===========================================================================
                 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, D. C. 20549
                                     FORM 10-K
   (Mark One)
   (X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 
                             
   For the fiscal year ended September 30, 1997
                             ------------------
                                        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 1-12859
                          -------
                                CTG Resources, Inc.
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              (Exact name of registrant as specified in its charter)
                                          
                Connecticut                                 06-1466463
   ---------------------------------------         ----------------------------
      (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                    Identification No.)
    
             100 Columbus Blvd.
             P.O. Box 1500
             Hartford, Connecticut                           06144-1500
   ---------------------------------------         ----------------------------
   (Address of principal executive offices)                  (Zip code)
    
   Registrant's telephone number, including area code (860) 727-3010
                                                         ---------------
    
   Securities registered pursuant to Section 12(b) of the Act:
                                                     Name of Each Exchange on
              Title of Each Class                        Which Registered
              -------------------                  ----------------------------
             Common Stock - No Par                    New York Stock Exchange
   ----------------------------------------        ----------------------------
    
   Securities registered pursuant to Section 12(g) of the Act:
   None
   ---------------------------------------------------------------------------
                                 (Title of Class)
    
   Indicate by check mark if disclosure of delinquent filers pursuant to Item
   405 of Regulation S-K is not contained herein, and will not be contained,
   to the best of registrant's knowledge, in definitive proxy or information
   statements incorporated by reference in Part III of this Form 10-K or any
   amendment to this Form 10-K.   x   
                                -----
   Indicate by check mark whether the registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Securities Exchange Act
   of 1934 during the preceding 12 months (or for such shorter period that the
   registrant was required to file such reports), and (2) has been subject to
   such filing requirements for the past 90 days.    Yes  x   No     
                                                        -----    -----
   State the aggregate market value of the voting stock held by nonaffiliates
   of the registrant.  (The aggregate market value shall be computed by
   reference to the price at which the stock was sold, or the average bid and
   asked prices of such stock, as of a specified date within 60 days prior to
   the date of filing.)
      The aggregate market value of the voting stock held by nonaffiliates
   ---------------------------------------------------------------------------
      of the Registrant on November 3, 1997 was $263,567,358.
   ---------------------------------------------------------------------------
   Indicate the number of shares outstanding of each of the registrant's
   classes of common stock, as of the latest practicable date (applicable only
   to corporate registrants).
   ---------------------------------------------------------------------------
     Number of shares of Common Stock outstanding as of the close of business
   ---------------------------------------------------------------------------
     on December 1, 1997 was 8,652,169.
   ---------------------------------------------------------------------------
                        DOCUMENTS INCORPORATED BY REFERENCE
    
   List hereunder the following documents if incorporated by reference and the
   Part of the Form 10-K into which the document is incorporated:  (1) Any
   annual report to security holders; (2) Any proxy or information statement;
   and (3) Any prospectus filed pursuant to rule 424(b) or (c) under the
   Securities Act of 1933.  The listed documents should be clearly described
   for identification purposes.
      Definitive Proxy Statement for the Company's January 1998 Annual 
   ---------------------------------------------------------------------------
      Meeting (Part III)  
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    <PAGE>



   <PAGE>


                                      PART I
    
   ITEM 1. BUSINESS
   ----------------
    
     General
     -------
    
     CTG Resources, Inc. ("the Company" or "CTG") is a Connecticut corporation 
     organized as a holding company with two wholly owned subsidiaries: 
     Connecticut Natural Gas Corporation ("CNG") and The Energy Network, Inc.
     ("TEN").  CTG was established as a holding company and the parent of CNG
     in March of 1997.  CTG subsequently became the parent of CNG's wholly
     owned subsidiary, TEN, in April of 1997.  This reorganization into a
     holding company structure effectively separated the Company's regulated
     natural gas business, CNG, and the diversified unregulated businesses held
     by TEN.  Management believes that the holding company structure offers the
     best means of providing the Company with the increased flexibility which
     will be required to compete in the rapidly deregulated energy marketplace. 
      
     CTG's headquarters are in Hartford, Connecticut.  At September 30, 1997,
     the Company employed 573 people.  The Company's no par common stock is
     traded on the New York Stock Exchange, under the symbol CTG.  Previously
     issued preferred stock of CNG is traded on the over-the-counter market.
    
     CTG's principal business is the distribution, transportation and sale of
     natural gas through CNG.  This business is subject to extensive
     regulation.  CTG's diversified businesses are unregulated and provide
     energy-related products and services, primarily district heating and
     cooling.
     
     Segment information for all relevant periods is included in the Notes to
     the Financial Statements filed in Part II, Item 8 of this report.
    

     Seasonality
     -----------
    
     The Company's operations are seasonal.  Most of the Company's gas revenues
     and related operating expenses occur during the winter heating season,
     October to April.  Natural gas usage in the Company's service area is
     greater for heating purposes in winter and less for cooling in summer. 
     Natural gas usage for nonheating purposes remains steady throughout the
     year.  Accordingly, earnings are highest during the first and second
     quarters of the fiscal year, which begins October 1, and the third and
     fourth quarters frequently show a net loss.  The impact of seasonality on
     cash flows is discussed in Item 7.  Management's Discussion and Analysis
     of Financial Condition and Results of Operations.

     The Company's unregulated district heating and cooling businesses
     experience peak loads during the winter heating and summer cooling
     seasons.




   <PAGE>


     Competition
     -----------
    
     In recent years, the natural gas industry has undergone structural changes
     in response to Federal regulatory policy intended to increase competition. 
     In 1992, the Federal Energy Regulatory Commission ("FERC") issued Order
     636, which required all interstate gas pipelines to provide "unbundled,"
     or separate, gas transportation and storage services and to discontinue
     their bundled merchant sales operations, which included the gas
     acquisition function.  Similarly, the Company has offered firm
     transportation rate tariffs to nonresidential customers since April 1,
     1996.  The impact of the FERC Order 636 and the resulting deregulation of
     the gas industry has continued to heighten competition and has changed the
     nature of the Company's business.
    
     The Company has historically distributed and sold natural gas to its
     customers without substantial competition from other gas utilities,
     cooperatives or other providers of natural gas.  At the local level, as a
     result of FERC Order 636 and Connecticut deregulation, the Company faces
     increasing competitive pressures as other providers of gas seek
     opportunities to make gas sales to the Company's commercial and industrial
     customers.
    
     The Company also competes with suppliers of oil, electricity and propane
     for cooking, heating, air conditioning and other purposes.  Competition is
     greatest among the large commercial and industrial customers who have the
     capability to use alternative fuels.  The volatile effect of this price-
     sensitive load is somewhat overcome through the use of flexible rate
     schedules which allow gas pricing to meet alternative-fuel competition. 
     The Company's transportation rate tariffs are designed to recover a margin
     on each transaction that is comparable to the margin that the Company
     would have received if it were making a system sale of natural gas.
     
     The diversified businesses own and operate district heating and cooling
     systems ("DHC"), which distribute and sell steam, hot water and chilled
     water to office complexes and other large buildings in the City of
     Hartford.  Once DHC has been selected, the risk of competition from
     alternate fuels is diminished because of the cost of the equipment
     necessary to utilize an alternative energy source.
    
    
     Regulatory Jurisdiction
     -----------------------
    
     CNG's principal business is the distribution of natural gas, and this
     business is subject to regulation by the Connecticut Department of Public
     Utility Control ("DPUC") as a public service company.  The scope of this
     regulation encompasses rates, standards of service, issuance of certain
     securities, safety practices and other matters.  Retail sales of gas by
     the Company and deliveries of gas owned by others are made pursuant to
     rate schedules and contracts filed with and subject to DPUC approval.  In
     general, the firm rate schedules provide for some reductions in the unit
     price of gas as greater quantities are used.  The rate schedules contain
     purchased gas adjustment provisions as described in Note 1 to the
     Financial Statements (included in Part II, Item 8 herein).
    



   <PAGE>


     Businesses operated by TEN are not public service companies under state
     law, and hence they are not subject to regulation by the DPUC.  However,
     intercompany transactions between CNG and its affiliates are subject to
     review and/or approval by the DPUC.
    
     The regulation of interstate sales of natural gas is under the
     jurisdiction of the FERC.  The Company is subject to the direct
     jurisdiction of the FERC for any off-system sales the Company makes in
     interstate commerce.  The FERC regulates the Company's pipeline gas
     suppliers and transporters, and the Company closely follows and
     participates in numerous proceedings before FERC.  Through an unregulated
     subsidiary, of TEN, TEN Transmission Company ("TEN Transmission"), the
     Company is a 4.87% equity partner in the Iroquois Gas Transmission System
     Limited Partnership ("Iroquois"), which is subject to regulation by FERC.
    
