Nondeductible reserves                                (200)        397        (125)
       Other                                                   172         119         116 
                                                           -------     -------     ------- 
    Consolidated reported federal income tax expense       $11,487     $ 8,665     $ 9,779 
                                                           =======     =======     ======= 
</TABLE>
     
    
    
   6.  Capital Stock:
    
   Common stock- 
    
   In June 1996 the Company sold 700,000 shares of its $3.125 Par Common Stock
   at $23.25 per share.  The Company received net proceeds of $15,557 which
   were added to working capital and used by the regulated operations to fund
   the current year's construction program and general operations.
    
   In October 1994 the Company sold 392,200 shares of its $3.125 Par Common
   Stock at $22.75 per share.  The Company received net proceeds of $8,474
   which were used by the regulated operations to retire existing short-term
   borrowings.
    
    
   Dividend reinvestment plan and employee savings plans-
    
   The Company maintains a Dividend Reinvestment Plan ("DRIP") which provides
   the Company's holders of common stock and preferred stock the opportunity
   to receive shares of the Company's common stock in lieu of some or all of
   their cash dividends.  In addition, the Company has Employee Savings Plans
   ("ESP"), which are designed to encourage and assist employees to save and
   invest for long-term financial security.  The Company's common stock is one
   of the investment options offered to employees under the ESP.  At 
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   September 30, 1996, there were 796,085 shares of the Company's common stock
   reserved for issuance under the DRIP and ESP.  In the fiscal years ended
   September 30, 1996, 1995 and 1994 the Company's contribution to the ESP on
   behalf of employees was $965, $958 and $956, respectively.
    
    
   Executive restricted stock plan-
    
   In 1990 the Company adopted a restricted stock performance plan.  The plan
   terminates in the year 2000 and is authorized to issue up to 200,000
   shares. On October 1, 1990 and October 1, 1993 key employees were granted
   22,146 and 24,040 restricted shares of the Company's common stock under
   this plan.  Restrictions lapse and the shares vest over a three to five
   year period beginning October 1, 1990, and 1993, respectively, as certain
   performance goals are achieved.  In October 1995 and 1994, 5,770 and 5,773,
   respectively, of the restricted shares became fully vested and were awarded
   to qualifying employees.
    
   The market value of the shares awarded under this plan has been recorded as
   unearned compensation and is a separate component of common equity.  The
   unearned compensation is being charged to expense over the vesting period
   based on achievement of the performance criteria.
    
   In fiscal 1995, the Company adopted the provisions of FASB Statement of
   Financial Accounting Standards No. 123, "Accounting for Stock-Based
   Compensation."  The impact of the adoption of this standard was not
   significant to the results of operations or financial condition of the
   Company.
    
   Preferred stock-
    
   The Company is prohibited from, among other things, paying dividends on
   common stock and purchasing, redeeming or retiring common stock, if
   dividends on preferred stock are in arrears.
    
   The following table sets forth the changes in the number of shares
   outstanding for each class of the Company's preferred stock not subject to
   mandatory redemption, for the years ended September 30, 1996, 1995 and
   1994, respectively:
    
<TABLE>
         <S>                                      <C>            <C>           <C>
                                                     1996           1995           1994  
                                                     ----           ----           ----  
         $3.125 par value                           (1,372)        (1,748)       (10,735)
                                                   =======        =======        ======= 
         $100 par value                                 (3)            (1)            (9)
                                                   =======        =======        ======= 
</TABLE>
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   7.  Long-term Debt:
    
   The Company has various issues of first mortgage bonds and first mortgage
   notes outstanding with maturities from 2001 to 2010.  Under the most
   restrictive terms of the indenture securing the bonds, retained earnings of
   $46,800 are available for dividends at September 30, 1996. Dividends paid
   on common and preferred stock in fiscal 1996 were $15,500.  Sinking fund
   requirements for outstanding bonds were paid in cash.
    
   Long-term debt amounts which are due during each of the five years ending
   September 30, 1997 through 2001, are as follows:
    
                               Sinking Fund Requirements and Maturities
                               ----------------------------------------
                                             Year                 Total      
                                             ----                -------     
                                             1997                $13,968     
                                             1998                  6,144     
                                             1999                  6,136     
                                             2000                  6,183     
                                             2001                  6,343     
                                                                 -------     
                                                                 $38,774     
                                                                 =======     
    
    
   8.  Short-term Borrowings and Lines of Credit:
    
   The Company maintains a line of credit under a revolving credit agreement
   with a large regional bank.  Under this agreement the Company can borrow up
   to $20,000 at a Eurodollar, Certificate of Deposit or Base Rate of interest
   plus a variable margin.  The initial expiration date was March 30, 1996,
   with two optional one-year extensions.  The Company exercised its option to
   extend this agreement for one year at that time.  There is a .1% facility
   fee and a .075% commitment fee on the unused portion of the agreement.  At
   September 30, 1996, there were no borrowings outstanding under this
   agreement.
    
   The Company also maintains a one-year line of credit with a bank for
   $9,000.  The Company pays a 1/5 of 1% commitment fee on this line of
   credit.  The interest rate varies according to market conditions.  This
   line of credit expired on February 18, 1996 and was extended for one year
   at that time.  At September 30, 1996, there were no borrowings outstanding
   under this line of credit.
    
   In December 1994 TEN replaced a $5,000 unsecured line of credit with a bank
   with an unsecured revolving credit agreement.  Under this agreement TEN can
   borrow up to $5,000 through December 15, 1997, with a 1/5 of 1% annual
   facility fee on the line of credit.  The interest rate is based upon the
   Certificate of Deposit, Eurodollar or Cost of Funds rate plus a variable
   margin and is determined at the time of each borrowing.  At September 30,
   1996 there were no borrowings outstanding under this arrangement.
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   The Hartford Steam Company ("HSC"), a wholly-owned subsidiary of TEN,
   maintains a secured line of credit with a bank.  Under the terms of this
   agreement HSC can borrow up to $5,000, through October 1997, with a 1/5 of
   1% commitment fee on the unused portion of the available credit line.  The
   interest rate is based upon the Certificate of Deposit, Libor or money
   market rate plus a variable margin, determined at the time of each
   borrowing.  At September 30, 1996, there were no borrowings outstanding
   under this arrangement.
    
   The weighted average interest rate on short-term borrowings outstanding was 
   5.84% at September 30, 1995.  No short-term borrowings were outstanding at
   September 30, 1996.
    
    
   9.  Fair Value of Financial Instruments:
    
   The fair value amounts disclosed below have been reported to meet the
   disclosure requirements of Statement of Financial Accounting Standards No.
   107, "Disclosures About Fair Values of Financial Instruments" and are not
   necessarily indicative of the amounts that the Company could realize in a
   current market exchange.
    
   The carrying amount of cash and cash equivalents; accounts receivable;
   notes payable and commercial paper; accounts payable and accrued expenses;
   and unrecovered or refundable purchased gas costs approximates fair value.
    
   At September 30, 1996 and 1995 the fair value of the Company's long-term
   debt, including current maturities, is estimated to be $155,108 and
   $163,630, respectively.  The fair value at year-end 1996 and 1995, of
   $138,299 and $141,511 of fixed-rate long-term debt, based on the market
   value of similar instruments, is estimated at $143,008 in 1996 and $150,830
   in 1995.  The carrying amount of the variable-rate long-term debt of
   $12,100 in 1996 and $12,800 in 1995 approximates fair value.
    
