Form 10-K/A

                               Amendment No. 1
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

        [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1996
                                      OR
         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
     For the transition period from ________________ to ________________
                        Commission file number 1-3280
                      Public Service Company of Colorado
            (Exact name of registrant as specified in its charter)
              Colorado                                 84-0296600
   (State or other jurisdiction of                    (IRS Employer
   incorporation or organization)                  Identification No.)
 1225 17th Street, Denver, Colorado                       80202
(Address of principal executive offices)               (Zip Code)
Registrant's Telephone Number, including area code: (303) 571-7511

         Securities Registered Pursuant to Section 12(b) of the Act:
                                                  Name of Each Exchange
         Title of Each Class                       on Which Registered
   Common Stock, par value $5 per share       New York, Chicago and Pacific
   Rights to Purchase Common Stock            New York, Chicago and Pacific
   Cumulative Preferred Stock, par value $100 per share
        4 1/4 Series                                                 American
        7.15% Series                                                 New York
   Cumulative Preferred Stock ($25), par value per share
        8.40% Series                                                 New York
         Securities Registered Pursuant to Section 12(g) of the Act:
             Cumulative Preferred Stock, par value $100 per share
                               (Title of Class)
      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

      The aggregate  market value of the  registrant's  Common Stock,  $5.00 par
value  (the  only  class  of  voting   stock),   held  by   non-affiliates   was
$2,536,745,052 based on the last sale price thereof reported on the consolidated
tape for February 21, 1997.

      At February 21, 1997,  65,253,892 shares of the registrant's Common Stock,
$5.00 par value (the only class of common stock), were outstanding.

                     Documents Incorporated by Reference

                                    None.

<PAGE>

                                      PART III

Item 10.  Directors and Executive Officers of the Registrant

      The  following  table  sets  forth  certain  information   concerning  the
Directors of the Company as of December 31, 1996.
<TABLE>
<CAPTION>
Name                           Age  Occupation/Title                            Initial Date as Director

<S>                            <C>  <C>                                                  <C>
Wayne H. Brunetti              54   President and CEO                                    1994

Collis P. Chandler, Jr. (g)    70   Chairman, Chandler & Associates, Inc.,
                                    Chandler-Simpson, Inc. and Chandler Drilling Corp.   1985

Doris M. Drury, Ph.D. (a)(h)   70   John J. Sullivan Professor of Free Enterprise
                                    Economics at Regis University, and President of the
                                    Center for Business and Economic Forecasting, Inc.   1975

Thomas T. Farley (c)           62   President, Petersen & Fonda, P.C.                    1983

Gayle L. Greer (c)             55   Senior Vice President, Time Warner Cable             1986

A. Barry Hirschfeld (e)        54   President, A.B. Hirschfeld Press, Inc.               1988

D.D. Hock (b)                  61   Chairman of the Board                                1985

George B. McKinley (a)(g)      69   Chairman and CEO, First National Banks of
                                    Evanston and Kemmerer, Wyoming and President &
                                    CEO, First McKinley Corporation                      1976

Will F. Nicholson, Jr. (a)(g)  67   Chairman, Rocky Mountain Bank Card System            1981

J. Michael Powers (d)          54   President, Powers Products Co. and Powers
                                    Masonry Supply                                       1978

Thomas E. Rodriguez (c)       52    President and General Manager, Thomas E. Rodriguez
                                    & Associates, P.C.                                   1986

Rodney E. Slifer (e)          62    Partner, Slifer, Smith & Frampton/Vail Associates
                                    Real Estate                                           1988

W. Thomas Stephens (f)(g)     54    Retired Chairman, Manville Corporation                1989

Robert G. Tointon (a)(g)      63    President and CEO Phelps-Tointon, Inc.                1988
</TABLE>

(a)  Member of Executive Committee.
(b)  Chairperson of Executive Committee.
(c)  Member of Audit Committee.
(d)  Chairperson of Audit Committee.
(e)  Member of Pension Investment Committee.
(f)  Chairperson of Pension Investment Committee.
(g)  Member of Compensation Committee.
(h)  Chairperson of Compensation Committee.

                                       1
<PAGE>

   The following  includes  information  concerning  each of the individuals set
forth in the above table:

    Wayne H. Brunetti is president and chief  executive  officer of the Company.
He joined the Company in July 1994 as president and chief operating officer.  He
became chief executive  officer on January 1, 1996. He also serves as a director
of e prime,  YGSC, and Natural Fuels.  Mr. Brunetti is the former  president and
chief  executive  officer  of  Management  Systems   International,   a  Florida
management  consulting  firm  that he  founded  in 1991.  Prior to that,  he was
executive  vice  president  of  Florida  Power &  Light  Company.  Mr.  Brunetti
currently  serves  on  the  Edison  Electric  Institute's  Policy  Committee  of
Communication,  Marketing  and  Corporate  Services.  He also  serves as a board
member of the Colorado  Association  of Commerce and Industry,  the Denver Metro
Chamber of Commerce,  the Western Energy Supply and Transmission  Associates and
the Medic Alert  Foundation.  He is a member of The Rotary  Club of Denver,  the
Governor's  Task  Force in  Renewable  Energy and the Board of  Advisors  of the
University  of  Colorado  Business  School.  He holds a B.S.  degree in Business
Administration from the University of Florida,  and is a graduate of the Harvard
Business School's Program for Management Development.

    Collis P.  Chandler,  Jr. is chairman and chief  executive  officer of The
Chandler Company and two of its subsidiaries,  Chandler & Associates, Inc. and
Chandler-Simpson,  Inc. Chandler & Associates,  Inc. is engaged in the oil and
gas  exploration  and  production  business.   Mr.  Chandler  has  served  the
Chandler  companies  since  1955,  when he founded  Chandler-Simpson,  Inc. He
received a B.S. in Mechanical  Engineering from Purdue  University in 1948 and
later served as a director and  president of the Purdue  Alumnae  Association.
He is a  Registered  Professional  Engineer  in  Colorado.  Mr.  Chandler is a
member of the  National  Petroleum  Council  and served as its  chairman  from
1976-1979.   James   Schlesinger   awarded  him  the   Secretary  of  Energy's
Distinguished  Service  medal.  He is a  director  of the  American  Petroleum
Institute,  and in 1994 was the recipient of its highest award, The Gold Medal
for Distinguished  Achievement.  He is also a member and a former president of
the Rocky  Mountain Oil & Gas  Association.  Mr.  Chandler is also a member of
the Rocky  Mountain  Association of  Geologists,  the American  Association of
Professional Landsmen and the Society of Petroleum Engineers.

    Dr.  Doris M. Drury is the John J.  Sullivan  Professor  of Free  Enterprise
Economics at Regis  University,  a position she has held since January 1990. She
was executive director of the MBA Program until July 1993, when Dr. Drury became
special assistant to the president of Regis  University.  Prior to her positions
with Regis  University,  she was a professor of economics at the  University  of
Denver  for 24 years.  She is also  president  of the Center  for  Business  and
Economic  Forecasting,  Inc.  Dr.  Drury  is a  director  of  Equitable  of Iowa
Companies and Premier  Bank.  She served on the Colorado  Bankers  Association's
Project  Consensus  Task Force and on the  Governor's  Management and Efficiency
Study Committee.

    Thomas T.  Farley is a senior  partner in the law firm of  Petersen & Fonda,
P.C. in Pueblo,  Colorado,  which he joined in 1974. He received his LL.B.  from
the  University of Colorado and a B.S. in Economics from the University of Santa
Clara where he serves as a member of the Board of  Regents.  He is a director of
Health Systems  International,  Inc., a community director of Norwest Pueblo and
Norwest Sunset, and a member of Norwest Colorado's statewide Community Relations
Committee.  He is also a trustee and president of the Catholic Foundation of the
Diocese of Pueblo,  and trustee of the Farley  Foundation and the Great Outdoors
Colorado Trust Fund.