    
     Natural Gas Business (Regulated)
     -------------------------------
    
     CNG is a Connecticut corporation organized in 1848 and headquartered in
     Hartford, Connecticut.  CNG is engaged in the distribution, transportation
     and sale of natural gas in Hartford and 20 other cities and towns in
     central Connecticut and in Greenwich, Connecticut.  This business is
     subject to extensive regulation.  Many aspects of this traditional
     business have changed or are expected to change as deregulation of the
     industry occurs.  Later sections of this document address these changes
     (See, for example, the sections entitled "Regulatory Matters" and
     "Competition.").
    
     Consolidated gas operating revenues were $283,324,000 for the fiscal year
     ended September 30, 1997 and were derived approximately 51% from
     residential customers, 21% from commercial firm customers, 1% from
     industrial firm customers, 15% from interruptible customers, 10% from off-
     system sales and 2% from the aggregate of transportation of customer-owned
     gas and other gas-related revenues.  There were $2,403,000 of revenues
     from sales to affiliated companies.  The gas distribution business
     contributed 93% of consolidated revenues over the three fiscal years
     ending 1997.  During the fiscal year ended September 30, 1997, the peak-
     day sendout of gas was 263,878 thousands of cubic feet ("mcf") which
     occurred on January 18, 1997.
    
     CNG has one wholly owned subsidiary, CNG Realty, Corp. ("CNGR"), which was
     formed in 1977.  CNGR is a single purpose corporation which owns the
     Company's Operating and Administrative Center located on a 7-acre site in
     downtown Hartford, Connecticut.  This facility is leased to CNG.  CNGR
     engages in no other business activity.
    

     Gas Supply -
    
     The Company's current gas supply contract portfolio reflects the results
     of a continuing supply diversification strategy.  The purpose of such a
     strategy is to hold a secure, flexible, best-cost gas supply portfolio,
     which allows the Company to respond quickly and appropriately as customer
     needs change.
    


   <PAGE>


     The Company purchases natural gas on a long-term and seasonal basis from
     producers and, when economics dictate, on a short-term basis in the spot
     market.  Pipeline services purchased include firm and interruptible
     transportation service.  Gas storage service in the northeast and in the
     southeast production area is purchased from both pipelines and storage
     contractors.
    
     The Company's principal and most economical source of gas is pipeline-
     delivered natural gas.  Because of limited transportation capacity,
     pipelines may be unable to meet all of the Company's needs during the
     coldest periods of the year.  Therefore, the Company also utilizes
     liquefied natural gas ("LNG") and, to a much lesser extent, propane mixed
     with air ("LP-Air").  LNG and LP-Air are usually more expensive than
     natural gas.  Therefore, they are used primarily during the winter months
     for peak shaving when the demand for gas is greatest and exceeds
     deliverable supplies of natural gas through the pipelines.
    
     The Company currently holds pipeline transportation contracts with
     Algonquin Gas Transmission Company ("AGT"), CNG Transmission Corporation
     ("CNGT"), Iroquois Gas Transmission System ("IGTS"), National Fuel Gas
     Supply Corporation ("NFGS"), Tennessee Gas Pipeline Company ("TGP"), Texas
     Eastern Gas Transmission Corporation ("TETCO"), and Transcontinental Gas
     Pipeline Corporation ("TRANSCO").  The various agreements expire at
     different times through 2012 and provide for the delivery of a total
     maximum daily quantity of approximately 170,596 mcf and maximum annual
     quantity of approximately 48,708,730 mcf.  The Company also has signed
     supply contracts directly with upstream producers to provide the natural
     gas for these transportation arrangements.
    
     The Company has contracted for storage service in various locations and
     with diverse expiration dates through 2012.  Under these arrangements, gas
     available during the warmer months of the year is stored underground in
     locations that, although out-of-state, are accessible for use during the
     colder winter months of the year and for balancing throughout the year.
    
     The gas supply which feeds into the Company's firm transportation rights
     on the interstate pipelines has been contracted for directly with
     producers of natural gas ("Direct Producer Contracts").  The Direct
     Producer Contracts are diverse in terms of expiration date, supply
     location, price, flexibility, etc. as part of the Company's gas supply
     diversification strategy.
    
     The Company continues to be very active in the area of purchasing gas
     directly from producers both in the spot market and under long-term
     arrangements.  Currently, the Company purchases all of its gas under such
     arrangements.  Spot market volumes are those purchased under short-term
     arrangements from producers and gas withdrawn from storage which had been
     purchased directly from producers for injection to that storage.  Spot
     market purchases are set by negotiation with the supplier.  
    
    

   <PAGE>


     Under FERC Order 636, a pipeline may not terminate service to a long-term
     firm transportation customer if that customer elects to exercise a "right
     of first refusal" following the initial contract term expiration.  This
     requires the customer to match the price and length terms of another offer
     made to the pipeline to continue to purchase such service.  The price for
     such continued firm transportation service would be capped at the maximum
     price determined as a just and reasonable rate under FERC jurisdiction.
    
     In addition to its pipeline gas supplies, the Company owns an LNG plant in
     Rocky Hill, Connecticut.  This plant has the design capacity to liquefy
     approximately 6,000 MCF per day and store 1,206,000 MCF.  The LNG plant is
     not a source of additional gas, but it permits the Company to liquefy and
     store gas during the summer and to deliver the stored gas during the
     following winter.  The plant has the design capacity to vaporize 60,000
     MCF per day.
    
     LP-Air is a source of peak shaving supply to the Company.  The Company has
     approximately 720,000 gallons of on-site propane storage which can produce
     the equivalent of approximately 8,208 MCF of natural gas per day.
     
    
     Regulatory Matters -
     
     In August 1997 the DPUC initiated a generic proceeding to investigate firm
     transportation and unbundling in Connecticut.  The unbundling review
     process, which includes collaboration between many industry stakeholders,
     will be held in two phases.  Phase I, currently in progress, will address
     the status of existing firm transportation service for commercial and
     industrial customers, primarily focusing on streamlining the local natural
     gas distribution companies' ("LDCs") administrative processes.  
      
     Phase II will explore the myriad of important issues related to fully
     unbundled, competitive gas service for all customers,  including
     residential.  These issues will include recovery of stranded costs, the
     LDCs' obligation to serve customers who choose other suppliers, a marketer
     code of conduct and consumer protection, use/role of fixed price hedging
     tools, future decisions regarding pipeline capacity entitlements, and
     public policy programs.  
    
     In August 1996, CNG filed an application to expand firm transportation
     service to multi-unit residential customers with six or more dwelling
     units  (i.e., large apartment complexes).  Transportation had only been
     available to commercial and industrial customers.  The Department approved
     this proposal in December 1996, allowing CNG to better compete in this
     market relative to alternate fuel competition.

     In February 1996, the Department initiated a DPUC Review of the Purchased
     Gas Adjustment ("PGA") clause.  The purpose of the generic review was to
     determine the appropriateness of the PGA mechanism in light of emerging
     competition and the evolution of "unbundling" of services provided by LDCs
     and the pipelines.  The PGA allows LDCs to recover gas costs on an 


   <PAGE>


     automatic flow-through basis.  The DPUC's April 1997 Decision reaffirmed
     the appropriateness of the PGA clause given the continued volatility of
     gas prices and significant proportion of gas costs relative to an LDC's
     total operating and maintenance expenses.
    
     In August 1996, CNG filed a petition to extend its meter test cycle in an
     effort to save costs.  Existing regulations required CNG to remove and
     test all meters that are in the field for ten years.  CNG requested that
     the test period be extended to twenty years, noting improved quality and
     accuracy in current metering technology.  The DPUC approved a performance-
     based test plan in September 1997.

     In September 1996, CNG and CTG filed and application with the DPUC to
     reorganize CNG into a holding company structure under which CNG would
     become one of two wholly owned subsidiaries of CTG Resources, Inc.  The
     new holding company structure, which was approved in November 1997 and
     became effective in March 1997, allows CNG to better position its
     management, financing vehicles, and energy related products and services
     to the distinct regulated and unregulated markets in which it competes.
    
     In August 1995, the DPUC initiated a management audit of CNG which was
     performed by an independent management consulting firm.  A final report
     containing the firm's findings, conclusions and recommendations was issued
     in November 1996.  CNG issued a response to the recommendations contained
     in the report in March 1997, indicating the course of action to be taken
     with respect to each recommendation with which it concurred and the
     reasons for disagreement with those to which it took exception.  In the
     opinion of management, the recommendations being implemented will not have
     any material adverse effect on the Company's results of operations.  The
     DPUC has informed CNG that it will initiate a second phase of the
     management audit which will focus on several areas of CNG's operations in
     which opportunities for improvements were identified by the initial audit. 
     The second phase is scheduled to begin in December 1997.

    
     Diversified Businesses (Unregulated)
     -----------------------------------
    
     At September 30, 1997, the diversified businesses of the Company included
     TEN and its wholly owned subsidiaries The Hartford Steam Company ("HSC"),
     TEN Transmission Company ("TEN Transmission"), ENI Gas Services, Inc.
     ("ENI Gas") and ENServe Incorporated ("ENServe").
    
