Independent Auditors' Report


The Board of Directors and Stockholders
Corning Natural Gas Corporation:


We have audited the accompanying consolidated balance sheets of Corning
Natural Gas Corporation and Subsidiary (the Company) as of September 30,
1999 and 1998, and the related consolidated statements of income,
stockholders' equity and comprehensive income, and cash flows for the years
then ended.  These consolidated financial statements are the responsibility
of the Company's management.  Our responsibility is to express an opinion on
these consolidated 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 audits 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 signifi-
cant 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
presently fairly, in all material respects, the financial position of
Corning Natural Gas Corporation and Subsidiary at September 30,1999 and 1998,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.

         /s/ KPMG LLP

November 15, 1999

CORNING NATURAL GAS CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements

For the Years Ended September 30, 1999 and 1998



(1) Summary of Significant Accounting Policies

Corning Natural Gas Corporation (the Company) is a gas distribution company
providing gas on a commodity and transportation basis to its customers in
the Southern Tier of New York State.  The Company follows the Uniform System
of Accounts prescribed by the Public Service Commission of the State of New
York (PSC) which has jurisdiction over and sets rates for New York State gas
distribution companies.  The Company's regulated operations meet the criteria
and accordingly, follow the accounting and reporting of Statement of Financial
Accounting Standards No. 71 (SFAS 71) Accounting for the Effects of Certain
Types of Regulation. The Company's financial statements contain the use of
estimates and assumptions for reporting certain assets, liabilities, revenue
and expenses and actual results could differ from the estimates.  The more
significant accounting policies of the Company are summarized below.

(a) Principles of Consolidation and Presentation

The consolidated financial statements include the Company and its wholly
owned subsidiary, the Corning Natural Gas Appliance Corporation.  In fiscal
1998, the Corning Natural Gas Appliance Corporation completed the purchase
of three businesses which have been established as New York State limited
liability subsidiary corporations, as follows:Tax Center International, LLC;
The Foodmart Plaza, LLC; and Corning Realty Associates, LLC.  In fiscal 1999,
the Corning Natural Gas Appliance Corporation completed the purchase of
Ambrose and Shoemaker Better Homes and Gardens Real Estate, which has also
been established as a New York State limited liability subsidiary corporation.
Hereinafter the Appliance Corporation and its limited liability subsidiary
corporations are collectively referred to as "Appliance Corportion". All
significant intercompany accounts and transactions have been eliminated in
consolidation.  The results of the Appliance Corporation are reported
separately as unregulated operations in the consolidated statements of income.
Shared expenses are allocated to the Appliance Corporation.

It is the Company's policy to reclassify amounts in the prior year financial
statements to conform with the current year's presentation.

(b) Property, Plant and Equipment

Utility plant is stated at the historical cost of construction.  These costs
include payroll, fringe benefits, materials and supplies, and transportation
costs.  The Company charges normal repairs to maintenance expense.  The
Appliance Corporation capitalizes the cost of appliances and the original
installation to rented gas appliances.  Subsequent repairs are expensed.
Property and equipment acquired pursuant to the acquisitions discussed in
note 2 were initially recorded at estimated fair market value.

(c)Depreciation

The Company provides for depreciation for accounting purposes using a
straight-line method based on the estimated economic lives of property,
which ranges from 3 to 55 years for all assets except utility plant.  The
depreciation rate used for utility plant, expressed as an annual percentage
of depreciable property, was 2.7% in 1999 and 1998.  At the time utility
properties are retired, the original cost plus costs of removal less salvage,
are charged to accumulated depreciation.

(d) Revenue and Natural Gas Purchased


The Company records revenues from residential and commercial customers based
on meters read on a cycle basis throughout each month, while certain large
industrial and utility customers' meters are read at the end of each month.
Pursuant to the most recent rate order, capacity assignment revenue is
recorded at a rate of 15% of the amount received from released capacity and
is recognized upon notification of capacity release from the pipeline company
while the remaining 85% is returned to customers through reduced gas cost.
The Company secured a weather normalization clause in the last major rate
filing as protection against severe weather fluctuations.  This affects space
heating customers and is activated when degree days are 2% greater or less
than a 30 year average.  As a result, the effect on revenue fluctuations in
weather related gas sales is somewhat neutralized.