   The Company has committed to support 4.87% of a letter of credit for
   Iroquois, equivalent to approximately $1,600 at September 30, 1996, which
   approximates fair value.  The letter of credit is used to satisfy
   Iroquois's cash retention requirements with respect to agreements between
   Iroquois and its lenders.
    
    
   10.  Commitments and Contingencies:
    
   Construction expenditures-
    
   Construction expenditures for the fiscal year ending September 30, 1997 are
   estimated at $25,400 for the regulated operations. 
    
   The unregulated operations are subject to compliance with Clean Air Act
   requirements.  They expect to incur approximately $2,200 of capital
   expenditures over the next two fiscal years to satisfy these requirements.
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   Gas supply-
    
   The Company is party to short-term and long-term contracts for the purchase
   of natural gas and transportation and storage services.
    
    
   FERC Order No. 636 transition costs-
    
   The Company began to be billed for transition costs associated with Federal
   Energy Regulatory Commission ("FERC") Order No. 636 from its pipeline
   suppliers in June 1993.  Through September 30, 1996 the Company has paid
   and recovered from ratepayers $12,142 of an estimated $15,000 of transition
   costs.
    
   In the opinion of management the DPUC has allowed the Company a sufficient
   number of recovery mechanisms to provide for the full recovery of all
   transition costs.  For this reason, management believes that these
   transition costs will not have a material impact on the Company's financial
   condition or results of operations.  The unpaid estimated liability of
   $2,858 at September 30, 1996 is included in Accounts Payable and Accrued
   Expenses.
    
    
   Steam supply-
    
   The unregulated operations are party to long-term contracts for the
   purchase of steam.
    
   Through fiscal 1995 one of the unregulated operations' suppliers of steam
   was a cogeneration facility located on the Company's premises and owned by
   an unrelated third party, the Hacogen partnership ("Hacogen").  This
   agreement was terminated, effective September 30, 1995, to the mutual
   satisfaction of both parties.  According to the terms of the negotiated
   settlement, HSC received consideration of $9,519, representing the payment
   of all past due amounts owed by Hacogen and certain additional amounts as a
   result of the contract termination.  The fiscal 1995 pretax, nonrecurring
   income related to this settlement was $4,124.
    
   In October 1995, HSC resumed producing more costly steam from its existing
   boilers which are located on the Company's premises and are currently
   providing adequate steam supply for customer requirements.  During fiscal
   1996, studies were undertaken to identify alternative and more competitive
   sources and methods to service steam and chilled water customers. 
   Management is currently evaluating the results of the studies.
    
    
   Letters of credit-
    
   The Company is contingently liable under a letter of credit amounting to
   $1,500 for workers' compensation claims.  As a condition of its ownership
   in the DCA, TEN is contingently liable under a letter of credit amounting
   to $2,000.  As a condition to its variable rate long-term debt, TEN holds a
   long-term letter of credit amounting to the principal outstanding:  $12,100
   at September 30, 1996 and $12,800 at September 30, 1995.
    
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   Environmental matters-
    
   In the ordinary course of business, the Company may incur costs to clean up
   environmental contaminants related to natural gas activity.  In those
   instances the Company expects that the remediation costs will be
   recoverable in rates.  In the opinion of management, any existing
   environmental matters will not be significant to the future financial
   condition or results of operations of the Company.
    
    
   Leases-
    
   The Company has entered into operating lease agreements for the use of
   computer and office equipment.  For fiscal 1996, 1995 and 1994 these lease
   payments were $1,092, $1,561 and $1,553, respectively.  Future lease
   payments are not expected to change significantly from those shown above.
    
    
   Legal proceedings-
    
   In May 1996, Iroquois reached a settlement with State of New York and
   Federal authorities regarding certain environmental allegations asserted by
   them in 1992.  The Company recognized the majority of its proportionate
   share of the $24,000 settlement in fiscal 1995 and anticipates no further
   material impact on its financial position or results of operations by
   reason of this settlement.  Iroquois is a partnership of which the Company
   is a 4.87% owner (See Note 1).
    
   In November 1995, certain Connecticut plumbers and HVAC contractors filed a
   class action suit against the Company and the State's two other LDCs,
   claiming that the LDCs engaged in unfair trade practices relating to
   customer service work.  The action alleged that the LDCs unfairly competed
   with licensed plumbers and contractors by performing customer service work
   using customer service employees who did not possess State trade licenses. 
   Previously, the LDCs have claimed that the work was performed under a
   statutory exemption enacted in 1965 and amended in 1967.  The Connecticut
   courts have upheld an administrative ruling against the LDCs' position.
    
   The plumbers and contractors are currently asserting claims for profits
   which they allege were lost during prior years.  There has not been any
   settlement demand or any formal statement of alleged damages.  As a result,
   management cannot estimate the potential exposure related to these claims. 
   The Company is vigorously defending this matter.
    
   The Company is not a party to any other litigation other than ordinary
   routine litigation incident to the operations of the Company or its
   subsidiaries.  In the opinion of management, the resolution of such
   litigation will not have a material adverse effect on the Company's
   financial condition or results of operations.
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
    
    
   11.  Segment Information:
    
   The Company operates in two segments:  gas related activities and
   unregulated activities.  Gas related activities consist primarily of
   natural gas distribution to residential, commercial and industrial
   customers.  Unregulated activities consist primarily of district heating
   and cooling services.
    
   Intersegment sales are priced in accordance with terms of existing tariffs
   and contracts.  Information about the Company's operations, by business
   segment, is presented below:
<TABLE>
    <S>                                             <C>           <C>          <C>
                                                        1996         1995         1994   
                                                     --------      --------     -------- 
    Revenues:
        Gas related activities                       $297,016      $255,680     $269,433 
        Unregulated activities                         23,628        22,306       24,298 
        Intersegment revenues                          (5,281)       (2,801)      (3,069)
                                                     --------      --------     -------- 
            Total                                    $315,363      $275,185     $290,662 
                                                     ========      ========     ======== 
    Pre-Tax Operating Income:
        Gas related activities                       $ 41,130      $ 33,309     $ 37,636 
        Unregulated activities                          3,739         5,280        6,629 
                                                     --------      --------     -------- 
            Total                                      44,869        38,589       44,265 
        Income taxes                                   14,365         9,430       13,353 
                                                     --------      --------     -------- 
            Consolidated Operating Income            $ 30,504      $ 29,159     $ 30,912 
                                                     ========      ========     ======== 
    Depreciation and Amortization:
        Gas related activities                       $ 15,399      $ 14,655     $ 13,481 
        Unregulated activities                          2,366         2,322        2,026 
                                                     --------      --------     -------- 
            Total                                    $ 17,765      $ 16,977     $ 15,507 
                                                     ========      ========     ======== 
    Property Additions:
        Gas related activities                       $ 23,894      $ 25,311     $ 25,352 
        Unregulated activities                            387         1,528        2,507 
                                                     --------      --------     -------- 
            Total                                    $ 24,281      $ 26,839     $ 27,859 
                                                     ========      ========     ======== 
    Identifiable Assets:
        Gas related activities                       $404,210      $400,064     $394,229 
        Unregulated activities                         62,769        64,975       64,325 
                                                     --------      --------     -------- 
            Consolidated Identifiable Assets
                                                     $466,979      $465,039     $458,554 
                                                     ========      ========     ======== 
</TABLE>
    
    
   12.  Proposed Holding Company:
    
   In November 1996 the Company announced its intention to reorganize under a
   holding company structure.  Under the proposed restructuring, CTG Resources
   Inc. ("CTG") would become the holding company for the regulated and 
    <PAGE>
   NOTES TO FINANCIAL STATEMENTS (Concluded)
   (In thousands of dollars, except per share amounts)
    
    
   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.  Management intends to effect the restructuring in fiscal
   1997, after receiving appropriate shareholder and DPUC approvals.
    