   Gayle L. Greer is senior vice president, division operations, for Time Warner
Communications.  Prior to this  appointment in February 1996 she served as cable
and group vice president for Time Warner  Cable's  National  Division.  She held
these  positions  from  February  1984 to 1996.  Ms.  Greer  received a B.S.  in
Political  Science and  Sociology  and a masters  degree in Social Work from the
University of Houston.  Ms. Greer is a director of Equitable of Iowa  Companies.
She is a member and  co-founder  of the National  Association  of  Minorities in
Cable, and a board member of the Women's Forum of Colorado.


                                       2
<PAGE>

    A.  Barry  Hirschfeld  is  president  of A. B.  Hirschfeld  Press,  Inc.,  a
commercial  printing  company.  He has held this position  since 1984. He is the
third generation to head this family-owned business,  which was founded in 1907.
He  received  his M.B.A.  from the  University  of Denver and a B.S. in Business
Administration  from California State  Polytechnic  University.  Mr.  Hirschfeld
serves on the boards of directors of the Boettcher  Foundation;  Mountain States
Employers Council,  where he is chairman;  the Rocky Mountain Multiple Sclerosis
Center;  the  National  Conference  of  Christians  and Jews;  the Boy Scouts of
America; the Cherry Creek Arts Festival; Up with People; and the National Jewish
Center,  where he serves as vice  president of the board.  He also serves on the
Advisory Board of the Harvard  University  Divinity  School Center for Values in
Public  Life.  He is vice  president of the Mile Hi Stadium Club and a member of
the KUSA 9Who Care Board of Governors;  the One Hundred Club of Denver; Colorado
Concern,  where he serves on the executive  committee;  Denver Mayor  Wellington
Webb's Advisory Committee; and the Allied Jewish Federation Endowment Committee.
Mr.  Hirshfeld  is past board  chairman and life time board member of the Denver
Metro Convention and Visitors Bureau and past chairman of the Denver Art Museum.

    D. D.  (Del)  Hock  served  as  chairman  of the board of the  Company.  A
native  Coloradan,  he began his career  with the  Company in 1962.  Mr.  Hock
became president and chief operating  officer in 1986 and assumed the position
of president and chief  executive  officer in October 1988. In February  1989,
he became  chairman of the board.  He stepped down as president of the Company
in July  1994,  and as chief  executive  officer  in January  1996.  Mr.  Hock
received  his B.S.  degree in  Accounting  from the  University  of  Colorado,
Boulder.  He currently  serves as Masters'  Chair of the Denver Metro  Chamber
Board of Directors,  on the Denver Area Council Boy Scouts of America Board of
Trustees,  the  University of Colorado  Foundation  Board,  the State Board of
Agriculture,   the  Denver   Foundation   Board,  and  the  Colorado  Symphony
Association  Board of  Trustees.  He also serves as a director  of  Serv-Tech,
Inc.,  Hathaway  Corporation,   Wagner  Equipment  Company,  Gold,  Inc.,  and
American  Century  Mutual Funds.  Mr. Hock is a member of the Colorado  Forum,
Colorado Society and American  Institute of Certified  Public  Accountants and
The Rotary Club of Denver.

    George B. McKinley is active in the banking and investment  businesses.  Mr.
McKinley is chairman  and chief  executive  officer of First  National  Banks in
Evanston and Kemmerer, Wyoming. He assumed these positions for the Evanston bank
in 1989, and for the Kemmerer bank in 1991. He is president and chief  executive
officer of First McKinley Corporation, a bank holding company. He also serves as
a  director  of the  Bankers  Bank of the West in  Denver.  He is  active in the
American, Colorado and Wyoming bankers associations, and served as a director of
the  Wyoming  Bankers   Association  and  president  of  the  Colorado   Bankers
Association.

    Will F. Nicholson,  Jr. is chairman of Rocky Mountain Bank Card System,  a
credit  card  company.  In  February  1995,  he  retired  as  chairman,  chief
executive officer and president of Colorado National Bankshares,  Inc., a bank
holding  company.  Mr.  Nicholson serves as a director of Boys and Girls Clubs
of Metro  Denver;  Columbia/HealthONE;  the  Colorado  Golf  Association;  the
National Western Stock Show Association;  Downtown Denver Partnership; and the
U.S.  Chamber  of  Commerce.  He is  chairman  of  Visa,  U.S.A.,  Inc.  and a
director of Visa International.

    J. Michael  (Mic) Powers has been  president of Powers  Masonry  Supply of
Cheyenne   and  Fort  Collins  and  of  Powers   Products   Co.,  a  specialty
construction  company  in  Cheyenne  and  Denver,  since  1974.  A  native  of
Cheyenne,  Wyoming,  Mr. Powers is a director of the American  National Bank -
Cheyenne.  Mr. Powers is a 1965 graduate of the University of Arizona.

    Thomas  E.  Rodriguez  is a CPA in  Colorado  and has been  president  and
general  manager of Thomas E.  Rodriguez & Assoc.,  P.C.,  a certified  public
accounting  firm,  since 1985.  He is a director of Mercy  Housing,  Inc.  and
Accurate  Machining,   Inc.  He  is  a  trustee  of  the  Colorado  Historical
Foundation and the American Tax Policy Institute in Washington,  D.C., as well
as  president  of  the  Colorado   Association   of  Hispanic   CPAs  and  the
Archdiocesan  Finance Council of Denver.  Mr.  Rodriguez has served since 1982
as an Appeals Court Judge for the  Selective  Service  System.  Until 1993, he
served as a director of the Federal  Reserve Bank in Kansas City.  He received
a B.S. in Business and Accounting from Colorado State University.

                                       3
<PAGE>

    Rodney E. Slifer is a partner in Slifer,  Smith &  Frampton/Vail  Associates
Real Estate,  LLC, a diversified real estate company.  He has held this position
since June 1994. From June 1989 to June 1994, he was a partner in Slifer,  Smith
& Frampton.  He is currently a director of Alpine Banks of Colorado,  a position
he has held since 1983.  Mr. Slifer is vice  president and a board member of the
Vail Valley Foundation, a director of Colorado Open Lands, a member of the Board
of Governors of the  University  of Colorado  Real Estate Center and serves as a
director and president-elect of Colorado University Real Estate Council.

   W. Thomas Stephens served as chairman,  president and chief executive officer
of  Schuller   Corporation   (formerly  known  as  Manville   Corporation),   an
international manufacturing and natural resources company, until August 1996.
 Mr.  Stephens  was  elected  chief  financial   officer  and  executive  vice
president of Manville Corporation in 1984, president,  chief executive officer
and board  member in 1986.  He became  chairman  in June  1990.  Mr.  Stephens
serves as a director of Mail Well,  Stillwater  Mining  Company and The Denver
Art  Museum.  He is a trustee  of the Eagle  Picher  Settlement  Trust and the
Council for Economic  Development.  He is a member of The Business Roundtable,
The Conference  Board, the Arkansas Academy of Industrial  Engineering and the
University of Arkansas  Advisory  Council.  Mr. Stephens received his B.S. and
M.S. degrees in Industrial Engineering from the University of Arkansas.

    Robert  G.  Tointon  is   president   and  chief   executive   officer  of
Phelps-Tointon,  Inc.,  a position  he  assumed in June 1989.  Phelps-Tointon,
Inc. is a specialty  construction  contractor and  manufacturer  formed by Mr.
Tointon in June 1989 as a spin-off of certain  assets of Phelps,  Inc.,  where
he served as president  since 1982.  Phelps-Tointon,  Inc. has four  operating
divisions:  Rocky Mountain Prestress,  Southern Steel Company,  Phelps-Tointon
Millwork  and Armor  Safe  Technologies.  Mr.  Tointon  is a  director  of the
Writer  Corporation  and a former  director of  Mountain  Bell and Bank One of
Colorado.  Mr.  Tointon  is a  member  of the  Greeley  Rotary  Club  and  the
Colorado Forum.