     TEN was incorporated in 1982 and is engaged in the operations described in
     the following paragraphs.  TEN and HSC together provide DHC services to a
     number of large buildings in Hartford, Connecticut.  TEN Transmission owns
     the Company's share of Iroquois.  ENServe offers energy system operating
     and maintenance services.  ENI Gas owns the Company's one-half interest in
     KBC Energy Services ("KBC").  TEN's other operating divisions offer energy
     equipment rentals, property rentals and financing services.  
    


   <PAGE>


     TEN Transmission, which was formed in 1986, owns the Company's 4.87% share
     of Iroquois.  Iroquois operates a natural gas pipeline which transports
     Canadian natural gas into the states of New York, Massachusetts and
     Connecticut.
    
     HSC, incorporated in Connecticut in 1961, owns and operates a central
     production plant and distribution system for the processing and
     distribution of steam for heating and chilled water for cooling to a
     number of offices, stores and other large buildings in downtown Hartford,
     Connecticut.
    
     HSC chills its own water supply for district cooling and produces its own
     steam from its existing boilers.  HSC also purchases steam from the
     Downtown Cogeneration Associates Limited Partnership ("DCA"), which sells
     steam to HSC under a twenty-year contract.  TEN is a 50% partner in the
     DCA with two unrelated third parties.  The DCA owns and operates a four-
     megawatt cogeneration facility on the roof of a downtown Hartford building
     complex.  Electricity generated from this unit is sold to The Connecticut
     Light and Power Company under a twenty-year contract expiring in 2007. 
     During fiscal 1997, TEN provided cogeneration management and consulting
     services to DCA.
    
     The Capitol Area System ("CAS") is a district heating and cooling system
     serving a section of the City of Hartford, Connecticut.  TEN owns the
     distribution system and purchases hot and chilled water from a third
     party.  TEN also provides marketing services to this third party.
    
     TEN's energy equipment rentals division and its financing division were
     joined to form TEN's financing operations in fiscal 1997.  TEN owns
     natural gas water heaters and natural gas conversion burners which it
     leases to customers in the residential market.

     In October 1997, the Company entered into an agreement to sell the
     physical assets and business of ENServe, subject to arrangements
     concerning certain uncompleted contracts and commitments.  These
     arrangements are expected to be completed in fiscal 1998.  ENServe
     previously had offered energy system management services and energy
     conservation services to residential, commercial and industrial customers
     throughout Connecticut.
    
     ENI Gas was formed to own the Company's interest in KBC.  KBC markets
     natural gas supplies, other energy sources and energy management related
     services on a nonregulated basis to commercial and industrial end users,
     primarily in New England.
    


   <PAGE>


     Environmental Considerations
     ----------------------------
    
     The Company has not experienced and does not anticipate any significant
     problem in complying with laws and regulations pertinent to its business
     concerned with protecting the environment.  Additional information
     regarding environmental considerations is included in the Management's
     Discussion and Analysis of Financial Condition and Results of Operations,
     filed in Part II, Item 7 of this report, and the Notes to the Financial
     Statements, filed in Part II, Item 8 of this report.
    
    
     Franchises
     ----------
    
     CNG holds franchises, granted by the Legislature of the State of
     Connecticut, and other consents which it considers to be valid and
     adequate to enable it to carry on its operations, substantially as now
     carried on, in each of the communities which it serves.
     
    

































   <PAGE>


   ITEM 2. PROPERTIES
   ------------------
    
     At September 30, 1997, CNG owns gas distribution mains, a natural gas
     liquefaction plant, propane gas storage tanks, metering stations, gas
     service connections, meters, regulators and other equipment necessary for
     the operation of a gas distribution system.  Substantially all of the
     Company's properties are subject to the lien of the Indenture of Mortgage
     and Deed of Trust securing its first mortgage bonds.  The properties, in
     management's opinion, are maintained in good operating condition.  The gas
     mains are located principally under public streets, roads and highways.
    
     TEN owns a distribution system located in the Capitol area of Hartford,
     Connecticut for the distribution of hot water for heating and chilled
     water for cooling.  This property was financed with industrial revenue
     bonds secured by a letter of credit with a bank.  
    
     The financing division of TEN owns water heaters and conversion burners
     which it leases to its customers in the residential market.
    
     HSC owns a central production plant and distribution system, which
     includes a chilled water storage tank, in downtown Hartford, Connecticut
     for the processing and distribution of steam for heating and chilled water
     for cooling.
    
     CNGR owns the Operating and Administrative Center in Hartford which is
     leased by the Company.  The center is subject to the lien of the Mortgage
     Deed under which the CNGR's first mortgage notes are issued.
    
    
























   <PAGE>


   ITEM 3. LEGAL PROCEEDINGS
   -------------------------
    
     In November 1995, certain Connecticut plumbers and HVAC contractors filed
     a class action suit against CNG and the State's two other LDCs, claiming
     that the LDCs engaged in unfair trade practices relating to customer
     service work.  The action alleged that the LDCs unfairly competed with
     licensed plumbers and contractors by performing customer service work
     using customer service employees who did not possess State trade licenses. 
     Previously, the LDCs claimed that the work was performed under a statutory
     exemption enacted in 1965 and amended in 1967.  In 1996, the Connecticut
     Court of Appeals upheld an administrative ruling against the LDCs'
     position.
    
     The plumbers and contractors are currently asserting claims for profits
     which they allege were lost during prior years.  There has not been any
     settlement demand or any formal statement of alleged damages.  As a
     result, management cannot estimate CNG's potential exposure related to
     these claims.  CNG is vigorously defending this matter.
    
     On July 28, 1997, CNG filed suit in state court against another
     Connecticut local gas distribution company seeking to enjoin that company
     from serving retail customers in a town in which CNG currently serves
     customers.  A hearing is scheduled for January 1998, and a decision on the
     merits of CNG's claims is expected in a matter of weeks following that
     hearing.  The outcome of this litigation and its impact cannot be assessed
     at this time. 
    
     The Company is not a party to any other litigation other than ordinary
     routine litigation incident to the operations of the Company or its
     subsidiaries.  In the opinion of management, the resolution of such
     litigation will not have a material adverse effect on the Company's
     financial condition or results of operations.
    
    
    
   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   -----------------------------------------------------------
    
     There were no matters submitted to a vote of security holders during the
     last quarter of the fiscal year ending September 30, 1997.
    
    











   <PAGE>


   Executive Officers of the Registrant
   ------------------------------------
   All executive officers' terms of office are one year.
    
   Victor H. Frauenhofer                                    Age - 64
   Chairman and Chief Executive Officer and Director
    
     Business experience:
        1996 - Present  Chairman and Chief Executive Officer
        1991 - 1996     Chairman, President and Chief Executive Officer
        1987 - 1991     President and Chief Executive Officer
        1983 - 1987     President and Chief Operating Officer
    
    
   Arthur C. Marquardt                                      Age - 50
   President and Chief Operating Officer
    
     Business experience:
        1996 - Present  President and Chief Operating Officer
        1992 - 1996     Senior Vice President - Gas Business Unit,
                            Long Island Lighting Company
        1991 - 1992     Vice President - Strategic Business Planning,
                            Long Island Lighting Company
    
    
   James P. Bolduc                                          Age - 48
   Executive Vice President and Chief Financial Officer
    
     Business experience:
        1996 - Present  Executive Vice President and Chief Financial Officer
        1993 - 1996     Senior Vice President - Financial Services
                            and Chief Financial Officer
        1992 - 1993     Vice President, Consumer Services
        1989 - 1991     Vice President, Distribution and Customer Service
        1987 - 1989     Vice President Corporate, Regulatory
                            and Customer Services
        1985 - 1987     Vice President Diversified Group
    
    
   Anthony C. Mirabella,                                    Age - 57
   Senior Vice President - Operations and Chief Engineer
    
     Business experience:
        1997 - Present  Senior Vice President - Operations and Chief Engineer
        1993 - 1997     Vice President - Operations and Chief Engineer
        1992 - 1993     Vice President, Distribution/Engineering Services
                            & Chief Engineer
        1989 - 1991     Vice President & Chief Engineer
        1988 - 1989     Vice President Nonregulated Operations
        1987 - 1988     Vice President Affiliated Resources Corporation
        1985 - 1987     Vice President Business Development Group



   <PAGE>


   Executive Officers of the Registrant (Concluded)
   -----------------------------------------------

   Reginald L. Babcock                                      Age - 46
   Vice President, General Counsel and Secretary
    
     Business experience:
        1997 - Present  Vice President, General Counsel and Secretary
        1996 - 1997     Vice President - Administrative Services and General
                           Counsel and Secretary
        1993 - 1996     Vice President - Corporate Services and General Counsel
                            and Secretary
        1989 - 1993     Vice President, General Counsel and Secretary
        1985 - 1989     Secretary and Counsel
        1983 - 1985     Assistant Secretary and Counsel
    
    
    
    

































   <PAGE>


                                      PART II
    
    
    
   ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
   -------------------------------------------------------------
            SECURITY HOLDER MATTERS
            -----------------------
    
     The Company's common stock is listed on the New York Stock Exchange.  The
     high and low sales prices for each quarterly period during the years ended
     September 30, 1997 and 1996 were as presented in the table below.  These
     prices are based on the New York Stock Exchange NYSENet stock quotation
     service.
    
