ROANOKE GAS COMPANY

                           STOCK BONUS
                              PLAN



Policy Statement:  The purpose of Roanoke Gas Company's Stock 
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Bonus Plan is to allow the Board of Directors to reward
individual or collective superior performance that has resulted
in enhanced stockholder value or returns, and to encourage
increased ownership of Company stock by officers and management.

Administration:  The Roanoke Gas Company Stock Bonus Plan shall 
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be administered by the Board of Directors Compensation Committee. 
The Committee shall consider recommendations from the Company
President before making its bonus award proposal to the Board of
Directors.  The President shall consider recommendations from the
other officers of the Company when making recommendations to the
Compensation Committee.  The Committee bonus award proposals
shall be subject to approval by the Board of Directors.

Timetable:  The Compensation Committee shall present its stock 
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bonus award proposal to the Board of Directors at the Boards'
annual meeting in January of each year.  The Compensation
Committee may, for exceptional employee performance, recommend
stock bonus awards at times other than and in addition to the
normal January proposal.

Financial Operating Impact:  The Committee shall consider the 
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potential income statement impact of its stock bonus award
proposals and include a statement on the anticipated impact in
its proposal to the Board of Directors.

Plan Revision:  The Stock Bonus Plan of Roanoke Gas Company may 
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be revised, temporarily suspended, or revoked by the Board of
Directors upon recommendation of the Compensation Committee.

Non Discrimination:  The Officers, President and Compensation 
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Committee of Roanoke Gas Company will make their recommendations
and proposals for stock bonus awards without respect to race,
color, age, sex or religious preference.  The final decision of
the Board of Directors will likewise be non discriminating.

Eligibility:  The Stock Bonus Plan is intended as a reward for 
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superior performance of the officers and managers of the Company. 
However, individual non management employees of the Company may
be considered for stock bonus awards when circumstances do not
allow adequate recognition of performance through existing
compensation sources or plans.  For example, stock certificates
as perfect attendance recognition may be given to all employees
of the Company.
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Officer Ownership Policy:  Officers of the Company are encouraged
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to own a position in the Company's Stock of at least 50 percent
of the value of their annual salary.  To promote this policy all
bonuses for officers with stock ownership positions below the 50
percent ownership level should receive no less than 50 percent of
any performance bonuses in the form of Company stock or stock
options unless otherwise approved by the Compensation Committee.

Stock Options:  The Compensation Committee and Board of Directors
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may use stock options in the place of or in conjunction with
stock bonuses once the Company has in place an SEC approved non
qualified stock option plan.

Adoption:  This plan was adopted on January 23, 1995 at a meeting
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of the Board of Directors of Roanoke Gas Company held at its
Corporate Offices at 519 Kimball Avenue, N.E., Roanoke, Virginia
24016.




                                   s/ Roger L. Baumgardner
                                   -----------------------------
                                        Corporate Secretary
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