Gas purchases are recorded based on readings of suppliers' meters as of the
end of the month.  The Company's rate tariffs include a Gas Adjustment Clause
(GAC) which adjusts rates to reflect changes in gas costs from levels
established in the rate setting process.  In order to match such costs and
revenue, the PSC has provided for an annual reconciliation of recoverable GAC
costs with applicable revenue billed.Any excess or deficiency in GAC revenue
billed is deferred and the balance at the reconciliation date is either
refunded to or recovered from customers over a subsequent 12-month period.

Real estate commissions are recognized at closing while professional services
revenues are recognized as services are performed.

(e) Marketable Securities

Marketable securities, which are intended to fund the Company's deferred
compensation plan, are classified as available for sale at September 30, 1999
and 1998.  Such securities are reported at fair value based on quoted market
prices, with unrealized gains and losses, net of the related income tax
effect, excluded from earnings, and reported as a component of accumulated
other comprehensive income in stockholders' equity until realized.  The cost
of securities sold was determined using the specific identification method.

A summary of the marketable securities at September 30, 1999 and 1998 is as
follows:
                                                                   Net
                                                                Market
C
ost    Unrealized       Unrealized     Unrealized
                    value          basis              gains
losse
s          gains

1999          $    1,021,696           923,389             130,511
    (32,
204)               98,307
1998          $    785,361             725,295               87,718
(2
7,652)                60,066

(f) Inventories

Inventories are stated at the lower of cost or market, cost being determined
on a first-in, first-out basis.

(g) Federal Income Tax

The Company uses the asset and liability method to establish deferred tax
assets and liabilities for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.  In addition, such deferred tax assets and liabilities will be
adjusted for the effects of enacted changes in tax laws and rates.

(h) Dividends

Dividends are accrued when declared by the Board of Directors.  Dividends
declared were $747,500 or $1.63 per share in 1999, and $448,501 or $0.98 per
share in 1998.  Dividends paid were $598,000 and $1.30 per share in 1999, and
$598,001 and $1.30 per share in 1998.

Under the most restrictive long-term debt covenants, the Company may not
declare or pay annual dividends except to the extent that consolidated net
worth exceeds $2,000,000.

(i) Goodwill

Goodwill represents the excess of purchase price over the fair value of the
identified net assets of acquired businesses.  Goodwill is amortized over 15
years, the estimated period of benefit, on a straight-line basis.  Goodwill
in excess of associated expected operating cash flows is considered to be
impaired and is written down to fair value, which is determined based on
either undiscounted future operating cash flows or appraised values,
depending on the nature of the asset.

(j) Accounting for Impairment

SFAS 121, Accounting for the Impairment of Long-Lived Assets to be Disposed
Of establishes accounting standards to account for the impairment of long-
lived assets, and certain identifiable intangibles.  Under SFAS 121 the
Company reviews assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
SFAS 121 also requires that a rate-regulated enterprise recognize an
impairment when regulatory assets are no longer probable of recovery.

(k) Pension and Postretirement Plans

On October 1, 1998, the Company adopted Financial Accounting Standards Board
Statement No. 132, Employers' Disclosures about Pension and Other Postretire-
ment Benefits (Statement 132).  Statement 132 revises employers' disclosures
about pension and other postretirement benefit plans; it does not change the
method of accounting for such plans.

(l) Comprehensive Income

On October 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive
Income.  SFAS No. 130 establishes standards for reporting and presentation
of comprehensive income and its components in a full set of financial
statements.  Comprehensive income consists of net income and net unrealized
gains (losses) on securities and is presented in the consolidated statements
of stockholders' equity and comprehensive income.  The Statement requires
only additional disclosures in the consolidated financial statements; it does
not affect the Company's financial position or results of operations.  Prior
year financial statements have been reclassified to conform to the require-
ments of SFAS No. 130.