<TABLE>
<CAPTION>
                           QUARTERLY COMMON STOCK PRICES
                           -----------------------------
                                  1997                       1996
                          --------------------       --------------------

     <S>                   <C>          <C>           <C>          <C>
     Fiscal Year            High         Low           High         Low
     ---------------       ------       ------        ------       ------

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

     Third Quarter         22 1/4       20 3/4        24 5/8       21 7/8
     Fourth Quarter        23 13/16     21 5/8        24 1/4       22
</TABLE>
    
     There were 8,744 record holders of the Company's common stock at November
     3, 1997.
    
     Cash dividends are declared on the Company's common stock on a quarterly
     basis out of funds legally available therefor.  The total amount of
     dividends declared was $1.52 per share in 1997 and $1.50 per share in
     1996.  Funds utilized by the Company for the payment of dividends are
     typically received as dividends from its subsidiaries, CNG and TEN.  Under
     the most restrictive terms of the open-end indenture securing CNG's first
     mortgage bonds, as amended, retained earnings of $23,135,000 were
     available for CNG to pay dividends at September 30, 1997.  There are also
     certain restrictions relating to CNG's classes of preferred stock as to
     which dividends and sinking fund obligations must be paid prior to the
     payment of common stock dividends.
    
     As a provision of a Forward Equity Purchase Agreement between CTG and TEN,
     dated October 1, 1997, the Company is restricted from declaring or paying
     any dividends or distributions to holders of its common stock if any
     amounts due and payable under this agreement are in arrears (See Note 12
     to the Financial Statements in Part II, Item 8).  There are no other
     restrictions on the Company's present or future ability to pay such
     dividends.  The Company expects that future cash for dividends will be
     available.
    

   <PAGE>


     In connection with a stock repurchase plan which occurred in the first
     quarter of fiscal 1998 (See Note 12 to the Financial Statements in Part
     II, Item 8) the Company reduced its quarterly dividend on common stock
     from $0.38 ($1.52 annually) to $0.25 ($1.00 annually) per share, effective
     with the first quarterly dividend of fiscal 1998, payable on December 19,
     1997 to shareholders of record on December 5, 1997.  The Company's Board
     of Directors has recently established a target of paying out as dividends
     approximately 50% to 55% of the Company's earnings on average.  The
     declaration and payment of future dividends will be dependent on the
     Company's earnings and financial condition, economic and market conditions
     and other factors deemed relevant by the Company's Board of Directors.
    
    









































   <PAGE>


   ITEM 6. SELECTED FINANCIAL DATA
   --------------------------------
    
<TABLE>
<CAPTION>
     FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS
     (Thousands of Dollars)
    
   <S>                          <C>      <C>       <C>       <C>      <C>
                                 1997      1996     1995      1994      1993 
                                ------    ------   ------    ------    ------ 
   Operating revenues           $305,565 $315,363  $275,185  $290,662 $265,337 

   Net income applicable
     to common stock            $ 17,013 $ 18,932  $ 16,957  $ 17,637 $ 16,788 

   Earnings per share           $   1.60 $   1.87  $   1.71  $   1.85 $   1.76 

   Total assets                 $464,287 $466,979  $465,039  $458,554 $444,585 

   Long-term obligations        $126,787 $136,432  $150,390  $154,193 $137,984 
    
   Cash dividends declared
     per common share           $   1.52 $   1.50  $   1.48  $   1.48 $   1.46 
   Dividend payout ratio            95.0%    80.2%     86.6%     80.0%    83.0%

   P/E ratio                          14       13        13        13       18 

   Market price as a %
     of book value -
     year-end                      145.9%   152.9%    146.8%    162.0%   225.6%

</TABLE>
    
   (Certain amounts for 1996 and prior years have been reclassified to conform
   with 1997 classifications.)
    
    



















   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997
       -----------------------------------------
       (Thousands of Dollars Except for Per Share Data)
        
        
       As of the close of business on March 31, 1997, CTG Resources, Inc. ("the
       Company" or "CTG") became the holding company and parent of the
       Connecticut Natural Gas Corporation ("CNG").  As of the close of
       business on April 30, 1997, CNG's unregulated business and wholly owned
       subsidiary, The Energy Network, Inc. ("TEN"), became a wholly owned
       subsidiary of CTG.  Management believes that this is the preferred form
       of organization for CTG as the era of deregulation in the natural gas
       industry continues.  The holding company structure will provide CTG and
       its subsidiaries with the increased flexibility that is needed to
       compete in a rapidly changing energy marketplace.  For financial
       reporting purposes, the consolidated statements for CTG are consistent
       with those that have been previously presented for CNG.

       CNG is an energy provider engaged in the regulated distribution, sale
       and transportation of natural gas.  CTG's diversified businesses are
       unregulated and are held by TEN.  The diversified businesses are offered
       through operating divisions or wholly owned subsidiaries and include
       energy-related products and services, district heating and cooling,
       energy equipment rentals and financing, energy system management and
       operating services and the Company's equity investments in several
       partnerships.
        
       In October 1997, subsequent to year-end, TEN repurchased 2.0 million
       shares of CTG common stock for $52,000.  TEN financed the purchase with
       a combination of revolving bank debt and the issuance of Senior
       Subordinated Notes.  The shares repurchased by TEN were transferred by
       the depositary directly to CTG.  In connection with the repurchase, CTG
       reduced its quarterly dividend on common stock from $0.38 ($1.52
       annually) to $0.25 ($1.00 annually) per share, effective with the first
       quarter of fiscal 1998.  In future periods the lower shares outstanding
       should help to increase overall earnings per share.  In the long-term,
       the lower dividend will enable CTG to retain more of its earnings to
       fund the future growth of the Company.  

         
       RESULTS OF OPERATIONS
       ---------------------
        
       Net income applicable to common stock and earnings per share for the
       fiscal years ended September 30, 1997, 1996 and 1995 were $17,013
       ($1.60), $18,932 ($1.87) and $16,957 ($1.71), respectively.  Earnings
       for 1996 include a nonrecurring item: the proceeds from the sale of a
       building by the diversified businesses, equivalent to $.05 per share. 
       Earnings in 1995 include two nonrecurring items: a gain of $.24 per
       share relating to a negotiated settlement for the termination of a steam
       supply contract and a charge of $(.05) per share in connection with the
       settlement of legal matters relating to the Company's interest in the
       Iroquois Gas Transmission System ("Iroquois").


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       Lower fiscal 1997 earnings are the result of the warmer weather
       experienced in the Company's natural gas service area during the winter
       heating season.  The Company's customers' greatest use of energy during
       the year is in the winter, mostly for the purpose of heating their homes
       or businesses.
        
       Warmer weather also impacts several other areas of the financial
       statements.  For example, the cost of energy is lower because the
       Company acquired less gas to satisfy customers' requirements.  Interest
       expense is lower because the Company did not need to borrow as much cash
       on a short-term basis to buy equivalent gas volumes.  Bad debt expense
       is lower because of both smaller customers' bills and overall favorable
       collection efforts.  Overtime labor is lower because of fewer weather
       related calls.  The impact of a higher effective income tax rate
       somewhat offset these benefits to earnings.  Other important
       contributing factors to all years include changes in the mix of sales,
       customer usage, the cost of natural gas and related profit margins.
        
       An increase in natural gas rates granted to the Company by the
       Connecticut Department of Public Utility Control ("DPUC"), effective
       October 1995, and a significantly colder winter are the principal
       reasons for the higher earnings reported for fiscal 1996.  Higher
       operating expenses and a higher effective income tax rate somewhat
       offset these benefits to earnings.

       Earnings from our diversified businesses represent the net effect of
       several diverse and offsetting influences.
        