    The Company has a standing Executive  Committee which exercises,  subject to
limitations  provided by law, all the authority of the Board of Directors in the
management of the Company  between the meetings of the Board of  Directors.  The
Executive Committee did not meet during 1996.

    The Company has a standing Audit Committee,  which held nine meetings during
1996.  The  functions of the Audit  Committee are to select and recommend to the
Board of Directors a firm of  independent  public  accountants to audit annually
the books and records of the Company and its consolidated  subsidiary companies;
to review the scope of such audit;  to receive and review the audit  reports and
recommendations; to transmit such audit reports and recommendations to the Board
of Directors;  to review the internal control  procedures of the Company and its
consolidated  subsidiary  companies  and recommend to the Board of Directors any
changes deemed necessary in such procedures; and to perform such other functions
as the Board of Directors from time to time may delegate to the Audit Committee.

    The Company has a standing  Pension  Investment  Committee,  which  provides
investment oversight for the assets of the Company's Employees'  Retirement Plan
and the Employees'  Savings and Stock  Ownership  Plan.  The Pension  Investment
Committee  appoints  executives  responsible  for the management of pension plan
assets,  and approves  investment  objectives and policy  guidelines for them to
follow. The Pension Investment  Committee receives regular reports on the status
of pension  plan and savings  plan  assets and reports at least  annually to the
Board of Directors. The Pension Investment Committee held two meetings in 1996.

    The Company has a standing Compensation Committee, which reviews performance
of and  recommends  salaries  and  other  forms of  compensation  for  executive
officers.   The   Compensation   Committee   annually  reviews  the  process  of
establishing  salaries  and wages of Company  employees;  reviews the process of
management  development  and long-range  planning for Company  development;  and
reviews and makes  recommendations  regarding  fees and other  compensation  for
Directors.  In  addition,  the  Compensation  Committee is  responsible  for the
oversight of the Omnibus Incentive Plan, the appointment of an executive officer
responsible  for  day-to-day


                                       4
<PAGE>

management  of such plan,  and the approval of the guidelines  for the granting
of awards  under the Omnibus  Incentive  Plan.  The Compensation Committee met
seven times during 1996.

    The following table sets forth certain information  concerning the Executive
Officers of the Company as of December 31, 1996:

Executive Officers                                        Initial Effective Date

D. D. Hock, Age 61  *
  Chairman of the Board...................................... February 28, 1989
  Chairman of the Board, Cheyenne Light, Fuel and
      Power Company ......................................... September 21, 1988
  Chairman of the Board, Fuel Resources Development Co....... March 22, 1989
  Chairman of the Board, 1480 Welton, Inc.................... September 26, 1988
  Chairman of the Board, PSR Investments, Inc................ March 22, 1990
  Chairman of the Board, PS Colorado Credit Corporation...... March 22, 1990
  Chairman of the Board, Green and Clear Lakes Company....... December 6, 1988
  Chairman of the Board, WestGas InterState, Inc............. April 22, 1993
  Chairman of the Board, Natural Fuels Corporation........... June 11, 1993
  Chairman of the Board, e prime, inc........................ January 30, 1995
  Chairman of the Board, Young Gas  Storage Company.......... June 27, 1995
  Company Service: September, 1962

Wayne H. Brunetti, Age 54
  President ................................................. June 28, 1994
    and Chief Executive Officer.............................. January 1, 1996
  President, 1480 Welton, Inc................................ March 29, 1996
  President, PSR Investments, Inc............................ March 29, 1996
  President, PS Colorado Credit Corporation.................. March 29, 1996
  President, WestGas InterState, Inc......................... April 19, 1995
  President, Fuel Resources Development Co................... April 27, 1995
  President, Natural Fuels Corporation....................... April 25, 1996
  President, Green and Clear Lakes Company................... December 5, 1995
  Company Service: June, 1994

Richard C. Kelly, Age 50
  Senior Vice President, Finance, Treasurer..................  June 28, 1994
    and Chief Financial Officer..............................  January 23,1990
  President and Treasurer, New Century Energies, Inc.........  August 21, 1995
  Vice President, Fuel Resources Development Co..............  April 26, 1990
  Treasurer, Fuel Resources Development Co...................  August 5, 1994
  Vice President, PSR Investments, Inc.......................  September 22,1986
  Vice President, PS Colorado Credit Corporation.............  March 30, 1987
  Treasurer, Cheyenne Light, Fuel and Power Company..........  July 15, 1994
  Treasurer, 1480 Welton, Inc................................  July 15, 1994
  Treasurer, Green and Clear Lakes Company...................  July 15, 1994
  Treasurer, WestGas InterState, Inc.........................  July 15, 1994
  Vice President and Treasurer, e prime inc..................  January 30, 1995
  Vice President and Treasurer, Young Gas Storage Company....  June 27, 1995
  Company Service: May, 1968

                                       5
<PAGE>

Patricia T. Smith, Age 49
  Senior Vice President and General Counsel..................  December 5, 1994
  Company Service: December, 1994

W. Wayne Brown, Age 46
  Controller.................................................  November 24, 1987
  Corporate Secretary........................................  November 23, 1993
  Secretary, Cheyenne Light, Fuel and Power Company.........   December 15, 1993
  Secretary, 1480 Welton, Inc. ..............................  December 16, 1993
  Secretary, PSR Investments, Inc. ..........................  December 16, 1993
  Secretary, PS Colorado Credit Corporation..................  December 16, 1993
  Secretary, Green and Clear Lakes Company...................  December 7, 1993
  Secretary, Fuel Resources Development Co...................  January 27, 1994
  Secretary, WestGas InterState, Inc.........................  May 2, 1994
  Secretary, e prime, inc....................................  January 30, 1995
  Secretary, Young Gas Storage Company.......................  June 27, 1995
  Company Service: June, 1972

A. Clegg Crawford, Age 64 **
  Vice President, Engineering and Operations Support.........  June 28, 1994
  Company Service: May, 1989

Ross C. King, Age 55
  Vice President, Gas and Electric Distribution..............  June 28, 1994
  President, Cheyenne Light, Fuel and Power Company..........  July 15, 1994
  Company Service:  February, 1966

Earl E. McLaughlin, Jr., Age 56
  Vice President, Retail Energy Services.....................  June 28, 1994
  Vice President, Cheyenne Light, Fuel and Power Company.....  March 24, 1994
  Company Service: August, 1960

Ralph Sargent III, Age 47
  Vice President, Production and System Operations...........  June 28, 1994
  Company Service:  July, 1978

Marilyn E. Taylor, Age 54
  Vice President, Human Resources............................  June 28, 1994
  Company Service: December, 1987

      * On February 28, 1997, Mr. Hock retired from the Company.
      ** On February 7, 1997, Mr. Crawford retired from the Company.

      Each of the above executive  officers,  except Mr. Brunetti and Ms. Smith,
has been  employed by the  Company  and/or its  subsidiaries  for more than five
years in executive or management  positions.  Prior to election to the positions
shown above and since January 1, 1992:

Mr. Hock has been Chief Executive Officer and President;

Mr.  Brunetti has been Chief  Operating  Officer of the Company and  President
and Chief  Executive  Officer of Management  Systems  International  from June
1991 through July 1994;

                                       6
<PAGE>

Mr. Kelly has been Vice President,  Financial Services,  Principal  Accounting
Officer and Senior Vice President, Finance and Administration;

Ms.  Smith has been Vice  President  and General  Counsel  for South  Carolina
Electric  and Gas  Company  from  May  1992  through  December  1994  and Vice
President, Regulatory Affairs and Purchasing from 1988 through May 1992;

Mr. Crawford has been Vice President,  Nuclear  Operations and Vice President,
Electric Production;

Mr. King has been  Manager,  Denver Metro  Region;  Vice  President,  Regional
Customer Operations and Vice President, Metropolitan Customer Operations;

Mr.  McLaughlin  has been Vice  President,  Marketing,  Customer  Services and
Support Services;

Mr.  Sargent has been  Executive  Assistant to Chairman,  President  and Chief
Executive  Officer and Vice President,  Finance,  Planning and  Communications
and Treasurer;

Ms.  Taylor  has been  Vice  President,  Human  Resources  and Vice  President
Administrative Services.