(m) Segment Information

Effective September 30, 1999, the Company adopted Financial Accounting
Standards Board Statement No. 131, Disclosures About Segments of an Enter-
prise and Related Information, which changes the way the Company reports
information about its operating segments.  The information for fiscal 1998
has been restated in accordance with the requirements of the new standard.

(2) Acquisitions

In April 1998, the Corning Natural Gas Appliance Corporation completed three
acquisitions accounted for by the purchase method, as follows:

The Foodmart Plaza, LLC, (Foodmart Plaza) was purchased for $1,202,996,
including direct acquisition costs, and financed through cash of $262,996
and a $940,000 ten year note secured by the real property.  Located in South
Corning, New York, Foodmart Plaza consists of eight tenants under multi-year
leases anchored by a major supermarket.

Tax Center International, LLC (Tax Center) and Corning Realty Associates, LLC
(Corning Realty) were purchased for $374,888, including direct acquisition
costs, and were funded through cash of $204,072 and a $170,816 eight year
loan agreement with the sellers.  Tax Center provides tax preparation,
accounting, and payroll services.  Corning Realty is a residential and
commercial real estate brokerage with agents operating out of offices in
Corning and Elmira, New York.

In December 1998, the Corning Natural Gas Appliance Corporation acquired a
local real estate company, Ambrose and Shoemaker Better Homes and Gardens
Real Estate (Ambrose and Shoemaker) for $1,636,589, including direct
acquisition costs, funded through cash of $579,923, a $608,333 five year
promissory note to the seller, and the remaining $448,333 payable over three
years.

The purchase price for these acquisitions,including direct acquisition costs,
was allocated to assets acquired based upon the estimated fair values, with
the excess of the consideration over such estimated fair values recorded as
goodwill, as follows:

                                            1998
1999
                                    Foodmart               Tax Center/
    Ambr
ose and
                                  Plaza               Corning Realty
Shoem
aker

Property, plant and
    equipment                $    1,175,000           52,088
    25,0
00
Goodwill                          27,996              322,800
1,611
,589
                       ------------     --------        -----------
                                       $    1,202,996                374,888

         1,636,589
                       ============    =========        ===========

Purchase price adjustments of $20,984 related to 1998 direct acquisition
costs were recorded in 1999 and are reflected as additional goodwill.

The following summarized unaudited pro forma financial information assumes
the acquisitions had occurred on October 1 of each year and reflects interest
expense and goodwill amortization, net of applicable taxes, related to the
acquisitions:
                                                      Years ended
                                                September 30,   (unaudited)
                                                 1999                1998
                                   ---------------------------
Total revenues                         $    23,623,000               23,550,300
Net income                                       457,900             693,400
Basic and diluted earnings per
    common share                                      1.00           1.51

The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable.  The pro forma results do not necessarily
represent results which would have occurred if the acquisition had taken
place on the basis assumed above, nor are they indicative of the results of
future combined operations.


(3) Information About Operating Segments

The Company's reportable segments have been determined based upon the nature
of the products and services offered, customer base, availability of
discrete internal financial information, homogeneity of products, delivery
channel, and other factors.

The Corning Natural Gas Corporation (the Gas Company) is a gas distribution
company providing gas on a commodity and transportation basis to its
customers in the Southern Tier of New York State.  The Appliance Corporation
sells, rents and services primarily gas burning appliances.  The Tax Center
provides tax preparation, accounting and payroll services to approximately
800 clients.  Corning Realty is a residential and commercial real estate
business with approximately 80 agents operating in three neighboring counties.
Foodmart Plaza is a retail complex consisting of eight tenants under multi-
year leases anchored by a major supermarket.

The following table reflects the results of the segments consistent with the
Company's internal financial reporting process.  The following results are
used in part, by management, both in evaluating the performance of, and in
allocating resources to, each of the segments.