       Gas Operating Margin

       Gas operating margin is equal to gas revenues less the cost of gas and
       Connecticut gross revenues tax.  The following table presents revenues,
       gas operating margin and gas commodity and transportation volumes for
       fiscal 1997, 1996 and 1995, respectively:
        
<TABLE>
       <S>                                               <C>             <C>             <C>
                                                           1997            1996            1995   
                                                           ----            ----            ----   

       Gas Revenues                                      $283,324        $292,852        $254,006 
                                                         ========        ========        ======== 
       Gas Operating Margin                              $112,446        $116,104        $103,267 
                                                         ========        ========        ======== 
       Commodity and Transportation
         Volumes (mmcf)
           Firm Gas Sales                                  22,354          23,911          21,361 
           Interruptible Gas Sales                          9,573           8,614           8,554 
           Off-System Gas Sales                            10,164          12,435          16,265 
           Transportation Services                          4,131           4,336           7,695 
                                                          -------         -------         ------- 
              Total                                        46,222          49,296          53,875 
                                                          =======         =======         ======= 
</TABLE>


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       Changes in weather patterns from year to year impact the contribution to
       operating margin by the different customer classes, because of required
       changes in overall throughput mix among the various customer classes and
       the different per-unit margin contributed by each customer class.  Firm
       sales contribute the highest per-unit operating margin of all customer
       classes.
        
       Warmer weather during the fiscal 1997 heating season resulted in lower
       use per customer and reduced sales and operating margin, especially from
       the firm class of customers.  Off-system sales and transportation
       services have also shown decreases in fiscal 1997 as a result of the
       warmer winter weather.
        
       The reduced firm customers' needs in the 1997 winter made gas available
       for sale to interruptible customers and resulted in higher interruptible
       sales in fiscal 1997.  However, interruptible per-unit margins were
       lower in fiscal 1997 because of the cost of gas associated with those
       sales.  Margin earned above a prescribed target level on interruptible
       sales is refunded to firm ratepayers, as required by the DPUC.

       New, higher firm rates, approved by the DPUC effective October 1995,
       together with significantly colder winter weather, resulted in the
       higher gas operating margin earned in fiscal 1996.
        
       Off-system sales permit the Company to market short-term gas supplies
       and transportation services by contract with customers nationwide. 
       However, these sales volumes contribute the smallest per-unit operating
       margin.  The significance of the off-system sales program is that the
       Company acts as an independent marketer of natural gas and
       transportation, enabling the Company to generate operating margin from a
       source not restricted by the capacity of the Company's own distribution
       system or curtailment limitations driven by system demand.  A
       significant portion of margin earned on off-system sales is refunded to
       firm ratepayers, as directed by the DPUC.
         
       Off-system sales were lower in fiscal 1997, as compared to 1996, because
       of the warmer winter weather and corresponding reduced need for fuel for
       heating purposes and the absence of production area sales that were made
       in prior years.  Off-system sales are lower in fiscal 1996, as compared
       to 1995, for two reasons.  During the colder winter the Company chose to
       be more conservative and selective in its off-system sales, pursuing
       opportunities for better contributions to margin rather than higher
       volume sales.  In the summer months the Company first used available gas
       supplies to fill storage facilities in preparation for the coming winter
       before offering available supply for off-system sales.

       Transportation services are sold under per-unit operating margins
       comparable to those earned on similar gas sales.  Therefore the Company
       is financially indifferent as to whether it transports gas or sells gas
       and transportation together.  The decrease in transportation throughput
       from 1995 to 1996 reflects the September 30, 1995 closing of the Hacogen
       cogeneration facility, which provided steam, under contract, to the
       district heating and cooling ("DHC") operations.
        
   <PAGE>

   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------

        
       Operating and Maintenance Expenses

       Lower operating and maintenance expenses recorded in fiscal 1997
       represent the net effect of variations in many different costs.  Lower
       costs were incurred for labor, reflecting the savings from early
       retirements and reduced overtime costs as a result of the warmer winter
       and fewer weather related expenses.  A reduction in pension costs
       reflects the absence of the expenses related to the early retirement
       program offered in fiscal 1996 and reduced costs because of those
       retirements.  Bad debt costs are lower mainly because of the lower
       natural gas bills experienced as a result of the warmer winter heating
       season.  Costs related to workers compensation insurance were lower
       because of lower actual and projected claims (used to set the Company's
       premiums) as a result of the Company's aggressive monitoring of claims. 
       Lower costs were also recorded for outside purchased services.  Higher
       margins generated by service contract work also helped to offset
       increases in other expense categories.
        
       The October 1995, rate decision allowed the Company to recover certain
       expenses that had been previously deferred pending the outcome of the
       rate proceedings.  Because of these additional amortizations and
       increases in certain other expense categories, higher operations and
       maintenance expenses were recorded beginning in fiscal 1996.  Increases
       were recorded in the categories of wages and salaries, pension costs,
       employee benefits, conservation program expenses, insurance-related
       costs, regulatory commission and rate proceedings expenses and outside
       purchased services.  The colder fiscal 1996 winter also resulted in
       increased bad debt costs related to the higher bills.  These increases
       were somewhat offset by lower costs incurred for computer hardware
       rentals and maintenance and margins generated from service contract
       activity.

       The Company announced a voluntary early retirement program ("VERO") in
       September 1996, and 16 employees accepted retirement effective December
       1, 1996.  The VERO resulted in an overall 1.5 percent reduction in the
       total workforce.
        
       Year to year increases in depreciation result from annual additions to
       depreciable plant and reflect the Company's continued growth.
        
        
       Income Taxes
        
       The on-going turn around of flow-through tax depreciation differences on
       older plant and the absence, in fiscal 1997, of cost of removal
       deductions related to prior periods that were recorded during fiscal
       1996, have resulted in an overall higher effective income tax rate in
       fiscal 1997.  Higher taxable income and an increase to the Company's
       income tax reserve also added to the increase in income taxes in fiscal
       1997.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       The overall effective income tax rate was also higher in fiscal 1996, as
       compared to 1995, due to the on-going turn around of flow-through tax
       depreciation differences on older plant and the absence of cost of
       removal deductions taken during 1995.  These higher taxes are being
       recovered in CNG's rates.
        
        
       Other Income/(Deductions)
        
       The Company's equity in partnership earnings is a part of the results of
       operations from the CTG's diversified businesses and is explained in
       that context under the section "Earnings from Diversified Businesses." 
        
       Higher deductions were recorded in fiscal 1997 because of lower interest
       income from overnight cash investments, higher promotional and
       advertising expenses and higher premiums related to insurance.  These
       additional costs and reduced income were somewhat offset by the absence
       of the 1996 costs associated with converting the Company's regulated
       propane service program to natural gas.
        
       Nonrecurring income of $892 in fiscal 1996 relates to the diversified
       businesses' sale of land and a building in August 1996.  The net after
       tax gain was $515, equivalent to $.05 per share.  Aside from this item,
       more Other Income was recorded in fiscal 1996 from interest income
       earned by the investment of available cash balances and lower insurance
       costs realized from the reconfiguration of certain plans.  This higher
       income was partially offset by increased promotional expenses and
       additional costs related to the  conversion of the Company's regulated
       propane service program to natural gas.
        
       Two nonrecurring items were recorded in fiscal 1995:  a one-time, after
       tax benefit of $2,379, equivalent to $.24 per share, from the
       termination of a steam supply agreement by the DHC operations, and a
       charge of $500, or $(.05) per share, to reflect the accrual of the
       Company's proportionate share of expenses in connection with legal
       matters of Iroquois.
         

       Interest and Debt Expense
        
       Interest related to long-term debt continues to decline as the amount of
       principal outstanding is reduced by scheduled sinking fund payments and
       early repurchases of issues that are near maturity.  In fiscal 1996, the
       Company also realized the benefit of lower average interest rates on
       variable rate long-term debt.
        
       Other interest relates primarily to interest on short-term borrowings
       and interest associated with pipeline refunds and deferred gas costs. 
       Short-term interest fluctuates as a result of changes in interest rates,
       short-term cash requirements and conversions to long-term debt. 



   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       Short-term borrowings were needed in both 1997 and 1996 to supplement
       the seasonal changes in available cash from operations.  In fiscal 1997,
       because of the warmer winter, the Company did not need to borrow as much
       cash on a short-term basis to support working capital requirements.  The
       Company also recorded lower interest related to natural gas pipeline
       refunds and deferred gas costs.  Short-term borrowings in the
       diversified businesses have been minimal as they have been able to meet
       their working capital needs from cash generated by day to day
       operations.  In fiscal 1996, cash was available because of the timing of
       collections through the purchased gas adjustment ("PGA"), which was
       ultimately refunded to customers, and available cash on hand for working
       capital from the issue of common stock in June 1996.  
        

       Earnings from Diversified Businesses
        
       The Company's diversified businesses are all unregulated and include TEN
       and TEN's wholly owned subsidiaries:  The Hartford Steam Company
       ("HSC"), ENI Gas Services,  ENServe, and TEN Transmission Company ("TEN
       Transmission").  TEN's Capitol Area Systems division and HSC provide DHC
       services to a majority of buildings in downtown Hartford, CT.  ENServe
       offers energy system operating and maintenance services.  TEN's other
       operating divisions offer energy equipment rentals and financing
       services.  TEN Transmission owns the Company's share of Iroquois.  ENI
       Gas Services owns the Company's one-half interest in KBC Energy Services
       ("KBC").  Refer to Note 1 to the Financial Statements for additional
       information regarding these investments.
        