      There are no family relationships  between executive officers or directors
of the  Company.  There  are  no  arrangements  or  understandings  between  the
executive  officers  individually  and any other person with  reference to their
being selected as officers.  All executive  officers are elected annually by the
Board of Directors.

      Compliance With Section 16(a) of the Securities Exchange Act

     Based  solely upon a review of Forms 3, 4 and 5 and written  representation
furnished to the Company,  the Company believes that all Directors and Officers,
with one  exception,  filed in a timely  manner  their  reports  required  under
Section  16(a) of the  Securities  Exchange Act of 1934,  as amended.  Mr. Ralph
Sargent filed one late report relating to the exercise of stock options.


                                       7
<PAGE>

Item 11.  Executive Compensation

     The Compensation  Committee of the Board of Directors (the  "Committee") is
composed entirely of outside Directors. The Board has delegated to the Committee
the  responsibility for establishing and administering the Company's base salary
system, executive annual and long-term incentive compensation plans, and benefit
programs. A primary objective of the Committee regarding executive  compensation
is to provide a total  compensation  package which, as a whole,  will enable the
Company to attract, retain and motivate a high-quality executive management team
that will be focused on enhancing shareholder value.  Information concerning the
Omnibus  Incentive  Plan and required  Executive  Compensation  disclosures  are
summarized below.

Annual Incentives

     Executives have the opportunity to earn annual  incentive  awards under the
Omnibus  Incentive  Plan.  The  purpose  of  these  awards  is  to  promote  the
achievement of Company financial and strategic  objectives which are designed to
benefit shareholders and customers, focus executive attention on pre-established
goals, and recognize  individual  performance  while fostering team performance.
The Committee believes that annual incentive awards serve to communicate Company
goals to the  executives  and motivate  executives  not only to achieve but also
potentially to exceed these goals. The Committee  further believes that having a
significant  portion of executive  compensation  at risk fosters  meeting  these
goals.

     In 1996,  target awards were set for 10 executive  officers,  including all
named  Executive  Officers.  Target awards are expressed as a percentage of base
salary,  which in 1996 was 40% for Mr.  Hock,  45% for Mr.  Brunetti (as the new
CEO) and ranged  from 25% to 35% for all other  named  Executive  Officers.  The
target award for Messrs.  Hock and  Brunetti  were below the median level in the
utility industry. Similarly, targets for the other named Executive Officers were
in line with or below median levels in the utility industry.

     Each  executive  earns the  right to  receive  an award if  pre-established
corporate  goals (based on earnings per share) are met. The award is adjusted up
or  down  accordingly  based  on  corporate   performance  above  or  below  the
pre-established  goals.  Actual annual  incentive  awards for 1996 for the named
Executive Officers were calculated based on corporate performance that was above
target  earnings per share which  resulted in awards based on 124 percent of the
target amount.  In addition,  the Committee may adjust these awards based on its
assessment of business unit and individual performance.  This assessment focuses
on factors such as customer  service,  actual resource  allocations  relative to
budget,  other  strategic  business unit factors,  and  individual  performance;
however, formal weightings are not assigned to these factors. Achievement of 100
percent of goals would result in the target amount,  with achievement of between
80 and 120  percent  of goals  resulting  in a lesser or greater  award.  Actual
awards are payable in cash or a combination of restricted  stock and cash at the
discretion of the Committee.

Stock Options

     Stock  options were granted in 1996 to 10  executives,  including all named
Executive  Officers.  The grants were made under the Omnibus  Incentive Plan and
are designed to link the  interests of executives  to  improvement  in long-term
shareholder  value. Award levels,  when combined with other long-term  incentive
awards,  are  targeted to deliver  compensation  at the 50th  percentile  in the
utility industry.

     Stock  options  vest  ratably  during  the  three-year  period  immediately
following  the date of grant.  If vested,  they may be exercised any time during
the ten-year period following the date of grant. The stock option grants made to
the Executive Officers are based on the value of the stock on the date of grant,
competitive practices, and individual  contributions.  No formal weightings have
been established for these criteria.

                                       8
<PAGE>

Dividend Equivalents

     To  further   strengthen  the  tie  between   executive   compensation  and
shareholder  value,  the 10 executives who received stock options were granted a
target number of dividend  equivalents under the Omnibus Incentive Plan. Payment
of the dividend  equivalents is subject to the achievement of earnings per share
goals over a three-year  performance  period.  The goals are  established  on an
annual  basis  and are the  same as  those  used for  annual  incentive  awards.
Attainment  of 90  percent  of the  earnings  per  share  goals  represents  the
threshold at which 50 percent of the awarded dividend equivalents can be earned.
Attainment  of the target  earnings  per share  goals  (100%) will result in the
executive  earning  100  percent of the  dividend  equivalents  awarded for that
particular performance period. The maximum amount of dividend equivalents (150%)
will be earned if at least  110  percent  of the  earnings  per share  goals are
attained. Performance is assessed each year and, based on the schedule described
above,  a percentage  award is  calculated.  Payment of dividend  equivalents is
dependent  upon the average of the annual  percentage  awards  during the entire
performance  period. In determining the average for the three-year  period,  any
year  in  which  the  minimum  performance  (threshold)  is  not  achieved,  the
percentage award is included as zero. Although the Company's  achievement of 124
percent of the established  goal in 1996 resulted in an annual award, the actual
percentage  of dividend  equivalents  granted in 1996 which  ultimately  will be
paid,  is dependent on  performance  during each year of the entire 1996 to 1998
performance period.

     The dividend  equivalent  amounts paid in early 1997, which are reported in
the Summary Compensation Table, reflect performance during 1994, 1995, and 1996.
Average performance during those years was slightly above target and resulted in
awards of approximately 108 percent of target.

     The number of dividend  equivalents  granted to the Executive  Officers was
based on the number of unvested stock options from 1994,  1995, and 1996.  Stock
option and dividend  equivalent  grants for 1996 for the Chief Executive Officer
and the named Executive Officers as a group remained below the 50th percentile.