    
   13.  Quarterly Results (Unaudited):
    
   The following table sets forth information with respect to the consolidated
   quarterly results of operations for the fiscal years 1996 and 1995.  The
   amounts are unaudited but, in the opinion of management, present fairly the
   results of operations.
     
   The quarterly results of operations reflect the seasonal nature of the
   Company's operations.  The results of any one quarter during the year are
   not indicative of the results of future quarters or the results of the
   Company's fiscal year.
    
<TABLE>
<CAPTION>
                        Consolidated Results of Operations
                        ----------------------------------
   <S>                                <C>              <C>            <C>          <C>
                                          
   --------------------------------------------------------------------------------------------
                                      December 31,     March 31,      June 30,     September 30,
   Quarter Ended                           1995           1996           1996            1996   
   --------------------------------------------------------------------------------------------

       Operating Revenues                $ 90,462       $130,606       $ 53,954        $ 40,341 

       Operating Income                  $ 11,367       $ 17,233       $  2,407        $   (503)

       Net Income (Loss)                 $  8,174       $ 13,888       $   (562)       $ (2,505)

       Net Income (Loss) Per
           Common Share*                 $    .82       $   1.40       $   (.06)       $   (.24)


   --------------------------------------------------------------------------------------------
                                      December 31,     March 31,      June 30,     September 30,
   Quarter Ended                          1994           1995           1995            1995    
   --------------------------------------------------------------------------------------------

      Operating Revenues                 $ 76,531       $105,540       $ 50,147        $ 42,967 

      Operating Income                   $  9,377       $ 16,658       $  2,790        $    334 

      Net Income (Loss)                  $  6,084       $ 12,924       $   (625)       $ (1,364)

      Net Income (Loss) Per Common
         Share*                          $    .61       $   1.30       $   (.06)       $   (.14)
</TABLE>

   * The sum of quarterly earnings per share does not equal annual earnings
   per share as reported on the statements of income because of quarterly
   changes in weighted average shares outstanding due to issue of common stock
   during the year.
    <PAGE>
   ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
   ------------------------------------------------------------
    
    
   There have been no disagreements required to be disclosed under this item.
    
    <PAGE>
                                     PART III
    
    
    
   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   -----------------------------------------------------------
    
       The information required by this item regarding directors of the
       registrant and the disclosure of delinquent filers pursuant to Item 405
       of Regulation S-K is contained in the section entitled "Biographical
       Information" in the Company's prospectus/proxy statement for its
       February 1997 Annual Meeting, which the Company files with the
       Securities and Exchange Commission pursuant to Regulation 14A of the
       Securities Exchange Act of 1934.  This information is hereby
       incorporated by reference.  The information required by this item
       regarding executive officers of the registrant is included in Part I
       hereof.
    
    
   ITEM 11. EXECUTIVE COMPENSATION
   -------------------------------
    
       The information required by this item is contained in the sections
       entitled "Compensation of Directors","Compensation Committee Report on
       Executive Compensation", "Compensation Committee Interlocks and Insider
       Participation", "Summary Executive Compensation", "Change of Control
       Agreements", "Severance Agreement", "Long Term Incentive Plan",
       "Retirement Plans" and "Corporate Performance Graph" in the Company's
       prospectus/proxy statement for its February 1997 Annual Meeting, which
       the Company files with the Securities and Exchange Commission pursuant
       to Regulation 14A.  This information is hereby incorporated by
       reference.
    
    
   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   -----------------------------------------------------------------------
    
       The information required by this item is contained in the section
       entitled "Ownership of Company Stock" in the Company's propectus/proxy
       statement for its February 1997 Annual Meeting, which the Company files
       with the Securities and Exchange Commission pursuant to Regulation 14A. 
       This information is hereby incorporated by reference.
    
    
   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
   -------------------------------------------------------
    
       The information required by this item is contained in the section
       entitled "Certain Relationships and Related Transactions" in the
       Company's propectus/proxy statement for its February 1997 Annual
       Meeting, which the Company files with the Securities and Exchange
       Commission pursuant to Regulation 14A.  This information is hereby
       incorporated by reference.
    
    
    <PAGE>
                                      PART IV
    
   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
   -------------------------------------------------------------------------
    
   (a)  1. Financial Statements:
           --------------------
    
           The consolidated balance sheets, statements of income, statements of
           cash flows, statements of capitalization and statements of common
           stock equity, together with the notes to the financial statements
           and report thereon of Arthur Andersen LLP dated November 4, 1996,
           are included in Part II, Item 8 herein.
    
        2. Financial Statement Schedules:
           -----------------------------
    
           The following financial statement schedules included herein under
           Item 14(d) are filed as part of this report.  Schedules I, III, IV,
           and V are not submitted because they are not applicable or the
           information required to be included therein is contained in the
           financial statements and footnotes.
    
              II  Valuation and Qualifying Accounts and Reserves for the fiscal
                  years ended September 30, 1996, 1995 and 1994
    
           Individual financial statements for the Company have been omitted as
           not being required since -
    
              1.  Consolidated statements of the Company and one or more of its
                  subsidiaries are filed; and
    
              2.  The Company's total assets, exclusive of investments in and
                  advances to its consolidated subsidiaries, constitute 75
                  percent or more of the total assets shown by the most recent
                  year-end consolidated balance sheet filed and the Company's
                  total gross revenues, exclusive of interest and dividends
                  received, or its equity in the income of the consolidated
                  subsidiaries, for the most recent period for which an income
                  statement is filed, constitute 75 percent or more of the
                  total gross revenues shown by the consolidated income
                  statement filed.
    
        3. Exhibits
           --------
    
      Exhibit
      Number
   ------------
    
    3   Articles of Incorporation and By-Laws
    
             (i)  Charter of the Company and all Amendments thereto
    
            (ii)  By-Laws of the Company, as amended, filed as Exhibit No.
                  3(ii) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
    4   Instruments Defining Rights of Security Holders, Including Indentures
    
             (i)  Indenture of Mortgage and Deed of Trust between The Hartford
                  Gas Company and The First National Bank of Hartford, Trustee
                  dated February 1, 1947, filed as Exhibit No. 2.2 to the
                  Company's Registration Statement on Form S-7 filed with the
                  Commission on December 8, 1970 (Commission File No. 2-38993)
    
            (ii)  In addition to the Indenture of Mortgage and Deed of Trust
                  referred to in 4(i) above, there have been sixteen
                  supplemental indentures thereto, all of which have been filed
                  with the Commission as follows:
    
                  (a)  Supplemental indentures 1-9 filed as Exhibit No. 2.2 to
                       the Company's Registration Statement on Form S-7 filed
                       with the Commission on December 8, 1970 (Commission File
                       No. 2-38993)
    
                  (b)  Tenth Supplemental Indenture filed as Exhibit No. 2.3 to
                       the Company's Registration Statement on Form S-7 filed
                       with the Commission on March 3, 1972 (Commission File
                       No. 2-43286)
    