                        Gas                 Appliance           Tax       Cornin
g Foodmart
                   Company             Corporation              Center
    Rea
lty      Plaza   Consolidated
Revenue:
    1999      $16,276,170              2,276,802           274,855        3,922,
879 272,268        23,022,974
    1998           16,673,295               2,323,087           62,668
    157,
750 120,957  19,337,757
Net income (loss):
    1999              219,671                  179,610               75,490

(77,289)  40,466             437,948
    1998                391,492                  236,349             12,323
         (1
9,148)        19,141         640,157
Interest income:
    1999                1,991               58,769              -
    -
              -              60,760
    1998                -                   38,263              -
    -
         -              38,263
Interest expense:
    1999           965,105             -              5,157               101,86
2             93,976              1,166,100
    1998           959,161                       -              1,761
    10,3
06            40,473              1,011,701
Identifiable assets*:
    1999           20,493,744               2,690,298           190,264
1,939
,511 1,203,168 26,516,985
    1998           20,670,347               2,497,312                91,241
    3
40,935 1,224,923   24,824,758
Depreciation and
    amortization:
         1999          488,631              236,271             5,388
    133,
557           31,433              895,280
         1998           574,389                  242,293             2,018

7,005              11,446              837,151
Income tax expense
    (benefit):
         1999                42,835             135,369              44,846
         (
27,402)       26,595         222,243
         1998           162,792             159,978             8,195
    (5
,417)              12,728              338,276

*Identifiable assets include property, plant and equipment, cash, accounts
receivable, inventories and other amounts specifically related to each
identified segment.

Interest income and expense have been displayed in the segment in which it
has been earned or incurred.  Segment interest expense other than the Gas
Company is included within unregulated expenses in the consolidated
statements of income.

Major Customers

The Company has three major customers, Corning Incorporated, New York State
Electric & Gas (NYSEG), and Bath Electric Gas & Water Systems (BEGWS).  The
loss of any of these customers could have a significant impact on the
Company's financial results.  In addition, a significant portion of capacity
assignment revenue is generated from Corning, Inc.  Total revenue and
deliveries to these customers were as follows:

                                            Deliveries
Reve
nue
                                       Mcf            % of Total
Amoun
t             % of Total
Corning, Inc.
Year ended Sept 30, 1999               2,107,000           26             $
728
,000               4
Year ended Sept 30, 1998               1,933,000           26
    698,
000           4

NYSEG
Year ended Sept 30, 1999               2,518,000           31             $
274
,000               2
Year ended Sept 30, 1998          1,985,000           27
270,0
00            2

BEGWS
Year ended Sept 30, 1999               691,000             8              $
1,657,000          10
Year ended Sept 30, 1998               731,000             10
1,640
,000          10


(4) Regulatory Matters

Certain costs are deferred and recognized as expenses when they are
reflected in rates and recovered from customers as permitted by SFAS 71.
These costs are shown as Deferred Charges.  Such costs arise from the
traditional cost-of-service rate setting approach whereby all prudently
incurred costs are generally recoverable through rates.  Deferral of these
costs is appropriate while the Company's rates are regulated under a cost-
of-service approach.

In a purely competitive environment, such costs might not have been incurred
or deferred.  Accordingly, if the Company's rate setting were changed from a
cost-of-service approach and it was no longer allowed to defer these costs
under SFAS 71, certain of these assets may not be fully recoverable. However,
the Company cannot predict the impact, if any, of competition and continues
to operate in a cost-of-service based regulatory environment.  Accordingly,
the Company believes that accounting under SFAS 71 is still appropriate.

Below is a summarization of the Company's regulatory assets as of
September 30, 1999 and 1998:

                                            1999                1998

Deferred pension and other   $    196,707             205,830
Deferred debits - accounting
 for income   taxes                         1,016,661           1,016,661
Unrecovered gas costs                       -          191,819
                            ------------    ----------
Total - regulatory assets    $    1,213,368           1,414,310

Deferred pension and other:  Approximately $84,000 and $135,000 of these
balances represent costs in excess of the amounts currently recoverable
through rates at September 30, 1999 and 1998, respectively.  The PSC
requires such excess costs to be deferred.  Remaining balances represent
miscellaneous regulatory assets.