       Earnings from the diversified businesses reflect the measures that have
       been taken in the last few years to position this area of the Company
       for future growth and development.  In fiscal 1996, the property
       management business sold its land and building, realizing a gain of $.05
       per share, and ceased operations.  In April of 1996, the Company's
       equity interest in Iroquois was increased from 2.40% to 4.87%, and its
       equity in partnership earnings from Iroquois increased accordingly.  In
       fiscal 1995, the DHC reached a settlement agreement related to steam
       supply and recorded a gain of $.24 per share.  Earnings per share from
       ongoing operations were $.25 in 1997, $.30 in 1996 and $.25 in 1995.
        
       The reduction in earnings from ongoing operations in fiscal 1997
       reflects the impact of two items:  additional outside consultant
       expenses and losses incurred by ENServe.  Subsequent to year-end, the
       physical assets of ENServe were sold.
        
       Higher earnings recorded from the Company's equity interest in several
       partnerships, as described above, and positive earnings from DHC
       activities in fiscal 1997 have offset the majority of the impact of the
       items described above.  During fiscal 1997, the DHC business implemented
       cost-containment measures and upgraded and/or modified the equipment
       which produces steam for heating, reducing the cost of company-produced
       steam from 1996 levels.  DHC operating earnings also benefited from
       lower interest expense because ongoing cash from operations eliminated
       the need for short-term borrowings for working capital throughout fiscal
       1997.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       DHC earnings in fiscal 1997 are also impacted by changes in weather. 
       Warmer winter weather and cooler summer weather did result in lower
       sales volumes, but variable costs of DHC service also declined and
       overall sales were not as low as they could have been because customer
       usage patterns did not fluctuate as much as the changes in the weather.  

        
       In fiscal 1996, DHC activities incurred higher operations and
       maintenance expenses.  The impact of these costs was somewhat offset by
       higher winter season steam and hot water sales, as a result of the
       colder weather, and lower average interest rates on variable rate long-
       term debt.  Initial operating losses related to energy system operating
       and maintenance services offered by ENServe also lowered earnings from
       ongoing operations in fiscal 1996.

        
       Steam Supply
        
       Through fiscal 1995 one of the DHC operations' suppliers of steam was a
       cogeneration facility owned by an unrelated third party, the Hacogen
       partnership ("Hacogen").  The steam supply agreement with Hacogen was
       terminated, effective September 30, 1995.  According to the terms of the
       negotiated settlement, the DHC operations received consideration of
       $9,519, representing the payment of all past due amounts owed by Hacogen
       and certain additional amounts as a result of the contract termination: 
       $4,967 was received as of September 30, 1995, and the balance was
       received in December 1995.  The 1995 pretax, nonrecurring income related
       to this settlement was $4,124.
        
       In October 1995, the DHC operations resumed steam production from their
       own boilers. In fiscal 1996, the DHC operations were reassessed to
       determine future cost control and operational options.  In response,
       equipment was upgraded and/or modified and other cost-containment
       measures were implemented, reducing the cost of company-produced steam.
        
        
       Year 2000 Compliance
        
       Over the last several years the Company has improved and upgraded its
       core financial and operating systems.  In addition, the Company is
       reviewing its other computer and operating systems to assure that they
       will be able to process transactions in the year 2000.  The Company is
       not aware of the need for any significant future expenditures in order
       to comply with Year 2000 software requirements.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------

        
       LIQUIDITY AND CAPITAL RESOURCES
       -------------------------------
        
       Natural gas sales in New England are seasonal, and the Company's cash
       flows vary accordingly because regulated natural gas operations are the
       principal segment of the Company's business.  The Company manages its
       changes in cash requirements, primarily to fund gas purchases and
       customer accounts receivable, by using cash flows generated from
       operations supplemented by short-term financing from lines of credit.
        
       Cash flows from operations have generally been sufficient to satisfy the
       diversified operations' cash requirements.  Existing credit lines are
       used to balance seasonal variations in available cash resources.
        
          
       Cash Flows from Operating Activities
        
       The levels of construction expenditures, dividends, the cost of gas and
       volumes of gas sold are the principal factors which influence cash flows
       from operations from year to year.  The price of natural gas impacts the
       amount of purchased gas costs subject to refund or recovery through the
       PGA.  The volumes of gas sold magnify the impact of changing prices.
        
       During fiscal 1997, a combination of the cash on hand at year-end 1996,
       short-term borrowings and cash received from ongoing operations paid for
       the expenses related to ongoing operations and for construction,
       dividends and principal payments that were due on long-term debt.  Cash
       flows from operations are lower in fiscal 1997, as compared to 1996,
       primarily due to lower sales as a result of this year's warmer winter.
        
       In both fiscal 1996 and 1995, the expenses of operations, construction,
       dividends and principal payments were paid for from the cash received
       from ongoing operations and proceeds from issues of common stock.  Cash
       flows from operations were higher in 1995 because of a large amount of
       natural gas pipeline refunds that were received in 1995 and later
       returned to customers in 1995 and 1996.  Such refunds result from
       pipeline regulatory activity at the federal level and are beyond the
       control of the Company.  The proceeds from the issues of Common Stock
       were used by the regulated operations and reduced the need for short-
       term financing.
        
        
       Investing Activities
        
       Construction expenditures in 1997, 1996 and 1995 were $24,593, $24,281
       and $26,839, respectively.  Capital spending for the fiscal year ending
       September 30, 1998 is estimated to be $22,600 for the regulated
       operations.  The diversified businesses are projecting to expend $13,200
       in fiscal 1998 primarily to fund the expansion of the DHC system to
       serve an additional neighborhood of large building complexes in Hartford
       CT.  CTG's construction program is subject to continuous review and
       modification, and actual expenditures may vary from these estimates. 
       The Company plans to fund capital expenditures and other commitments
       through a combination of sources.



   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       In May 1997, the Company invested $100 for a 2.15% interest in the AGA
       Gas Finance Company ("GasFinCo").  GasFinCo provides loans through
       Fannie Mae to finance energy investments in owner-occupied residences.
        
       In June 1997, the Company and Koch Gas Services Company acquired the
       partnership interest of Bay State Energy Enterprises in KBC.  As a
       result of this transaction the Company's interest in KBC has increased
       from one third to one half.
        
       Cash flows from investing activities in fiscal 1996 include the proceeds
       from the diversified businesses' sale of a building and land and the
       receipt of the balance of the settlement amount due from the termination
       of a steam supply contract.
        
        
       Financing Activities

       The Company uses short-term debt to finance working capital
       requirements.  Capital expenditures are also temporarily funded with
       short-term debt.  The Company raises short-term funds through the use of
       available bank lines of credit and revolving credit agreements (See Note
       8 to the Financial Statements).  Long-term debt and equity issues are
       used to reduce outstanding short-term debt and to permanently finance
       completed construction.
        
       In February 1997, the Company extended the term of its expiring $9,000
       bank line of credit for one year.  
        
       In March 1997, the Company exercised its option to extend the term of
       its $20,000 revolving credit agreement for one year. 
        
       In August 1997, the Company repurchased $10,000 of existing 8.8% long-
       term mortgage debt, due in 2001, with available working capital.
         

       Common Stock and Dividend Matters
        
       In March 1997, pursuant to the Agreement and Plan of Exchange approved
       by shareholders, each outstanding share of common stock, $3.125 par
       value of CNG was exchanged for one new share of common stock, without
       par value, of CTG.  Each outstanding share of CTG common stock held by
       CNG prior to this exchange was cancelled.  As a result, CTG became the
       sole common stock shareholder of CNG, CNG became a subsidiary of CTG and
       all of the common stock of CTG was owned by the former common stock
       shareholders of CNG.  The consolidated assets, liabilities and equity of
       the Company did not change as a result of the reorganization.
        
       During fiscal 1997, 29,145 original issue shares of the Company's no par
       common stock were issued through various Company-sponsored plans. 
        
       In June 1996, the Company sold 700,000 shares of its $3.125 Par Common
       Stock at $23.25 per share.  The Company received net proceeds of $15,557
       which were added to working capital and used by the regulated operations
       to fund the current year's construction program and general operations.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       Under the most restrictive terms of the indenture securing the Company's
       First Mortgage Bonds, retained earnings of $23,135 are available for CNG
       to pay dividends at September 30, 1997.  CTG's ability to pay dividends
       is not restricted by these terms.  Dividends paid on common and
       preferred stock in fiscal 1997 were $16,177.  The preferred stock on the
       balance sheet is issued by CNG.  CNG is prohibited from, among other
       things, paying dividends on common stock and purchasing, redeeming or
       retiring common stock, if dividends on preferred stock are in arrears.
        