                  (c)  Eleventh Supplemental Indenture filed as Exhibit No. V
                       to the Company's Annual Report on Form 10-K for the
                       fiscal year ended December 31, 1974, filed with the
                       Commission in March, 1975 (Commission File No. 1-7727)
    
                  (d)  Twelfth Supplemental Indenture filed as Exhibit No. 4(h)
                       to the Company's Registration Statement on Form S-7
                       filed with the Commission on December 23, 1981
                       (Commission File No. 2-75457)
    
                  (e)  Thirteenth Supplemental Indenture filed as Exhibit No. 4
                       to the Company's Quarterly Report on Form 10-Q for the
                       quarter ended June 30, 1982, filed with the Commission
                       in August, 1982 (Commission File No. 1-7727)
    
                  (f)  Fourteenth Supplemental Indenture filed as Exhibit No.
                       4(iii) to the Company's Current Report on Form 8-K,
                       dated August 28, 1986, filed with the Commission in
                       September, 1986 (Commission File No. 1-7727)
    
                  (g)  Fifteenth Supplemental Indenture filed as Exhibit No.
                       4(iii) to the Company's Current Report on Form 8-K,
                       dated December 8, 1987, filed with the Commission in
                       December, 1987 (Commission File No. 1-7727)
    
                  (h)  Sixteenth Supplemental Indenture filed as Exhibit No.
                       4(ii)(h) to the Company's Quarterly Report on Form 10-Q
                       for the quarter ended September 30, 1989, filed with the
                       Commission in November, 1989 (Commission File No. 1-
                       7727)
    
    9   Voting Trust Agreement
           Not applicable
    
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10   Material Contracts
    
             (i)  Underground storage service agreement (rate schedule SS-1)
                  between the Company and PYEC, filed as Exhibit No. 10(vii) to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1981, filed with the Commission on March
                  30, 1982 (Commission File No. 1-7727) 
     
            (ii)  Agreement dated November 1, 1980 between the Company and
                  Robert H. Willis, filed as Exhibit No. 10(j) to the Company's
                  Registration Statement on Form S-7 filed with the Commission
                  on December 23, 1981 (Commission File No. 2-75457)
    
           (iii)  Loan Agreement and Amendments thereto, between The Hartford
                  Steam Company and Connecticut National Bank, filed as Exhibit
                  No. 10(xxii) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1986, filed with the
                  Commission on March 31, 1987 (Commission File No. 1-7727)
    
            (iv)  Canadian gas transportation contract (rate schedule CGT-NE)
                  between the Company and Tennessee, dated December 1, 1987,
                  filed as Exhibit No. 10(xxiii) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1987,
                  filed with the Commission on March 29, 1988 (Commission File
                  No. 1-7727)
    
             (v)  Gas purchase contract between the Company and TransCanada
                  Pipelines Limited, dated September 14, 1987, filed as Exhibit
                  No. 10(xxiv) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1987, filed with the
                  Commission on March 29, 1988 (Commission File No. 1-7727)
    
            (vi)  Gas sales agreement between the Company and Boundary Gas,
                  Inc., dated September 14, 1987, filed as Exhibit No. 10(xxv)
                  to the Company's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1987, filed with the Commission on
                  March 29, 1988 (Commission File No. 1-7727)
    
           (vii)  Steam Supply Agreement between The Hartford Steam Company and
                  Independent Energy Operations, Inc., dated December 3, 1987,
                  filed as Exhibit No. 10(xxv) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1989,
                  filed with the Commission on March 28, 1990 (Commission File
                  No. 1-7727)
    
          (viii)  Partial Release of Mortgage agreement, dated March 1, 1989,
                  to the Open-End Mortgage and Security Agreement between The
                  Hartford Steam Company and The Connecticut National Bank,
                  dated March 1, 1983 (filed as Exhibit No. 10(xxii) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1986, filed with the Commission on March
                  31, 1987 (Commission File No. 1-7727)), filed as Exhibit No.
                  10(xxvi) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended December 31, 1989, filed with the
                  Commission on March 28, 1990 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10      (ix) Fourth Amendment, dated August 15, 1989, to the Open End
                Mortgage and Security Agreement between The Hartford Steam
                Company and The Connecticut National Bank, dated March 1, 1983
                (filed as Exhibit No. 10(xxii) to the Company's Annual Report
                on Form 10-K for the fiscal year ended December 31, 1986, filed
                with the Commission on March 31, 1987 (Commission File No. 1-
                7727)), filed as Exhibit No. 10(xxvii) to the Company's Annual
                Report on Form 10-K for the fiscal year ended December 31,
                1989, filed with the Commission on March 28, 1990 (Commission
                File No. 1-7727)
    
             (x)  Open-End Mortgage and Security Agreement between Energy
                  Networks, Inc. and The Connecticut National Bank, dated March
                  1, 1989, filed as Exhibit No. 10(xxviii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended December
                  31, 1989, filed with the Commission on March 28, 1990
                  (Commission File No. 1-7727)
    
            (xi)  Collateral Assignment of Lease and Rentals, dated March 1,
                  1989, to the Open-End Mortgage and Security Agreement between
                  Energy Networks, Inc. and The Connecticut National Bank,
                  dated March 1, 1989 (filed as Exhibit 10(xxviii) herein),
                  filed as Exhibit No. 10(xxix) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1989,
                  filed with the Commission on March 28, 1990 (Commission File
                  No. 1-7727)
    
           (xii)  Amended and Restated Loan Agreement between The Hartford
                  Steam Company and The Connecticut National Bank, dated March
                  31, 1983, filed as Exhibit No. 10(xxx) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended December
                  31, 1989, filed with the Commission on March 28, 1990
                  (Commission File No. 1-7727)
    
          (xiii)  Precedent Agreement to First Amendment, dated September 14,
                  1988, to the Gas Sales Agreement between the Company and
                  Boundary Gas, Inc., dated September 14, 1987 (filed as
                  Exhibit No. 10(xxv) to the Company's Annual Report on Form
                  10-K for the fiscal year ended December 31, 1987, filed with
                  the Commission on March 29, 1988 (Commission File No. 1-
                  7727)), filed as Exhibit No. 10(xxxi) to the Company's Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1989, filed with the Commission March 28, 1990 (Commission
                  File No. 1-7727)
    
           (xiv)  First Amendment, dated January 1, 1990, to the Gas Sales
                  Agreement between the Company and Boundary Gas, Inc., dated
                  September 14, 1987 (filed as Exhibit No. 10(xxv) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1987, filed with the Commission on March
                  29, 1988 (Commission File No. 1-7727)), filed as Exhibit
                  10(xxxii) to the Company's Annual Report on Form 10-K for the 
                  fiscal year ended December 31, 1989, filed with the
                  Commission on March 28, 1990 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (xv)  Sixth Amendment, dated September 30, 1991, to the Loan
                  Agreement between The Hartford Steam Company and The
                  Connecticut National Bank, dated March 1, 1983 (filed as
                  Exhibit No. 10(xxii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended December 31, 1986, filed with
                  the Commission on March 31, 1987 (Commission File No. 1-
                  7727)), filed as Exhibit No. 10(xxxviii) to the Company's
                  Transition Report on Form 10-K for the period October 1, 1990
                  to September 30, 1991, filed with the Commission on December
                  23, 1991, (Commission File No. 1-7727)
    