Deferred debits - accounting for income taxes:   These amounts represent the
expected  future  recovery from ratepayers of the tax consequences of
temporary differences between the financial reporting basis and tax basis
of assets and liabilities.

Unrecovered gas costs:  These costs are recoverable over future years and
arise from an annual reconciliation of certain gas revenue and costs
(as described in Note 1).

The Company expects that its regulatory assets will be fully recoverable
from customers.

(5) Long-Term Debt

A summary of long-term debt at September 30 follows:

                                                                     1999

1998
Unsecured senior note - 7.9%, due serially
    with annual payments of $355,000
    beginning in 2006 through 2016 and
    $795,000 due in 2017                              $    4,700,000
4,700
,000

First mortgage bonds - 8.25%, series all due
    2018, secured by substantially all utility plant       3,100,000
3,100
,000

Unsecured senior note - 9.83%, due serially
    with annual payments of $100,000
    beginning in 2007 through 2015
    and $700,000 due in 2016                               1,600,000
1,600
,000

Mortgage note - 8.02% monthly
    installments through April 2008                         912,044
    932,
245

Unsecured promissory note - 6.5% monthly
    installments through April 2006                             146,643
    163,
936

Note payable - 6.5% monthly installments
    through January 2004 secured by assets of
    Corning Realty                                              520,128

-

Note payable - 7.75% monthly installments
    through January 2009 secured by assets of
    Corning Realty                                              447,215

-
                                                   ------------   ----------
Total long-term debt                                       11,426,030
    10,4
96,181
Less current installments                                  202,774
36,83
0
                                                   ------------  -----------
Long-term debt less
current installments                                $      11,223,256
    10,4
59,351
                                                 =============   ==========

The aggregate maturities of long-term debt for each of the five years
subsequent to September 30, 1999 are as follows:

2000                 $  202,774
2001                                        219,492
2002                                        234,812
2003                                        251,001
2004                                        149,601
2005 and thereafter          10,368,350

(6) Lines of Credit

The Company has lines of credit with local banks to borrow up to $7,500,000
on a short-term basis.  Borrowings outstanding under these lines were
$2,165,000 and $2,325,000 at September 30, 1999 and 1998, respectively.  The
maximum amount outstanding during the year ended September 30, 1999 and 1998
was $2,840,000 and $2,325,000, respectively.  The lines of credit are
unsecured and payable on demand with interest at rates which range from the
prime rate (8.25% at September 30, 1999) to the prime rate less 3/4%. The
weighted average interest rates on outstanding borrowins during fiscal 1999
and 1998 wer 7.24% and 7.8%, respectively.

(7) Federal Income Taxes

Federal income tax expense (benefit) for the years ended September 30
is as follows:

                                            1999                1998

Utility Operations:
    Current                            $    (86,529)                 242,955
    Deferred                             123,251                (86,301)
    Investment Tax Credits                  6,113                    6,138
                              ----------      --------
                                                      42,835              162,79
2
Unregulated Operations:
    Current                                 197,244             175,484
    Deferred                                (17,836)                      -
                              -----------     --------
                                                 179,408                  175,48
4
                               ----------     -------
Total federal income
 tax expense                      $    222,243             338,276
                              ==========      =======

Actual federal income tax expense differs from the expected federal income
tax expense (computed by applying the federal corporate tax rate of 34% to
income before federal income tax expense) as follows:

                                                 1999                1998

Expected tax expense              $    224,465             332,667
Investment tax credits                 6,113               6,138
Other, net                                  (8,335)             (529)
                               ------------  ---------
                                            $    222,243        338,276

The Company is exempt from state income taxes.