        
       Environmental Matters
        
       In the ordinary course of business, the Company may incur costs to clean
       up environmental contaminants related to natural gas activity.  In those
       instances the Company expects that the remediation costs will be
       recoverable in rates.  In the opinion of management, any existing
       environmental issues will not be significant to the future financial
       condition or results of operations of the Company.
        
         
       Competitive Environment

       In recent years, the natural gas industry has undergone structural
       changes in response to Federal regulatory policy intended to increase
       competition.  In 1992, the Federal Energy Regulatory Commission ("FERC")
       issued Order 636, which required all interstate gas pipelines to provide
       "unbundled," or separate, gas transportation and storage services and to
       discontinue their bundled merchant sales operations, which included the
       gas acquisition function.  Similarly, the Company has offered firm
       transportation rate tariffs to nonresidential customers, effective April
       1, 1996.  The impact of the FERC Order 636 and the resulting
       deregulation of the gas industry has continued to heighten competition
       and has changed the nature of the Company's business.
        
       The Company has historically distributed and sold natural gas to
       customers  within its franchise area without substantial competition
       from other providers of natural gas.  At the local level, as a result of
       FERC Order 636 and Connecticut deregulation, the Company faces
       increasing competitive pressures as providers of gas seek to make sales
       to the Company's commercial and industrial customers.

       The Company also competes with suppliers of oil, electricity and propane
       for cooking, heating, air conditioning and other purposes.  Competition
       is greatest for the Company's large commercial and industrial customers
       who have the capability to use alternative fuels.  The volatile effect
       of this price-sensitive load is somewhat overcome through the use of
       flexible rate schedules which allow gas pricing to meet alternative-fuel
       competition.  The Company's transportation tariffs are designed to
       recover a margin on each transaction that is comparable to the margin
       that the Company would have received if it were making a system sale of
       natural gas.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------
        
       The diversified businesses own and operate district heating and cooling
       systems, collectively referred to as DHC, which distribute and sell
       steam, hot and chilled water to office complexes and other large
       buildings in the city of Hartford.  Once DHC has been selected, the
       competition from alternate energy types is diminished because of the
       cost of the equipment necessary to utilize an alternative energy source.
        
        
       Regulatory Proceedings
        
       Connecticut local gas distribution companies ("LDCs") pass on to firm
       customers any increases or decreases in gas costs from those reflected
       in tariff charges under PGA provisions.  During fiscal 1996, the DPUC
       initiated a review of the need to continue or modify PGA accounting for
       all Connecticut LDCs.  The review was prompted by the offering of
       unbundled services by LDCs that began in fiscal 1996.  In April 1997,
       the DPUC issued a decision affirming the need to continue the PGA.
        
       In October 1995, the DPUC issued a decision which allowed the Company to
       increase its rates $8,900 or 3.64%.  This decision allowed a rate of
       return on equity of 10.76% and provided for recovery of all significant
       items that had been deferred pending recovery. 
        
        
       Legal Proceedings

       In November 1995, certain Connecticut plumbers and HVAC contractors
       filed a class action suit against the Company and the State's two other
       LDCs, claiming that the LDCs engaged in unfair trade practices relating
       to customer service work.  The plumbers and contractors are currently
       asserting claims for profits which they allege were lost during prior
       years.  There has not been any settlement demand or any formal statement
       of alleged damages.  As a result, management cannot estimate the
       Company's potential exposure related to these claims.  The Company is
       vigorously defending this matter.
        
       On July 28, 1997, the Company filed suit in State court against another
       Connecticut LDC seeking to enjoin that company from serving retail
       customers in a town in which the Company currently serves customers.  A
       hearing is scheduled for January 1998, and a decision on the merits of
       the Company's claims is expected in a matter of weeks following that
       hearing.  The outcome of this litigation and its impact cannot be
       assessed at this time. 
        
       The Company is not a party to any other litigation other than ordinary
       routine litigation incident to the operations of the Company or its
       subsidiaries.  In the opinion of management, the resolution of such
       litigation will not have a material adverse effect on the Company's
       financial condition or results of operations.
        

   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------

        
       Effects of Regulation
        
       The Company's natural gas distribution business is subject to cost-of-
       service regulation by the DPUC.  Based on current regulation and recent
       DPUC decisions, the Company believes that its use of regulatory
       accounting is appropriate and in accordance with the provisions of
       Statement of Financial Accounting Standards ("SFAS") No. 71 (See Note 1
       to the Financial Statements).
        
         
       Other Tax Matters
        
       A State tax matter that was being reviewed by the State of New York was
       settled during fiscal 1997 with no impact to the Company's financial
       condition or results of operations.
         
       CNG and other gas marketers, including KBC, may be subject to State
       taxation of off-system sales of natural gas.  Management is working with
       the states involved in order to clarify each state's position on the
       taxation of these sales.
        
       The Company is also subject to audit by State and Federal authorities as
       it relates to income, sales, use and property tax returns filed.  In the
       opinion of management, the ultimate resolution of these issues will not
       have a material impact on the Company's results of operations.
         
        
       NEW ACCOUNTING STANDARDS
        
       In February 1997, the Financial Accounting Standards Board ("FASB")
       issued SFAS No. 128, "Earnings Per Share."  This statement specifies the
       computation, presentation and disclosure requirements for earnings per
       share for entities with publicly held common stock.  Adoption of SFAS
       No. 128 is required in fiscal 1998.  Based on current analyses and
       assumptions, the Company does not expect that the adoption of SFAS No.
       128 will change its computation or presentation of earnings per share.
        
       In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
       Income."  This statement establishes standards for reporting and display
       of comprehensive income and its components in the financial statements. 
       Adoption of SFAS No. 130 is required in fiscal 1999.  Based on current
       analyses and assumptions, the Company does not expect that the adoption
       of SFAS No. 130 will have a material impact on its current presentation
       of stockholders' equity.
        
       In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
       of an Enterprise and Related Information."  This statement requires that
       public business enterprises report certain information about operating
       segments in complete sets of financial statements of the enterprise and
       in condensed financial statements of interim periods issued to
       shareholders.  It also requires that public business enterprises report
       certain information about their products and services, the geographic 
        

   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
       ----------------------------------------------------

       areas in which they operate, and their major customers.  Adoption of
       SFAS No. 131 is required in fiscal 1999.  The Company currently
       discloses certain financial data by segment (See Note 11 to the
       Financial Statements) in accordance with existing accounting and
       disclosure requirements.  At the appropriate time the Company will
       modify its current presentation, if necessary, to meet the requirements
       of SFAS No. 131.  The adoption of SFAS No. 131 will have no impact on
       the Company's financial condition or results of operations.
        
        
       INFLATION AND CHANGING PRICES
        
       Inflation impacts the prices the Company must pay for operating and
       maintenance expenses and construction costs.  The Company's rate
       schedules for natural gas and DHC sales include provisions that permit
       changes in gas costs and service costs, respectively, to be passed on to
       customers.  The Company attempts to minimize the effects of inflation on
       other costs through cost control, productivity improvements and
       regulatory actions where appropriate.
        
        
       SUBSEQUENT EVENTS
        
       Recapitalization Plan  
        
       In October 1997, TEN repurchased 2.0 million shares of CTG common stock
       for $52,000.  The common stock repurchase was financed by TEN primarily
       through the issue of $45,000 of Senior Subordinated Notes at 6.99%, due
       in 2009.  The principal is retired through semi-annual payments of
       $2,500 beginning in 2001.
        
       In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
       committed to fund $7,500 per year into TEN from 1998 through 2009 for an
       aggregate additional cash infusion into TEN of $90,000.  In exchange,
       TEN caused all shares of CTG common stock purchased through the October
       1997 tender offer to be transferred directly to CTG by the depositary. 
       As a provision of this agreement, CTG is restricted from declaring or
       paying any dividends or distributions to its holders of common stock if
       any amounts due and payable under this agreement are in arrears.
        
       On October 1, 1997, TEN entered into a 364-day secured revolving credit
       agreement for $10,000 with a bank.  This agreement matures on September
       29, 1998.  Interest is based on a Bank Rate or a LIBOR rate plus a
       variable margin.  It is determined at the time of each borrowing.  There
       is a one-time $5 commitment fee and a one-time .375% facility fee upon
       renewal.  

       On October 1, 1997, TEN entered into a three-year revolving credit
       agreement for $10,000 with a bank.  The maximum borrowing amount is
       reduced by $500 on each fiscal quarter, beginning January 1, 1998. 
       Interest is based on a Bank Rate or a LIBOR rate plus a variable margin
       and is determined at the time of each borrowing.  There is a one-time $5
       commitment fee and an on-going .45% to .6% facility fee on the unused
       portion of the agreement.