           (xvi)  Medium Term Notes, Series A, Placement Agency Agreement among
                  Connecticut Natural Gas Corporation, PaineWebber Incorporated
                  and Smith Barney, Harris Upham & Co. Incorporated, dated
                  November 1, 1991, filed as Exhibit No. 10(xxxix) to the
                  Company's Transition Report on Form 10-K for the period
                  October 1, 1990 to September 30, 1991, filed with the
                  Commission on December 23, 1991, (Commission File No. 1-7727)
    
          (xvii)  Issuing and Paying Agency Agreement between The Connecticut
                  National Bank and Connecticut Natural Gas Corporation, for
                  the Medium Term Notes, Series A, dated November 1, 1991,
                  filed as Exhibit No. 10(xl) to the Company's Transition
                  Report on Form 10-K for the period October 1, 1990 to
                  September 30, 1991, filed with the Commission on December 23,
                  1991, (Commission File No. 1-7727)
    
         (xviii)  Connecticut Natural Gas Corporation Executive Restricted
                  Stock Plan, filed as Exhibit A to the Company's definitive
                  proxy statement dated March 26, 1991, filed with the
                  Commission on March 26, 1991 (Commission File No. 1-7727)
    
           (xix)  Gas Transportation Contract for Firm Reserved Service, dated
                  February 7, 1991, between the Company and the Iroquois Gas
                  Transmission System, L.P., filed as Exhibit No. 10(xxxvii) to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1992, filed with the Commission on
                  December 23, 1992, (Commission File No. 1-7727)
    
            (xx)  Gas Sales Agreement No. 1, dated February 7, 1991, between
                  the Company and Alberta Northeast Gas Limited, filed as
                  Exhibit No. 10(xxxviii) to the Company's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1992, filed
                  with the Commission on December 23, 1992, (Commission File
                  No. 1-7727)
    
           (xxi)  Gas Sales Agreement No. 2, dated February 7, 1991, between
                  the Company and Alberta Northeast Gas Limited, filed as
                  Exhibit No. 10(xxxix) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992, filed with
                  the Commission on December 23, 1992, (Commission File No. 1-
                  7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10     (xxii)  Gas Sales Agreement (ProGas), dated February 7, 1991, between
                  the Company and Alberta Northeast Gas Limited, filed as
                  Exhibit No. 10(xl) to the Company's Annual Report on Form 10-
                  K for the fiscal year ended September 30, 1992, filed with
                  the Commission on December 23, 1992, (Commission File No. 1-
                  7727)
    
         (xxiii)  Gas Sales Agreement (ATCOR), dated February 7, 1991, between
                  the Company and Alberta Northeast Limited, filed as Exhibit
                  No. 10(xli) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1992, filed with the
                  Commission on December 23, 1992, (Commission File No. 1-7727)
    
          (xxiv)  Gas Sales Agreement (AEC), dated February 7, 1991, between
                  the Company and Alberta Northeast Gas Limited, filed as
                  Exhibit No. 10(xlii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992, filed with
                  the Commission on December 23, 1992, (Commission File No. 1-
                  7727)
    
           (xxv)  Gas Transportation Contract for Firm Reserved Service, dated
                  October 20, 1992, between the Company and the Iroquois Gas
                  Transmission System, L.P., filed as Exhibit No. 10(xlvii) to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1992, filed with the Commission on
                  December 23, 1992, (Commission File No. 1-7727)
    
          (xxvi)  Revolving Credit Agreement, dated March 30, 1993, between the
                  Company and The First National Bank of Boston, filed as
                  Exhibit No. 10(xlviii) to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 1993, filed with
                  the Commission on May 3, 1993 (Commission File No. 1-7727)
    
         (xxvii)  Secured Note Purchase Agreement, dated July 15, 1993, between
                  the CNG Realty Corp. and the Aid Association for Lutherans,
                  filed as Exhibit No. 10(xlix) to the Company's Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 1993,
                  filed with the Commission on August 3, 1993 (Commission File
                  No. 1-7727)
    
        (xxviii)  Capital Contribution Support Agreement, dated April 15, 1993,
                  among Connecticut Natural Gas Corporation, ENI Transmission
                  Company and Bank of Montreal, filed as Exhibit No. 10(l) to
                  the Company's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1993, filed with the Commission on August 3,
                  1993 (Commission File No. 1-7727)
    
          (xxix)  Steam and Chilled Water Supply Agreement, dated May 28, 1986,
                  between Capitol District Energy Center Cogeneration
                  Associates and Energy Networks, Incorporated, filed as
                  Exhibit No. 10(xxxvii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1993, filed with
                  the Commission December 28, 1993 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10      (xxx)  Service Agreement #89102 (Rate Schedule AFT-1), dated June 1,
                  1993, between the Company and Algonquin Gas Transmission
                  Company, filed as Exhibit No. 10(xxxviii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
          (xxxi)  Service Agreement #93205 (Rate Schedule AFT-1), dated June 1,
                  1993, between the Company and Algonquin Gas Transmission
                  Company, filed as Exhibit No. 10(xl) to the Company's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1993, filed with the Commission December 28, 1993 (Commission
                  File No. 1-7727)
    
         (xxxii)  Service Agreement #93404 (Rate Schedule AFT-1), dated June 1,
                  1993, between the Company and Algonquin Gas Transmission
                  Company, filed as Exhibit No. 10(xlii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
        (xxxiii)  Service Agreement #.6426, dated June 1, 1993, between the
                  Company and Transcontinental Gas Pipe Line Corporation, filed
                  as Exhibit No. 10(xlv) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1993, filed with
                  the Commission December 28, 1993 (Commission File No. 1-7727)
    
         (xxxiv)  Service Agreement #800380 (Rate Schedule CDS), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(xlvi) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
          (xxxv)  Service Agreement #800341 (Rate Schedule FT-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(xlvii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
         (xxxvi)  Service Agreement #800294 (Rate Schedule FT-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(xlviii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
        (xxxvii)  Service Agreement #800295 (Rate Schedule FT-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(xlix) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10  (xxxviii)  Service Agreement #400148 (Rate Schedule SS-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(l) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
         (xxxix)  Service Agreement #400149 (Rate Schedule SS-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(li) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
            (xl)  Service Agreement #400150 (Rate Schedule SS-1), dated June 1,
                  1993, between the Company and Texas Eastern Transmission
                  Corporation, filed as Exhibit No. 10(lii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
           (xli)  Service Agreement (Rate Schedule FTNN), dated October 1,
                  1993, between the Company and CNG Transmission Corporation,
                  filed as Exhibit No. 10(liii) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended September 30, 1993,
                  filed with the Commission December 28, 1993 (Commission File
                  No. 1-7727)
    
          (xlii)  Service Agreement (Rate Schedule GSS), dated November 1,
                  1993, between the Company and CNG Transmission Corporation,
                  filed as Exhibit No. 10(liv) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended September 30, 1993,
                  filed with the Commission December 28, 1993 (Commission File
                  No. 1-7727)
    
         (xliii)  Amended and Restated CNG Officers' Retirement Plan, dated
                  June 28, 1994, filed as Exhibit No. 10(liii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1994, filed with the Commission December 27,
                  1994 (Commission File No. 1-7727)
    