The tax effects of temporary differences that result in deferred income tax
assets and liabilities at September 30 are as follows:

                                                 1999                1998
Deferred income tax assets:
    Unbilled revenue                        $    21,118              23,530
    Deferred compensation reserve               272,371              229,438
    Postretirement benefit obligations           202,063             150,884
    Allowance for uncollectible accounts           32,980                 32,980
    Inventories                                    32,420                 45,912
    Other                                                   18,575
1
4,947
                                      ---------     --------
Total deferred income tax assets            579,527             497,691

Deferred income tax liabilities:
    Plant and equipment, principally
         due to differences in depreciation           2,215,658           2,139,
275
    Pension benefit obligations                  449,707             426,787
    Deficiency of GAC revenue billed               94,405                 61,311
    Other                                                   221,837
166,9
83
                                      ----------     ---------
Total deferred income tax liabilities  2,981,607                2,794,356
                                       ---------     ---------
Net deferred income tax liability      $2,402,080               2,296,665
                                      ==========    ==========
There was no change in the valuation allowance for deferred income tax
assets during the year ended September 30, 1999 or 1998.

(8) Pension and Other Postretirement Benefit Plans

In 1997, the Company established a trust to fund a deferred compensation
plan for certain officers.  The fair market value of assets in the trust was
$1,021,696 and $785,361 at September 30, 1999 and 1998, respectively, and the
plan liability, which is included in deferred compensation, postretirement
benefits and other credits on the balance sheet, was $801,091 and $673,416 at
September 30, 1999 and 1998, respectively.  The assets of the trust are
available to general creditors in the event of insolvency. Beginning October
1, 1998, the Company changed the manner in which the plan liability is
calculated.  The Company believes that the newly elected actuarial method
more accurately reflects the obligation to covered participants as of the
balance sheet date.  This change in accounting method reduced the Company's
expense under the Plan by $65,000 in 1999.

The Company has defined benefit pension plans covering substantially all of
its employees.  The benefits are based on years of service and the employee's
highest average compensation during a specified period.  The Company makes
annual contributions to the plans equal to amounts determined in accordance
with the funding requirements of the Employee Retirement Security Act of 1974
Contributions are intended to provide for benefits attributed for service to
date, and those expected to be earned in the future.

In addition to the Company's defined benefit pension plans, the Company
offers postretirement benefits comprising of medical and life coverages to
its employees who meet certain age and service criteria.  Currently, the
retirees under age 65 pay 60% of their health care premium until Medicare
benefits commence at age 65.  After age 65, Medicare supplemental coverage
is offered with Company payment of the premium.  For participants who retire
on or after September 2, 1992, the Company cost, as stated above, shall not
exceed $150 per month.  In addition, the Company offers limited life insurance
coverage to active employees and retirees.  The postretirement benefit plan
is not funded.  The Company accrues the cost of providing postretirement
benefits during the active service period of the employee.

The following table shows reconciliations of the Company's pension and
postretirement plan benefits as of September 30:

                                  Pension benefits              Postretirement
benefits
                                       1999                1998
1999
              1998
Change in benefit obligations
Benefit obligation at
 beginning of year        $  8,445,196           7,159,528           1,062,666

    941,855
Service cost                            283,700            228,817
    23,9
94            16,171
Interest cost                          541,895             512,415
69,98
6             65,512
Participant contributions                   -                   -
18,78
6                  -
Actuarial gain/(loss)             (1,269,615)              868,962
(246
,840)         104,724
Benefits paid                     (459,727)           (423,378)
(84,3
58)      (65,596)
Amendments                             91,189              98,852
48,82
8                  -
                          ------------------------------------------------
Benefit obligation at
 end of year                 $    7,632,638           8,445,196
893,0
62       1,062,666
                         =================================================
Change in plan assts
Fair value of plan assets
 at beginning of year             $    9,658,264           9,102,282
         -
                   -
Actual return on plan assets 1,138,844                764,923
-
              -
Company contributions                191,232               214,437
65,572             65,596
Participant contributions                   -                   -
18,78
6                  -
Benefits paid                     (459,727)                (423,378)
    (84,
358)          (65,596)
                           ------------------------------------------------
Fair value of plan assets at
    end of year                   $    10,528,613               9,658,264
              -                   -
                         ==================================================
Funded status                     2,864,283           1,213,048      (893,062)
(1,062,666)
Unrecognized actuarial
 loss (gain)                 (2,328,796)              (864,189)      (407,718)