                                       9
<PAGE>

<TABLE>
<CAPTION>

================================================================================
                          Summary Compensation Table
================================================================================
                                   Annual Compensation           Long-Term Compensation                   All
  Name and Principal                                                                                     Other
       Position                                                                                          Compen-
                                                                                                         sation
                                                                                                        ($)(d)(e)
                              --------------------------------------------------------------------
                        Year                                          Awards               Payouts
                                                             -------------------------------------
                              Salary   Bonus($)       Other  Restricted      Securities     LTIP
                               ($)      (a)          Annual    Stock         Underlying     Payouts
                                                     Compen-   Awards          Options/       ($)
                                                     sation  ($)(a)(c)         SAR's(#)
                                                     ($)(b)
-------------------------------------------------------------------------------------------------------------------
<S>                     <C>   <C>       <C>                   <C>               <C>         <C>          <C>       
Delwin D. Hock (e)      1996  $450,020  $256,820              $      0          30,220      $82,658      $4,092,585
Chairman of the Board   1995   446,352   225,440                     0          26,500       45,289          22,318
                        1994   428,014   197,648                     0          22,700       17,160          19,260
-------------------------------------------------------------------------------------------------------------------
Wayne H. Brunetti       1996   400,018   256,820                     0          16,800       30,129          20,001
President and Chief     1995   330,838   150,448                74,992          14,700            0           6,917
Executive Officer       1994   148,320    58,251               123,085          17,000            0               0
--------------------------------------------------------------------------------------------------------------------
Richard C. Kelly        1996   238,339   120,820                     0          10,950       29,388          11,917
Sr. V.P. Finance,       1995   227,503   100,457                49,983           9,600       15,619          11,375
Treasurer and           1994   215,005    49,970                24,756           8,200        5,631          10,362
Chief Financial Officer
-------------------------------------------------------------------------------------------------------------------
Patricia T. Smith       1996   225,842    94,944                     0           9,300            0          11,292
Sr. V.P. and General    1995   220,018    49,782                24,658           8,150            0               0
Counsel                 1994    15,834         0                21,563               0            0               0
-------------------------------------------------------------------------------------------------------------------
A. Clegg Crawford (f)   1996   182,347    58,770                     0           4,650       15,459           9,117
V.P. Engineering and    1995   172,841    33,791                16,649           4,050        8,585           8,642
Operations Support      1994   167,000    27,165                13,335           4,200        3,175           4,755
===================================================================================================================
</TABLE>
(a) The amounts shown in the "Bonus"  column for 1996  represent the cash awards
earned under the Omnibus Incentive Plan for financial performance in 1996. These
awards were paid in February 1997. In accordance with the plan  guidelines,  the
entire award amount can be paid in cash or a combination  of cash and restricted
stock. At the election of each executive officer,  all or a portion of the award
may be deferred into the Executive  Savings Plan ("ESP").  In 1996, no executive
officers  elected this deferral  option.  In 1995 and 1994,  Mr. Hock elected to
defer the entire award into the ESP and, accordingly,  both the cash portion and
the value of the restricted stock portion of Mr. Hock's 1995 and 1994 awards are
reflected in the "Bonus" column. In addition,  under the 1996 Employee Incentive
Plan, Mr. Hock, Mr.  Brunetti,  Mr. Kelly and Ms. Smith received a bonus of $820
and Mr. Crawford received a bonus of $620.

(b) Perquisites  and other personal  benefits do not exceed the lesser of either
$50,000  or 10% of the total  annual  salary  and bonus  reported  for the named
Executive Officers.

(c) The amounts shown in the "Restricted  Stock Awards" column reflect the value
of all restricted  stock awards made under the Omnibus  Incentive Plan described
in footnote (a).

    Aggregate  restricted  stock  holdings  as of December  31, 1996  (including
restricted  stock  held at year end  which  vested  February  21,  1997)  are as
follows:  Mr. Brunetti held 6,681  ($259,724)  shares of restricted  stock;  Mr.
Kelly held 2,238  ($87,002)  shares of  restricted  stock;  Ms. Smith held 1,452
($56,447)  shares of restricted stock and Mr. Crawford held 913 ($35,493) shares
of restricted  stock. The restrictions on the shares held by Mr. Crawford lapsed
at the date of his  retirement  on  February  7,  1997.  The value of the shares
reported in this  paragraph  were  calculated  using the Company's 1996 year end
stock price of $38.875.

    Dividends  are paid on  restricted  stock when and as paid on the  Company's
Common Stock. Restrictions lapse two years from the date of grant or at the date
of retirement, if earlier.

                                       10
<PAGE>

(d) The amounts represented in the "All Other Compensation"  column,  except for
the additional  compensation  to Mr. Hock as disclosed in footnote (e),  reflect
the total of the  matching  contributions  made under the  Company's  Employees'
Savings and Stock  Ownership  Plan (the "ESOP") and the  matching  contributions
provided by the ESP. The ESP allows the named  executives to receive credits for
Company  contributions to which they would be entitled under the ESOP if pre-tax
deferral  contributions  were  not  limited  by  federal  income  tax  laws.  In
accordance  with the  provisions of the ESP for Mr. Kelly,  the 1994 amount also
includes Company  contributions  for the years 1989, 1990 and 1991. In 1996, the
value of contributions made under the ESOP to Executives Hock, Brunetti,  Kelly,
Smith and Crawford was $7,000. The value of the contributions made under the ESP
in 1996 to Executives Hock,  Brunetti,  Kelly,  Smith and Crawford were $15,501,
$13,001, $4,917, $4,292 and $2,117 respectively.

(e) During the third quarter of 1996, the Compensation Committee recommended and
the Board of Directors of the Company  approved the payment of  compensation  to
Mr. Hock,  to be  determined  under the same terms  contained  in his  severance
agreement  dated August 22, 1995 (see  discussion in  "Employment  Contracts and
Change in Control  Arrangements"  and in Item 12. SECURITY  OWNERSHIP OF CERTAIN
BENEFICIAL  OWNERS AND MANAGEMENT - "Changes in Control").  The Company  accrued
this obligation in 1996. On February 28, 1997, Mr. Hock retired from the Company
and was paid the  compensation  referred  to above in the amount of  $4,070,084,
including  three  future years  compensation  and the  reimbursement  of certain
taxes.

(f) On February 7, 1997, Mr. Crawford  retired from the Company (see disclosures
in "Employment Contracts and Change in Control Arrangements").

<TABLE>
<CAPTION>
===============================================================================
                    Option/SAR Grants in Last Fiscal Year
===============================================================================
                                Individual Grants
         Name
                        --------------------------------------------------------
                         Number of
                        Securities
                        Underlying  % of Total
                         Options/   Options/SARS  Exercise
                           SARS     Granted to    or Base            Grant Date
                          Granted    Employees    Price   Expiration  Present
                          (#)(a)        in        ($/Sh)    Date       Value
                                    Fiscal year                       ($)(b)
--------------------------------------------------------------------------------
<S>                          <C>         <C>     <C>       <C>        <C>     
Delwin D. Hock               30,220      19.09%  $35.125   2/27/06    $130,271
--------------------------------------------------------------------------------
Wayne H. Brunetti            16,800      10.61%  $35.125   2/27/06     $72,421
--------------------------------------------------------------------------------
Richard C. Kelly             10,950       6.92%  $35.125   2/27/06     $47,203
--------------------------------------------------------------------------------
Patricia T. Smith             9,300       5.88%  $35.125   2/27/06     $40,090
--------------------------------------------------------------------------------
A. Clegg Crawford             4,650       2.94%  $35.125   2/27/06     $20,045
===============================================================================
</TABLE>

(a) All options were granted to executive officers by the Compensation Committee
of the Board of  Directors  on  February  27,  1996.  The  options  vest and are
exercisable  only to the extent of 33 1/3% on the first  anniversary date of the
grant and to the same extent on the second  anniversary  and third  anniversary.
Such rights to exercise are cumulative to the extent not exercised.  All options
expire 10 years  from the date of  grant.  In  accordance  with the terms of the
Omnibus Incentive Plan, all  unexercisable  options vest 100% immediately upon a
change in control  and the  Merger,  when  effective,  qualifies  as a change in
control  condition.  All outstanding  stock options on the effective date of the
Merger will be exchanged for stock options of NCE.  Additionally,  unexercisable
options become exercisable at the date of retirement.

                                   11
<PAGE>

(b) These amounts  represent a theoretical  present valuation based on the Black
Scholes Option Pricing Model as adjusted for dividends. The values in the column
are  estimated  based on an option value of $4.31.  The option value was derived
using the following assumptions:

    1.the time to exercise is the option life of 10 years;
    2.the risk free rate is 6.21%, the interest rate on 10-year treasury
      strips  as  quoted  in  the  Federal  Reserve  Statistical  Release  for
      February 1996;
    3.the option strike price is $35.125;
    4.the stock price at grant date is $35.125;
    5.the standard  deviation of PSCo Common Stock,  which is a measure of the
      volatility of the stock, is 11.95%; and
    6.future  dividends are assumed to be $.525 per quarter through the
      second  quarter of 1997.  The  dividends are then assumed to increase to
      $.58 per  quarter  over  the  life of the  options.  The  dividends  are
      discounted at a rate of 11.00%.