          (xliv)  The Connecticut Natural Gas Corporation Officers' Retirement
                  Plan Trust Agreement, dated January 9, 1989, filed as Exhibit
                  No. 10(liv) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    
           (xlv)  First Amendment to the Connecticut Natural Gas Corporation
                  Officers' Retirement Plan and Deferred Compensation Plan
                  Trust Agreement, dated August 5, 1993, filed as Exhibit No.
                  10(lv) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10     (xlvi)  The Connecticut Natural Gas Corporation Deferred Compensation
                  Plan, as amended, dated January 1, 1993, filed as Exhibit No.
                  10(lvi) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    
         (xlvii)  First Amendment to the Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated  December 2, 1993, filed as
                  Exhibit No. 10(lvii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
        (xlviii)  Second Amendment to the Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated June 28, 1994, filed as
                  Exhibit No. 10(lviii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
          (xlix)  Agreement and Declaration of Trust, Connecticut Natural Gas
                  Corporation Employee Benefit Trust, dated December 28, 1987,
                  filed as Exhibit No. 10(lix) to the Company's Annual Report
                  on Form 10-K for the fiscal year ended September 30, 1994,
                  filed with the Commission December 27, 1994 (Commission File
                  No. 1-7727)
    
             (l)  First Amendment to Agreement and Declaration of Trust,
                  Connecticut Natural Gas Corporation Employee Benefit Trust,
                  Dated December 2, 1993, filed as Exhibit No. 10(lx) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
            (li)  Agreement and Declaration of Trust, Connecticut Natural Gas
                  Corporation Union Employee Benefit Trust, dated December 2,
                  1993, filed as Exhibit No. 10(lxi) to the Company's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1994, filed with the Commission December 27, 1994 (Commission
                  File No. 1-7727)
    
           (lii)  CNG Annual Incentive Plan, 1994, filed as Exhibit No.
                  10(lxii) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    
          (liii)  Settlement Agreement and Release of All Claims by and between
                  Connecticut Natural Gas Corporation and Donato P. Lauria,
                  dated November 29, 1993, filed as Exhibit No. 10(lxiii) to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
           (liv)  Letter of Credit and Reimbursement Agreement by and between
                  Energy Networks, Inc. and The Bank of Nova Scotia, dated
                  October 14, 1994, filed as Exhibit No. 10(lxiv) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (lv)  Second Amended and Restated Loan Agreement by and between The
                  Hartford Steam Company and Shawmut Bank Connecticut, N.A.,
                  dated October 28, 1994, filed as Exhibit No. 10(lxv) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
           (lvi)  Medium Term Notes, Series B, Placement Agency Agreement among
                  Connecticut Natural Gas Corporation, Smith Barney Inc., and
                  A.G. Edwards & Sons, Inc., dated June 14, 1994, filed as
                  Exhibit No. 10(lxvi) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
          (lvii)  Issuing and Paying Agency Agreement between Shawmut Bank
                  Connecticut, National Association, and Connecticut Natural
                  Gas Corporation, for Medium Term Notes, Series B, dated June
                  14, 1994, filed as Exhibit No. 10(lxvii) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1994, filed with the Commission December 27,
                  1994 (Commission File No. 1-7727)
    
         (lviii)  Service Agreement (EFT Service), dated July 31, 1993, between
                  the Company and National Fuel Gas Supply Corporation, filed
                  as Exhibit No. 10(lxviii) to the Company's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1994, filed
                  with the Commission December 27, 1994 (Commission File No. 1-
                  7727)
    
           (lix)  Gas Storage Contract, dated February 16, 1990, between the
                  Company and ENDEVCO Industrial Gas Sales Company, filed as
                  Exhibit No. 10(lxix) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
            (lx)  Commercial Revolving Credit Agreement by and between Fleet
                  Bank, National Association, and Energy Networks, Inc., dated
                  December 21, 1994, filed as Exhibit No. 10(lxx) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  December 31, 1994, filed with the Commission January 31, 1995
                  (Commission File No. 1-7727)
    
           (lxi)  Service Agreement #86006 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Company and Algonquin Gas
                  Transmission Company, filed as Exhibit No. 10(lxxi) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
          (lxii)  Service Agreement #93005 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Company and Algonquin Gas
                  Transmission Company, filed as Exhibit No. 10(lxxii) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10    (lxiii)  Service Agreement #9B103 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Company and Algonquin Gas
                  Transmission Company, filed as Exhibit No. 10(lxxiii) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
          (lxiv)  Service Agreement #9W005 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Company and Algonquin Gas
                  Transmission Company, filed as Exhibit No. 10(lxxiv) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
           (lxv)  KBC Energy Services Partnership Agreement, dated June 19,
                  1995, By and Among Bay State Energy Enterprises, Inc., ENI
                  Gas Services, Inc., and Koch Energy Alliance Company, filed
                  as Exhibit No. 10(lxxv) to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1995, filed with the
                  Commission August 2, 1995 (Commission File No. 1-7727)
    
          (lxvi)  Gas Storage Agreement No. 1626 (Rate Schedule FS), dated
                  September 1, 1993, by and between the Company and Tennessee
                  Gas Pipeline Company, filed as Exhibit No. 10(lxix) to the
                  Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
         (lxvii)  Gas Transportation Agreement No. 2498 (Rate Schedule FT-A),
                  dated September 1, 1993, by and between the Company and
                  Tennessee Gas Pipeline Company, filed as Exhibit No. 10(lxx)
                  to the Company's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1995, filed with the Commission
                  December 18, 1995 (Commission File No. 1-7727)
    
        (lxviii)  Gas Transportation Agreement No. 3900 (Rate Schedule FT-A),
                  dated October 1, 1993, by and between the Company and
                  Tennessee Gas Pipeline Company, filed as Exhibit No. 10(lxxi)
                  to the Company's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1995, filed with the Commission
                  December 18, 1995 (Commission File No. 1-7727)
    
          (lxix)  Gas Transportation Agreement No. 3901 (Rate Schedule FT-A),
                  dated October 1, 1993, by and between the Company and
                  Tennessee Gas Pipeline Company, filed as Exhibit No.
                  10(lxxii) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
           (lxx)  Gas Transportation Agreement No. 2075 (Rate Schedule FT-A),
                  dated September 1, 1993, by and between the Company and
                  Tennessee Gas Pipeline Company, filed as Exhibit No.
                  10(lxxiii) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10     (lxxi)  Second Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated June 27, 1995, filed as Exhibit
                  No. 10(lxxvi) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
         (lxxii)  Second Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated January 24, 1995, filed as
                  Exhibit No. 10(lxxvii) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1995, filed with
                  the Commission December 18, 1995 (Commission File No. 1-7727)
    
        (lxxiii)  Third Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated June 27, 1995, filed as Exhibit
                  No. 10(lxxviii) to the Company's Annual Report on Form 10-K
                  for the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
         (lxxiv)  Amendment to Connecticut Natural Gas Corporation Officers'
                  Retirement Plan, dated June 27, 1995, filed as Exhibit No.
                  10(lxxix) to the Company's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
          (lxxv)  Third Amendment to Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated June 27, 1995, filed as
                  Exhibit No. 10(lxxx) to the Company's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1995, filed with
                  the Commission December 18, 1995 (Commission File No. 1-7727)
    