    (178,753)
Unrecognized PSC adjustment            332,762             373,097
-                  -
Unrecognized prior
 service cost                     838,691             817,339
43,40
3                  -
Unrecognized net transition
 asset   (obligation)             (325,956)           (365,446)           802,25
0             859,250
                            -------------------------------------------------
Prepaid (accrued)
 benefit cost              $ 1,380,984                1,173,849
(455,
127)          (382,169)
                           ==================================================

Weighted-average assumptions as of
    September 30, 1999 and 1998
 Discount rate                                7.75%                    6.5%
              7.75%               6.5%
Expected return on assets              8.0                      8.0

-                  -
Rate of compensation increase          5.0                      5.0
         -
                   -

For measurement purposes, an 8% annual rate of increase in the per capita
cost of covered benefits (health care cost trend rate) was assumed for 1998.
The rate is assumed to decrease gradually to 6% by the year 2012 and remain
at that level thereafter.  A 1% increase in the actual health care cost trend
would result in approximately a 4.5% increase in the service and interest
cost components of the annual net periodic postretirement benefit cost and a
3.4% increase in the accumulated postretirement benefit obligation. A 1%
decreae in the actual health care cost trend would result in approximately
a 3.7% decrease in the service and interest cost components of the annual
net periodic postretirement benefit cost and a 3.0% decrease in the
accumulated postretirement benefit obligation.


                                            Pension benefits              Postre
tirement benefits
                                            1999           1998
    1999
              1998
Components of net periodic
    benefit cost
Service cost                         $      285,161             228,817
    23,9
94            16,171
Interest cost                                  543,856               512,415
         6
9,986              65,512
Expected return on
 plan assets                                (764,699)      (715,243)      -

    -
Amortization of prior service          100,017             91,137    5,425

-
Amortization of transition obligation       (39,510)            (39,510)
57,00
0        57,000
Amortization of PSC adjustment              40,335         40,335
-
              -
Amortization of unrecognized
    actuarial (gain) loss                   (180,288)      (262,216) (17,875)
(32,153)
                                    ----------------------------------------
Net periodic benefit cost (benefit)    $    (15,128)  (144,265)  138,530
106,5
30
                                    ========================================

For ratemaking and financial statement purposes, pension expense represents
the amount approved by the PSC in the Company's most recently approved rate
case.  Pension expense for ratemaking and financial statement purposes was
approximately $39,000 for the years ended September 30, 1999 and 1998.  The
difference between the pension expense (benefit) for ratemaking and financial
statement purposes, and the amount computed above has been deferred and is
not included in the prepaid pension cost noted above.  Such balances equal
$84,000 and $135,000 as of September 30, 1999 and 1998, respectively.

The PSC has allowed the Company to recover incremental cost associated with
postretirement  benefits through rates on a current basis.  Due to the timing
differences between the Company's rate case filings and financial reporting
period, a regulatory liability of $262,924 and $125,605 have been recognized
at September 30, 1999 and 1998, respectively.


(9) Rentals Under Operating Leases

Foodmart Plaza receives income from the rental of retail store space under
operating leases.  The following is a schedule of minimum future rentals
(excluding amounts representing executory costs such as taxes, maintenance
and insurance) of operating leases as of September 30, 1999:

                     2000                   $    267,000
                     2001                        250,450
                     2002                        192,300
                     2003                           52,900
                     2004                           34,875
                            ------------
Total minimum future rentals      $    797,525

All leases contain renewal options at the end of their respective lease terms.


(10)     Commitments

The Company has agreements with seven pipeline companies providing for
pipeline capacity for terms that extend through 2001.  These agreements
require the payment of a demand charge for contracted capacity at Federal
Energy Regulatory Commission approved rates.  Purchased gas costs incurred
under these pipelines capacity agreements during 1999 and 1998 amounted to
$3,599,300 and $3,735,000, respectively.  The Company also has short-term
gas purchase agreements averaging three months in length, with prices tied
to various indices. The Company does not anticipate these agreements to be
significantly in excess of normal capacity requirements.