    Executives  may not sell or assign these  options,  which have value only to
the  extent of future  stock  price  appreciation.  These  amounts or any of the
assumptions  should not be used to predict future  performance of stock price or
dividends.
<TABLE>
<CAPTION>
================================================================================
             Aggregated Option/SAR Exercises in Last Fiscal Year
                        and FY-End Option/SAR Values
================================================================================
                                                    Number of     Value of
                                                    Securities   Unexercised
                                                    Underlying   In-the-Money
                                                   Unexercised   Options/SARS
                                                   Options/SARs   at FY-End
                                                    at FY-End      ($) (a)
                                                       (#)
                                                   ------------- ------------
          Name             Shares        Value     Exercisable/  Exercisable/
                          Acquired     Realized    Unexercisable Unexercisable
                             on           ($)
                          Exercise
                             (#)
--------------------------------------------------------------------------------
<S>                           <C>         <C>           <C>        <C>      
 Delwin D. Hock (b)                0      $     0       38,543/    $382,326/
                                                         55,454      340,427
--------------------------------------------------------------------------------
 Wayne H. Brunetti (c)        10,566      $72,049        5,667/     $69,421/
                                                         32,267      216,946
--------------------------------------------------------------------------------
 Richard C. Kelly (c)              0           $0       13,867/    $137,487/
                                                         20,083      123,251
--------------------------------------------------------------------------------
 Patricia T. Smith (c)             0           $0        2,717/     $23,434/
                                                         14,733       81,735
--------------------------------------------------------------------------------
 A. Clegg Crawford (b)             0           $0        6,960/     $69,501/
                                                          8,750       54,550
================================================================================
</TABLE>

(a) Option values were  calculated  with the closing stock price on December 31,
1996, of $38.875.

(b) All  unexercisable  options  outstanding at the date of retirement  became
exercisable.

(c) All unexercisable  options outstanding on the effective date of the Merger
become exercisable.


                                       12
<PAGE>
<TABLE>
<CAPTION>
================================================================================
            Long-Term Incentive Plans - Awards in Last Fiscal Year
================================================================================
          Name           Number    Performance  Estimated Future Payouts Under
                         of        or Other     Non-Stock Price-Based Plans
                         Shares,   Period
                         Units     Until
                         or        Maturation
                         Other     or Payout
                         Rights
                          (a)(#)
                                              ---------- ----------- ----------

                                              Threshold    Target     Maximum
                                               ($ or #)   ($ or #)    ($ or #)
--------------------------------------------------------------------------------
<S>                       <C>       <C>       <C>         <C>        <C>
 Delwin D. Hock (b)       55,454    1/1/96
                                     thru      $56,563    $113,126   $169,689
                                   12/31/98
--------------------------------------------------------------------------------
 Wayne H. Brunetti        32,267    1/1/96
                                     thru      $32,912    $ 65,825   $ 98,737
                                   12/31/98
--------------------------------------------------------------------------------
 Richard C. Kelly         20,083    1/1/96
                                     thru      $20,485    $ 40,969   $ 61,454
                                   12/31/98
--------------------------------------------------------------------------------
 Patricia T. Smith        14,734    1/1/96
                                     thru      $15,029    $ 30,057   $ 45,086
                                   12/31/98
--------------------------------------------------------------------------------
 A. Clegg Crawford (c)    8,750     1/1/96
                                     thru      $ 8,925    $ 17,850   $ 26,775
                                   12/31/98
================================================================================
</TABLE>

(a)Dividend  equivalents are granted under the Omnibus Incentive Plan.  Dividend
   equivalents  entitle the recipient to the cash amount equal to the average of
   the dividends paid over the  performance  cycle at the then current  dividend
   rate  multiplied by the number of units  granted.  Dividend  equivalents  are
   earned,  if at all, at the end of a three-year  performance  period depending
   upon achievement of Earnings Per Share goals over the performance period. The
   Target  represents the amount to be awarded if 100% attainment of the goal is
   achieved. Threshold represents the amount to be awarded if 90% of the goal is
   achieved, and Maximum represents the amount to be awarded if 110% of the goal
   is attained.  Additional dividend equivalents may be granted each year by the
   Compensation Committee. In accordance with the terms of the Omnibus Incentive
   Plan,  dividend  equivalents  vest at the target level  immediately  upon the
   effective date of the Merger.

(b)Certain  amounts were paid on February 28, 1997, as discussed in footnote (e)
   of the Summary Compensation Table.

(c)Certain amounts vested upon retirement.


                                       13
<PAGE>

    The  following  table  shows the  estimated  pension  benefits  payable to a
covered  participant at normal  retirement  age under the Employees'  Retirement
Plan ("Retirement Plan") and the Supplemental Executive Retirement Plan
("SERP").
<TABLE>
<CAPTION>
================================================================================
                         Pension Plan Table
================================================================================
   Remuneration                   Years of Service
                             15                 20   25 or more years
--------------------------------------------------------------------------------
      <S>               <C>                <C>                <C>
       $100,000         $54,375            $65,000            $65,000
        125,000          67,969             81,250             81,250
        150,000          81,562             97,500             97,500
        175,000          93,750            113,750            113,750
        200,000         105,938            130,000            130,000
        225,000         118,125            146,250            146,250
        250,000         130,313            162,500            162,500
        300,000         154,688            195,000            195,000
        400,000         203,438            260,000            260,000
        450,000         227,813            292,500            292,500
        500,000         252,188            325,000            325,000
        600,000         300,938            390,000            390,000
================================================================================
</TABLE>

    The Retirement Plan portion of the amounts listed in the table is calculated
based on the following formula: 1.5% of average final compensation multiplied by
years of credited service.

    Average  final  compensation  is  based  on the  highest  average  of  three
consecutive years compensation.  For the named Executive Officers,  such covered
compensation  is  reflected  in the Salary  column of the  Summary  Compensation
Table.  Federal  regulations  require  that for the 1996  plan year no more than
$150,000  in  compensation  be  considered  for the  calculation  of  retirement
benefits from the Retirement  Plan, and the maximum amount paid from a qualified
defined benefit plan cannot exceed $120,000, as of January 1, 1997. Benefits are
calculated  on a straight  life annuity  basis.  The benefit  amounts  under the
Retirement Plan are not subject to any deduction for Social Security benefits or
other offset amounts.

    The number of years of service  credited under the  Retirement  Plan as of
December 31, 1996,  were 34 years for Mr. Hock, 2 years for Mr.  Brunetti,  28
years for Mr. Kelly, 2 years for Ms. Smith,  and 8 years for Mr. Crawford (see
"Employment  Contracts and Change in Control  Arrangements"  for Mr. Brunetti,
Ms.  Smith  and Mr.  Crawford).  Mr.  Crawford  is not a member  of the  SERP.
There is no maximum  number of years of credited  service for  calculation  of
benefits under the Retirement Plan.

   The  SERP  is  a  non-qualified  supplemental  pension  plan  for  designated
executive  officers that provides  increased benefits including those that would
otherwise be denied  because of certain  Internal  Revenue Code  limitations  on
qualified  benefit  plans.  As of  December  31,  1996,  there were 9  executive
officers participating in the SERP, including the named Executive Officers (with
the exception of Mr.  Crawford).  Benefits  under the SERP are  calculated  such
that,  when added to the maximum  benefits  payable under the  Retirement  Plan,
benefits will equal 65% of the  participant's  base salary at the  participant's
normal  retirement  date  (age 65 or such  earlier

                                       14
<PAGE>

date as the participant is eligible and elects to retire with full benefits
under the Retirement  Plan). For executives who became  participants in the SERP
after March 26, 1991, the SERP benefits accrue over a 20-year  period.  Benefits
are paid for 20 years with a 50% survivor  benefit if death occurs  sooner.  The
benefit  amounts  under the SERP are not  subject  to any  deduction  for Social
Security benefits or other offset amounts.