         (lxxvi)  Third Amendment to The Connecticut Natural Gas Corporation
                  Officers' Retirement Plan and Deferred Compensation Plan
                  Trust Agreement, dated September 12, 1995, filed as Exhibit
                  No. 10(lxxxi) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
        (lxxvii)  Second Amendment to Restricted Stock Agreement (Under the
                  Connecticut Natural Gas Corporation Executive Restricted
                  Stock plan), dated June 27, 1995, filed as Exhibit No.
                  10(lxxxii) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    
        (lxxviii) Third Amendment to Restricted Stock Agreement (Under the
                  Connecticut Natural Gas Corporation Executive Restricted
                  Stock plan), dated June 27, 1995, filed as Exhibit No.
                  10(lxxxiii) to the Company's Annual Report on Form 10-K for
                  the fiscal year ended September 30, 1995, filed with the
                  Commission December 18, 1995 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10    (lxxix)  Amended and Restated CNG Nonemployee Directors' Fee Plan,
                  dated September 29, 1995, filed as Exhibit No. 10(lxxxiv) to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
          (lxxx)  CNG Nonemployee Directors' Fee Plan Trust Agreement, by and
                  between the Company and Fleet Bank, N.A., dated September 28,
                  1995, filed as Exhibit No. 10(lxxxv) to the Company's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1995, filed with the Commission December 18, 1995 (Commission
                  File No. 1-7727)
    
         (lxxxi)  HSC Termination Agreement, dated August 1, 1995, among The
                  Hartford Steam Company, Connecticut Natural Gas Corporation,
                  Energy Networks, Inc., and Hartford Cogeneration Limited
                  Partnership, filed as Exhibit No. 10(lxxxvi) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
        (lxxxii)  Irrevocable Standby Letter of Credit by and between Energy
                  Networks, Inc. and The Bank of Nova Scotia, dated March 20,
                  1996, filed as Exhibit No. 10(lxxxvii) to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1996, filed with the Commission May 1, 1996 (Commission File
                  No. 1-7727)
    
       (lxxxiii)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 86) dated September 1, 1993, between the Company
                  and Tennessee Gas Pipeline Company, filed as Exhibit No.
                  10(lxxxviii) to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)

        (lxxxiv)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 1625) dated September 1, 1993, between the
                  Company and Tennessee Gas Pipeline Company, filed as Exhibit
                  No. 10(lxxxix) to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
         (lxxxv)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 2655) dated September 1, 1993, between the
                  Company and Tennessee Gas Pipeline Company, filed as Exhibit
                  No. 10(xc) to the Company's Quarterly Report on Form 10-Q for
                  the quarter ended June 30, 1996, filed with the Commission
                  July 29, 1996 (Commission File No. 1-7727)
    
        (lxxxvi)  Gas Storage Contract (Rate Schedule FS, Service Package No.
                  1626) dated December 1, 1994, between the Company and
                  Tennessee Gas Pipeline Company, filed as Exhibit No.
                  10(xciii) to the Company's Quarterly Report on Form 10-Q for
                  the quarter ended June 30, 1996, filed with the Commission
                  July 29, 1996 (Commission File No. 1-7727)
    <PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10  (lxxxvii)  Amendment No.1-A to Gas Storage Contract (Rate Schedule FS,
                  Service Package No. 1626) dated July 1, 1995 between the
                  Company and Tennessee Gas Pipeline Company, filed as Exhibit
                  No. 10(xciv) to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
      (lxxxviii)  Service Agreement (#N01719, FST Service) dated March 28, 1996
                  between the Company and National Fuel Gas Supply Corporation,
                  filed as Exhibit No. 10(xcv) to the Company's Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 1996,
                  filed with the Commission July 29, 1996 (Commission File No.
                  1-7727)
    
        (lxxxix)  Amendment No. 1 to Service Agreement (#N01719, FST Service)
                  dated April 1, 1996, between the Company and National Fuel
                  Gas Supply Corporation, filed as Exhibit No. 10(xcvi) to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1996, filed with the Commission July 29, 1996
                  (Commission File No. 1-7727)
    
            (xc)  Service Agreement (#O01718, FSS Service) dated March 28, 1996
                  between the Company and National Fuel Gas Supply Corporation,
                  filed as Exhibit No. 10(xcvii) to the Company's Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 1996,
                  filed with the Commission July 29, 1996 (Commission File No.
                  1-7727)
    
           (xci)  Amendment No. 1 to Service Agreement (#O01718, FSS Service)
                  dated April 1, 1996, between the Company and National Fuel
                  Gas Supply Corporation, filed as Exhibit No. 10(xcviii) to
                  the Company's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1996, filed with the Commission July 29, 1996
                  (Commission File No. 1-7727)
    
          (xcii)  First Amendment to Agreement and Declaration of Trust,
                  Connecticut Natural Gas Corporation Union Employee Benefit
                  Trust, dated           , 1995, between the Company and Fleet
                  Bank, N.A.

         (xciii)  CNG Nonemployee Directors' Fee Plan, dated October 1, 1996

          (xciv)  First Amendment to CNG Nonemployee Directors' Fee Plan Trust
                  Agreement, dated           , 1996, between the Company and
                  Putnam Fiduciary Trust Company

           (xcv)  Second Amendment to CNG Nonemployee Directors' Fee Plan Trust
                  Agreement, dated            , 1996, between the Company and
                  Putnam Fiduciary Trust Company

          (xcvi)  Third Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated            , 1995<PAGE>
   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10    (xcvii)  Fourth Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated            , 1995

        (xcviii)  Fifth Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated            , 1996

          (xcix)  Fourth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated            , 1995

             (c)  Fifth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated            , 1995

            (ci)  Sixth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated            , 1996

           (cii)  Settlement Agreement and Release of All Claims between
                  Connecticut Natural Gas Corporation and Harry Kraiza, Jr.,
                  dated September 25, 1996

          (ciii)  Service Agreement (#93305, Rate Schedule AFT-1), dated June
                  1, 1993, between the Company and Algonquin Gas Transmission
                  Company

           (civ)  Service Agreement (#400507, Rate Schedule FSS-1), dated       
                         , 19--, between the Company and Texas Eastern
                  Transmission Corporation

            (cv)  Service Agreement (#412008, Rate Schedule SS-1), dated        
                        , 19--, between the Company and Texas Eastern
                  Transmission Corporation

           (cvi)  Service Agreement (#800423, Rate Schedule CDS), dated         
                       , 19--, between the Company and Texas Eastern
                  Transmission Corporation

          (cvii)  Service Agreement (#800424, Rate Schedule CDS), dated         
                       , 19--, between the Company and Texas Eastern
                  Transmission Corporation
    
   11   Computation of Consolidated Primary and Fully Diluted Earnings Per
        Share
    
   12   Computation of Ratios
           Not applicable
    
   13   Annual Report to Stockholders for the Fiscal Year Ended September 30,
        1996
           Not applicable
    
   16   Letter Regarding Change in Certifying Accountant
           Not applicable
    
   18   Letter Regarding Change in Accounting Principles
           Not applicable
    <PAGE>
   (a)  3. Exhibits (concluded)
           --------
    
      Exhibit
      Number
   ------------
    
   21   Subsidiaries of the Registrant
    
   22   Published Report Regarding Matters Submitted to Vote of Security
        Holders
           None
    
   23   Consent of Independent Public Accountants
    
   24   Power of Attorney
    
   27   Financial Data Schedule
    
   28   Information from Reports Furnished to State Insurance Regulatory
        Authorities
           Not applicable
    
   99   Additional Exhibits
         
             (i)  Exhibit Index
    
            (ii)  Information required by Form 11-K with respect to the
                  Connecticut Natural Gas Corporation Employee Savings Plan for
                  the fiscal year ending December 31, 1995
    
           (iii)  Information required by Form 11-K with respect to the
                  Connecticut Natural Gas Corporation Union Employee Savings
                  Plan for the fiscal year ending December 31, 1995, filed as
                  Exhibit 99(iii) to the Company's Annual Report on Form 10-K
                  for the fiscal year ended September 30, 1995, filed with the
                  Commission on December 18, 1995, as amended by Form 10-K
                  Amendment No. 1, filed with the Commission on June 28, 1996
                  (Commission File No. 1-7727)
    
    
   Exhibits 3(ii), 4(i), 4(ii)(a), 4(ii)(b), 4(ii)(c), 4(ii)(d), 4(ii)(e),
   4(ii)(f), 4(ii)(g), 4(ii)(h), 10(i), 10(ii), 10(iii), 10(iv), 10(v),
   10(vi), 10(vii), 10(viii), 10(ix), 10(x), 10(xi), 10(xii), 10(xiii),
   10(xiv), 10(xv), 10(xvi), 10(xvii), 10(xviii), 10(xix), 10(xx), 10(xxi),
   10(xxii), 10(xxiii), 10(xxiv), 10(xxv), 10(xxvi), 10(xxvii), 10(xxviii),
   10(xxix), 10(xxx), 10(xxxi), 10(xxxii), 10(xxxiii), 10(xxxiv), 10(xxxv),
   10(xxxvi), 10(xxxvii), 10(xxxviii), 10(xxxix), 10(xl), 10(xli), 10(xlii),
   10(xliii), 10(xliv), 10(xlv), 10(xlvi), 10(xlvii), 10(xlviii), 10(xlix),
   10(l), 10(li), 10(lii), 10(liii), 10(liv), 10(lv), 10(lvi), 10(lvii),
   10(lviii), 10(lix), 10(lx), 10(lxi), 10(lxii), 10(lxiii), 10(lxiv),
   10(lxv), 10(lxvi), 10(lxvii), 10(lxviii), 10(lxix), 10(lxx), 10(lxxi),
   10(lxxii), 10(lxxiii), 10(lxxiv), 10(lxxv), 10(lxxvi), 10(lxxvii),
   10(lxxviii), 10(lxxix), 10(lxxx), 10(lxxxi), 10(lxxxii), 10(lxxxiii),
   10(lxxxiv), 10(lxxxv), 10(lxxxvi), 10(lxxxvii), 10(lxxxviii), 10(lxxxix),
   10(xc), 10(xci) and 99(iii) listed above which have been filed with the
   Securities and Exchange Commission pursuant to the Securities Act of 1933
   and the Securities Exchange Act of 1934, and which were designated as noted
   above and have not been amended, are hereby incorporated by reference.  All
   other exhibits referred to above are filed herewith.
    
    <PAGE>
   (b)  Reports on Form 8-K
        -------------------
    
        There were no current reports filed on Form 8-K during the last quarter
        of fiscal 1996.
    
    <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.
    
     
                                            CONNECTICUT NATURAL GAS CORPORATION
                                            -----------------------------------
                                                        (Registrant)           
                                                                               
                                                S/ Victor H. Frauenhofer       
                                           ------------------------------------
                                                  (Victor H. Frauenhofer)      
                                           Chairman and Chief Executive Officer
                                                                               
                                                                               
         Pursuant to the requirements of the Securities Exchange Act of 1934,
   this report has been signed below by the following persons on behalf of the
   Registrant and in the capacities and on the dates indicated.
    
<TABLE>
    <S>                                   <C>                       <C>    

     S/ Victor H. Frauenhofer             Chairman, Chief Executive December 19, 1996
    -------------------------------       Officer and Director
       (Victor H. Frauenhofer)


     S/ James P. Bolduc                   Executive Vice President   December 19, 1996
    -------------------------------       and Chief Financial
       (James P. Bolduc)                  Officer


                                           
    S/ Andrew H. Johnson                  Treasurer and Chief        December 19, 1996
    -------------------------------       Accounting Officer
      (Andrew H. Johnson)

     
                                                                     
     S/ R. L. Babcock                                                December 19, 1996
    -------------------------------
       (R. L. Babcock)
     as Attorney-in-fact for:

            Bessye W. Bennett, Esq.                Director
            James F. English, Jr.                  Director
            Herman J. Fonteyne                     Director
            Beverly L. Hamilton                    Director
            Harvey S. Levenson                     Director
            Denis F. Mullane                       Director
            Richard J. Shima                       Director
            Laurence A. Tanner                     Director
            DeRoy C. Thomas                        Director
            Michael W. Tomasso                     Director
</TABLE>
    
    <PAGE>
                        CONNECTICUT NATURAL GAS CORPORATION
                            Annual Report on Form 10-K
                                  Schedule Index

                       Fiscal Year Ended September 30, 1996

      Item                                   Description
   ----------                                -----------
      
     II                 Financial Statement Schedule II; Valuation and
                        Qualifying Accounts and Reserves for the fiscal years
                        ended September 30, 1996, 1995 and 1994
    
    <PAGE>
<TABLE>
<CAPTION>
   (d) Financial Statement Schedules
       -----------------------------                                                   Page 1 of 1
                         CONNECTICUT NATURAL GAS CORPORATION AND SUBSIDIARIES
                          ---------------------------------------------------
                     SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                    --------------------------------------------------------------
                         FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
                         -----------------------------------------------------
                                        (THOUSANDS OF DOLLARS)
    
   Column A                         Column B           Column C            Column D    Column E
                                                       Additions
                                              --------------------------
   <S>                             <C>        <C>              <C>       <C>           <C>
                                   Balance At    Charged       Charged    Deductions    Balance  
                                   Beginning    To Costs       To Other      From        At End  
   Description                     of Period  And Expenses     Accounts  Reserves (1)  of Period 
   -----------                     ---------- ------------     --------  -----------   --------- 
   YEAR ENDED SEPTEMBER 30, 1996
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  4,066     $  4,959     $      -     $  4,600    $  4,425 
             Other                        524           82            -          212         394 
                                     --------     --------     --------     --------    -------- 
                                     $  4,590     $  5,041     $      -     $  4,812    $  4,819 
                                     ========     ========     ========     ========    ======== 
   YEAR ENDED SEPTEMBER 30, 1995
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  3,273     $  4,653            -     $  3,860    $  4,066 
             Other (2)                    744          233           24          477         524 
                                     --------     --------     --------     --------    -------- 
                                     $  4,017     $  4,886     $     24     $  4,337    $  4,590 
                                     ========     ========     ========     ========    ======== 
   YEAR ENDED SEPTEMBER 30, 1994
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  2,491     $  5,990     $      -     $  5,208    $  3,273 
             Other (3)                    577          592           19          444         744 
                                     --------     --------     --------     --------    -------- 
                                     $  3,068     $  6,582     $     19     $  5,652    $  4,017 
                                     ========     ========     ========     ========    ======== 
<FN>
   Note: (1)   Deductions From Reserves include the write-off of uncollectible accounts, net of
               recoveries of accounts previously written off.
         (2)   $24 Charged to Other Accounts represents recognition of trade receivables acquired
               with the purchase of certain assets by the nonregulated operations.
         (3)   $19 Charged to Other Accounts represents interest on receivables.
</TABLE>

    <PAGE>