   Although no decision has yet been finalized,  it is expected that replacement
plans will be adopted,  as applicable,  for  supplemental  retirement,  deferred
compensation,  incentive  compensation  and certain  other  plans for  executive
officers when the Merger is effective.

Compensation of Directors

    Each  Director who is not an officer is currently  paid a fee of $24,000 per
annum.  Effective  January  1,  1994,  each  non-officer  Director  is  paid  an
additional attendance fee of $500 for each Board and committee meeting that such
Director  attends,  with  committee  chairpersons  receiving $750 per meeting of
their respective committees that they attend.

    Effective January 26, 1988, the Company adopted a modified tenure policy for
Directors,  as  amended.  The  primary  purpose  of the  policy is to assure the
continued  availability to the Company of the varied experience of the Directors
after their retirement. Under the provisions of the policy, and in consideration
of the  Directors'  agreement  to  provide  advice  and  counsel to the Board as
requested, all Directors retiring after January 26, 1988, will be paid a monthly
retainer  equal to the base fee being paid to outside  Directors  at the time of
their retirement.  This retainer will be paid for 10 years or life, whichever is
less.  In  addition,  any outside  Director  who has served as a Director  for a
minimum of 10 years and who does not seek  re-election  for  reasons  other than
physical or mental disability, the pressure of other duties, or similar reasons,
shall also be paid this retainer.

    On  January  1,  1994,  the  "Directors'  Voluntary  Deferral  Plan"  became
effective.  This  non-qualified  plan  allows  Directors  to  defer  receipt  of
retention  fees  and/or  meeting  fees on a  pre-tax  basis.  Messrs.  McKinley,
Nicholson, Rodriguez, and Tointon have elected to participate.

Employment Contracts and Change in Control Arrangements

    The Company has  entered  into  severance  agreements  (the "PSCo  Severance
Agreements") with certain key employees,  including Messrs.  Hock,  Brunetti and
Kelly and Ms.  Smith  (each,  an  "Employee"),  as amended.  The PSCo  Severance
Agreements  provide  that if the  Employee's  employment  is  terminated  by the
Company  for any  reason  other  than  cause,  death or  disability,  or by such
Employee in the event of constructive  discharge at any time during the coverage
period,  the Company  will pay the Employee a severance  benefit  equal to three
years'  compensation  and the Employee will continue to receive welfare benefits
and perquisites  until the earlier of (i) three years after  termination or (ii)
24 months after a 13th-Month Trigger.  The 13-month Trigger permits the Employee
to elect to  terminate  employment  for any  reason  during  the  30-day  period
following  the  one-year  anniversary  of a change in control (as defined in the
PSCo Severance  Agreements) and receive a severance  benefit equal to two years'
compensation.  In addition,  the Company will (i) pay such  Employee the present
value of the benefits  that would have accrued  under the  qualified  retirement
plans in place and  operational  on the date of  termination as if such Employee
had received  credit for the  three-year  period of  severance,  (ii) treat such
Employee as if he or she had  continued to accrue  benefits  under the Company's
SERP during the three-year  period of severance and (iii) treat such Employee as
if he or she were  employed  by the  Company  during  the  three-year  period of
severance for purposes of exercising stock options.

    The Company  entered into an employment  agreement  with Mr. Hock for a term
ending January 31, 1997, as amended.  Mr. Hock's  agreement  provided for a base
salary of not less than $428,000 plus an annual target bonus  opportunity of not
less than 40% of base salary and an annual stock option award opportunity of not
less than 160% of base salary.

                                       15
<PAGE>

    The Company has entered into an employment agreement with Mr. Brunetti for a
term ending July 17, 1997, as amended.  Mr. Brunetti's  agreement provides for a
single lump sum cash sign-on bonus in the gross amount of $25,000 in addition to
the issuance of 4,000 shares of restricted  stock of the Company.  The agreement
also  provides for a base salary of not less than $325,000 plus an annual target
bonus opportunity of not less than 35% of base salary and an annual stock option
award opportunity of not less than 140% of base salary. Upon the commencement of
employment  with the Company,  Mr.  Brunetti  was also issued stock  options for
17,000 shares of stock of the Company.  Mr.  Brunetti's  agreement also provides
that Mr.  Brunetti  will  participate  in the SERP and will be  entitled to full
benefits upon retirement at age 65.

    The Company has entered into an  employment  agreement  with Ms. Smith for a
term ending  December 4, 1997, as amended.  The agreement  provides for a single
lump sum cash  sign-on  bonus in the gross  amount of $20,000 in addition to the
issuance of 750 shares of restricted  stock of the Company.  The agreement  also
provides for a base salary of not less than $220,000 plus an annual target bonus
opportunity of not less than 30% of base salary and an annual stock option award
opportunity  of not less than 115% of base salary.  Ms.  Smith's  agreement also
provides  that Ms.  Smith will  participate  in the SERP and will be entitled to
full benefits upon retirement at age 65.

    Upon termination of Mr. Hock's,  Mr.  Brunetti's,  or Ms. Smith's employment
after a Change in Control  (as  defined in their  respective  agreements),  such
individual will receive the greater of the payments he or she would otherwise be
entitled to receive under their agreements,  including tax-free reimbursement of
any excise taxes paid  thereunder,  or the  payments  provided for in his or her
respective severance agreements,  as described above.  Termination of employment
with the Company to become an employee of a  corporation  which owns 100% of the
Company will not be considered a termination of employment for purposes of these
agreements. If the Company terminates Mr. Hock's, Mr. Brunetti's, or Ms. Smith's
employment  without cause, or such  individual  terminates his or her employment
for good  reason  (each as defined in the  agreements),  such  individual  shall
receive (i) his or her base salary for the  remainder  of the term of his or her
agreement,  (ii) the greater of the target or actual  annual bonus paid for such
year of termination  for the remaining  term of his or her  agreement,  (iii) an
immediate  vesting  of  all  outstanding   incentive  awards  and  the  economic
equivalent  of any  long-term  awards he or she would have  received  during the
remaining term of his or her agreement,  (iv)  additional  credit under the SERP
for the remaining  term of his or her agreement,  (v)  additional  contributions
under the ESP that he or she would have received for the  remaining  term of his
or her agreement,  (vi) continued welfare benefits for the remaining term of his
or her agreement, and (vii) a payment equal to the present value of the benefits
he or she would have received under all then existing qualified retirement plans
had he or she received credit for the remaining term of his or her agreement.

      Effective March 1, 1994, the Company entered into an employment  agreement
with Mr. Crawford pursuant to which he would receive  severance  benefits if his
employment is terminated  because his position is eliminated.  Additionally,  if
Mr.  Crawford's  employment is terminated or he retires after his  attainment of
age 62, he would be entitled  to benefit  payments  such that his total  benefit
payment under the Retirement Plan and the employment agreement equals 40% of his
monthly rate of salary at the time of termination/retirement  for a period of 20
years. On February 7, 1997, Mr.  Crawford  retired at age 65 after effecting the
termination  provisions  of his  employment  agreement.  Mr.  Crawford  was paid
severance  benefits equal to 26 weeks pay totaling  $92,007 and began  receiving
other benefit payments,  as discussed above, totaling $70,348 annually (includes
$56,240 annually under the employment agreement). Upon Mr. Crawford's death, his
beneficiary  will receive 50% of the benefit  payments  described  above for the
remainder of such 20-year period.

      In accordance  with the  stipulation  and agreement  which was approved in
connection with the CPUC's  approval of the Merger,  amounts paid under the PSCo
Severance  Agreements are not recoverable  merger related costs. This regulatory
treatment  is similar to the  treatment  allowed in other  transactions  of this
type.

                                       16
<PAGE>

Compensation Committee Interlocks and Insider Participation

    During  1996,  the  following   Directors   served  on  the   Compensation
Committee:  Dr. Doris M. Drury,  Collis P. Chandler,  Jr., George B. McKinley,
Will F.  Nicholson,  Jr., W. Thomas  Stephens and Robert G.  Tointon.  None of
these  Directors are or have been an officer or employee of the Company or any
of  its  subsidiaries.  Mr.  Tointon  was  involved  in  transactions  with  a
subsidiary of the Company.  For a description of these transactions,  see Item
13. "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Management and Directors
as of February 28, 1997 (a)
<TABLE>
<CAPTION>
================================================================================
 Title of Class   Name of Beneficial Owner      Amount and      % of
       (b)                                       nature of       Class
                                                beneficial        (e)
                                               ownership (d)
--------------------------------------------------------------------------------
<S>               <C>                                <C>      
 Common Stock     Wayne H. Brunetti                  34,342(f)
--------------------------------------------------------------------------------
 Common Stock     Collis P. Chandler, Jr.(1)            10,229
--------------------------------------------------------------------------------
 Common Stock     Dr. Doris M. Drury                     1,792
--------------------------------------------------------------------------------
 Common Stock     Thomas T. Farley (2)                   3,161
--------------------------------------------------------------------------------
 Common Stock     Gayle L. Greer                           995
--------------------------------------------------------------------------------
 Common Stock     A. Barry Hirschfeld (3)                4,780
--------------------------------------------------------------------------------
 Common Stock     Delwin D. Hock (4)                138,001(f)
--------------------------------------------------------------------------------
 Common Stock     George B. McKinley                     1,000
--------------------------------------------------------------------------------
 Common Stock     Will F. Nicholson, Jr.(5)              2,143
--------------------------------------------------------------------------------
 Common Stock     J. Michael Powers                      5,480
--------------------------------------------------------------------------------
 Common Stock     Thomas E. Rodriguez (6)                1,942
--------------------------------------------------------------------------------
 Common Stock     Rodney E. Slifer                      10,737
--------------------------------------------------------------------------------
 Common Stock     W. Thomas Stephens                     4,586
--------------------------------------------------------------------------------
 Common Stock     Robert G. Tointon (7)                  5,000
--------------------------------------------------------------------------------
 Common Stock     Richard C. Kelly (8)               28,986(f)
--------------------------------------------------------------------------------
 Common Stock     Patricia T. Smith                  10,182(f)
--------------------------------------------------------------------------------
 Common Stock     A. Clegg Crawford                  11,662(f)
--------------------------------------------------------------------------------
 Common Stock     Directors & Executive             327,269(f)
                  Officers
                  as a Group (c)
================================================================================
</TABLE>
Notes

(a)  As of  February  28,  1997,  the  Company is not aware of any  persons  who
     beneficially own more than 5% of the Company's Common Stock.

(b)  Common Stock listed in the table  represents the Company's Common Stock, $5
     par value.

(c)  There are a total of 22 Executive Officers and Directors.

                                       17
<PAGE>

(d)  The common shares  represented  above  include  those shares,  if any, held
     under the Company's ESOP.

(e)  On February 28, 1997,  the percentage of shares  beneficially  owned by any
     Director or named  Executive  Officer,  or by all  Directors  and Executive
     Officers as a group, does not exceed one percent of the class of securities
     described above.

(f)  The number of shares  includes  those which the following have the right to
     acquire as of February  27, 1997  through  the  exercise of vested  options
     granted under the Omnibus  Incentive Plan: Mr. Hock,  112,497  shares;  Mr.
     Brunetti, 16,167 shares; Mr. Kelly, 23,450 shares; Ms. Smith, 8,533 shares;
     Mr. Crawford,  8,750 shares; and all Executive Officers as a group, 196,748
     shares. There are 102,884  unexercisable  options held by all Directors and
     Executive  Officers as a group  outstanding at February 28, 1997 and on the
     effective date of the Merger, these options will become exercisable.

     Unless otherwise  specified,  each Director and named Executive Officer has
sole voting and sole investment power with respect to the shares indicated.

(1)  Mr.  Chandler's  wife owns 308 of these  shares,  ownership  of which Mr.
     Chandler  disclaims.  In addition,  Mr. Chandler shares  investment power
     with  Chandler-Simpson,  Inc., of which he is President,  with respect to
     5,143 of these shares.

(2)  Included  in the total  amount are 2,565  common  shares held in a family
     trust of which  Mr.  Farley  is  beneficiary.  Mr.  Farley  has no voting
     power but shares investment power with respect to these shares.

(3)  Mr.  Hirschfeld's  wife  owns  1,231  of  these  shares;  Mr.  Hirschfeld
     disclaims ownership of these shares.

(4)  Mr. Hock shares voting and  investment  power with his wife with respect to
     21,557 of these shares.

(5)  Mr.  Nicholson's wife owns 500 of these shares;  Mr. Nicholson  disclaims
     ownership of these shares.

(6)  Mr.  Rodriguez's  wife is custodian  and has sole  investment  and voting
     power for their  minor  children  with  regard to 1,040 of these  shares.
     Also,  Mr.  Rodriguez's  wife  owns 365 of these  shares;  Mr.  Rodriguez
     disclaims ownership of these 1,405 shares.

(7)  Mr. Tointon shares voting and investment power with respect to these shares
     with  Phelps-Tointon,  Inc., of which he is President  and Chief  Executive
     Officer.

(8)  Mr. Kelly's wife owns 263 of these shares; Mr. Kelly disclaims  ownership
     of these shares.

Changes in Control

      It is expected that the Merger will be completed in the second  quarter of
1997 (see Note 3. Merger and Note 9.  Commitments and  Contingencies  Regulatory
Matters in Item 8. FINANCIAL  STATEMENTS AND  SUPPLEMENTARY  DATA).  The Merger,
when  effective,  will result in a change in control and,  accordingly,  certain
benefits  under the  Omnibus  Incentive  Plan will vest and become  payable,  as
provided in the plan, and certain provisions under employment  contracts and the
PSCO severance  agreements will be triggered as disclosed in Item 11.  EXECUTIVE
COMPENSATION.

Item 13.  Certain Relationships and Related Transactions

      Fuelco, a dissolved Colorado corporation and a wholly-owned  subsidiary of
the Company,  had  previously  entered into an agreement with The San Juan Basin
Consortium,  Ltd.  (of which Mr.  Tointon and his  affiliates  were  members) to
purchase and further develop various oil and gas  properties.  Fuelco's  working
interest in these properties ranged from 50% to 100%. These properties were sold
by Fuelco,  Mr.  Tointon and his  affiliates  on July 1, 1996,  effective  as of
January 1, 1996, for approximately $27 million. Fuelco's properties were sold at
approximately book value.

                                       18
<PAGE>


                                  SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  Public  Service  Company of Colorado has duly caused this
report to be signed on its behalf by the undersigned,  thereunto duly authorized
on the 25th day of March, 1997.

                                          PUBLIC SERVICE COMPANY OF COLORADO

                                          By      /s/R. C. Kelly
                                          ---------------------------------
                                                   R. C. KELLY
                                             Senior Vice President,
                                             Finance, Treasurer and
                                             Chief Financial 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 Public
Service Company of Colorado and in the capacities and on the date indicated.


   Signature                      Title                          Date
--------------------------------------------------------------------------------

/s/W. H. Brunetti
____________________________   Principal Executive            March 25, 1997
W. H. Brunetti                 Officer and Director
President and
Chief Executive Officer


/s/R. C. Kelly
_____________________________  Principal Financial Officer    March 25, 1997
R. C. Kelly
Senior Vice President,
Finance, Treasurer and
Chief Financial Officer


/s/W. Wayne Brown
_____________________________  Principal Accounting Officer   March 25, 1997
W. Wayne Brown
Controller and
Corporate Secretary