   <PAGE>


   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   ------------------------------------------------------------------------
       RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (concluded)
       ----------------------------------------------------

        
       Long-Term Debt 
        
       In October 1997, the Company issued a total of $19,000 of Medium Term
       Notes ("MTNs") due 2007.  These MTNs are unsecured and have no call
       provisions or sinking fund requirements.  The proceeds were used to
       refinance existing short-term debt.  The face values and interest rates
       of these MTNs are:

<TABLE>
                            <C>                     <S>
                            Face Value              Interest Rate
                            ----------              -------------
                                $ 1,000                  6.62%   
                                $ 1,000                  6.65%   
                                $17,000                  6.69%   
</TABLE>
                            
       The MTNs are rated at A3 by Moody's and A- by Standard and Poor's. 
        
        
       Sale of Assets
        
       On October 6, 1997, the Company signed an agreement to sell the physical 
       assets and related contracts of ENServe Corp., a wholly owned 
       subsidiary of TEN engaged in the HVAC business, for approximately
       $1,200.  This transaction will be finalized in fiscal 1998.  Any gain
       or loss is not expected to be significant.
        
        
       FORWARD LOOKING INFORMATION
        
       This report and other Company reports, including filings with the
       Securities and Exchange Commission, press releases and oral statements, 
       contain forward looking statements.  Forward looking statements are 
       made based upon management's expectations and beliefs concerning future 
       developments and their potential effect upon the Company.  The Company
       cautions that, while it believes such statements to be reasonable and 
       makes them in good faith, they almost always vary from actual results, 
       and the differences between assumed facts or basis and actual results 
       can be material, depending upon the circumstances.  Investors should be
       aware of important factors that could have a material impact on future 
       results.  These factors include, but are not limited to, weather, the 
       regulatory environment, legislative and judicial developments which 
       affect the Company or significant groups of its customers, economic 
       conditions in the Company's service territory, fluctuations in energy-
       related commodity prices, customer conservation efforts, financial 
       market conditions, interest rate fluctuations, customers' preferences,
       unforeseen competition, and other uncertainties, all of which are 
       difficult to predict and beyond the control of the Company.
        
        



   <PAGE>


   ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
   ----------------------------------------------------
    
   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
   ----------------------------------------
    
    
   To the Stockholders and The Board of Directors
     of CTG Resources, Inc.:
    
    
       We have audited the accompanying consolidated balance sheets and 
   consolidated statements of capitalization of CTG Resources, Inc. (a 
   Connecticut Corporation) and subsidiaries as of September 30, 1997 and 1996, 
   and the related consolidated statements of income, common stock equity and 
   cash flows for each of the three years in the period ended September 30, 
   1997.  These financial statements and the schedule referred to below are 
   the responsibility of the Company's management.  Our responsibility is to 
   express an opinion on these financial  statements based on our audits.
    
       We conducted our audits in accordance with generally accepted auditing 
   standards.  Those standards require that we plan and perform the audit to 
   obtain reasonable assurance about whether the financial statements are free 
   of material misstatement.  An audit includes examining, on a test basis, 
   evidence supporting the amounts and disclosures in the financial statements. 
   An audit also includes assessing the accounting principles used and 
   significant estimates made by management, as well as evaluating the overall 
   financial statement presentation.  We believe that our audits provide a 
   reasonable basis for our opinion.
    
       In our opinion, the consolidated financial statements referred to above 
   present fairly, in all material respects, the financial position of CTG 
   Resources, Inc. and subsidiaries as of September 30, 1997 and 1996, and the 
   results of their operations and their cash flows for each of the three years 
   in the period ended September 30, 1997, in conformity with generally accepted
   accounting principles.
    
       Our audits were made for the purpose of forming an opinion on the basic 
   financial statements taken as a whole.  The schedule listed in the schedule 
   index is presented for purposes of complying with the Securities and Exchange
   Commission's rules and is not part of the basic financial statements.  This 
   schedule has been subjected to the auditing procedures applied in the audits 
   of the basic financial statements and, in our opinion, fairly states in all 
   material respects the financial data required to be set forth therein in 
   relation to the basic financial statements taken as a whole.
    

                                                S/ Arthur Andersen LLP     
                                                -------------------------------
                                                  (ARTHUR ANDERSEN LLP)    


    
    
   Hartford, Connecticut
   November 6, 1997
    
   <PAGE>
<TABLE>
<CAPTION>
                                      Consolidated Balance Sheets
                                      September 30, 1997 and 1996
                                        (Thousands of Dollars)
                                                    

    
    
   <S>                                                            <C>            <C>
                              Assets                                  1997           1996   
                                                                      ----           ----   
   Plant and Equipment:
      Plant in service                                             $ 484,250      $ 464,377 
      Construction work in progress                                    7,703          6,417 
                                                                   ---------      --------- 
                                                                     491,953        470,794 
      Less-Allowance for depreciation                                160,313        145,042 
                                                                   ---------      --------- 
                                                                     331,640        325,752 
                                                                   ---------      --------- 
   Investments, at equity                                             11,530          9,914 
                                                                   ---------      --------- 
   Current Assets:
      Cash and cash equivalents                                        4,458          8,515 
      Accounts receivable (less allowance for
        doubtful accounts of $3,439 in 1997
        and $4,819 in 1996)                                           25,287         25,033 
      Accrued utility revenue                                          4,624          4,180 
      Inventories                                                     17,584         15,968 
      Prepaid expenses                                                 8,903         10,920 
                                                                   ---------      --------- 
           Total Current Assets                                       60,856         64,616 
                                                                   ---------      --------- 
   Other Assets:
      Unrecovered future taxes                                        37,177         44,812 
      Recoverable transition costs                                       839          2,858 
      Other assets                                                    22,245         19,027 
                                                                   ---------      --------- 
           Total Other Assets                                         60,261         66,697 
                                                                   ---------      --------- 
                                                                   $ 464,287      $ 466,979 
                                                                   =========      ========= 
</TABLE>
    
    
   The accompanying notes are an integral part of these consolidated 
   financial statements.
    
   <PAGE>

<TABLE>
<CAPTION>
                                Consolidated Balance Sheets (Concluded)
                                      September 30, 1997 and 1996
                                        (Thousands of Dollars) 
                                                    

    

   <S>                                                            <C>            <C>
                                                                      1997           1996
                                                                      ----           ----
                  Capitalization and Liabilities

   Capitalization (see accompanying statements):
      Common stock equity                                          $ 169,299      $ 168,882 
      Preferred stock, not subject to
         mandatory redemption                                            884            899 
      Long-term debt                                                 126,787        136,432 
                                                                   ---------      --------- 
                                                                     296,970        306,213 
                                                                   ---------      --------- 
   Current Liabilities:
      Current portion of long-term debt                                1,487         13,968 
      Notes payable and commercial paper                              27,500              - 
      Accounts payable and accrued expenses                           36,968         40,721 
      Refundable purchased gas costs                                   4,714          6,012 
      Accrued taxes                                                      484              - 
      Accrued interest                                                 4,047          4,479 
                                                                   ---------      --------- 
           Total Current Liabilities                                  75,200         65,180 
                                                                   ---------      --------- 
   Deferred Credits:
      Deferred income taxes                                           44,302         40,011 
      Unfunded deferred income taxes                                  37,177         44,812 
      Investment tax credits                                           2,982          3,203 
      Refundable taxes                                                 3,491          3,445 
      Other                                                            4,165          4,115 
                                                                   ---------      --------- 
           Total Deferred Credits                                     92,117         95,586 
                                                                   ---------      --------- 
   Commitments and Contingencies                                             
                                                                   ---------      --------- 
                                                                   $ 464,287      $ 466,979 
                                                                   =========      ========= 
</TABLE>

    
   The accompanying notes are an integral part of these consolidated
   financial statements.
    
   <PAGE>

<TABLE>
<CAPTION>
                            Consolidated Statements of Income
                         For the Years Ended September 30, 1997, 1996 and 1995
                           (Thousands of Dollars Except for Per Share Data)
    
   <S>                                                    <C>             <C>             <C>
                                                             1997            1996            1995   
                                                             ----            ----            ----   

   Operating Revenues                                     $ 305,565       $ 315,363       $ 275,185 
   Less:  Cost of energy                                    169,188         175,175         147,764 
          State gross revenues tax                           11,107          11,710          11,296 
                                                          ---------       ---------       --------- 
   Operating Margin                                         125,270         128,478         116,125 
                                                          ---------       ---------       --------- 
   Operating Expenses:
      Operations                                             45,838          49,640          45,311 
      Maintenance                                             8,682           8,615           7,917 
      Depreciation and amortization                          18,184          17,765          16,977 
      Income taxes                                           16,959          14,364           9,430 
      Local property taxes                                    5,323           5,277           5,148 
      Other taxes                                             2,400           2,313           2,183 
                                                          ---------       ---------       --------- 
                                                             97,386          97,974          86,966 
                                                          ---------       ---------       --------- 
   Operating Income                                          27,884          30,504          29,159 
                                                          ---------       ---------       --------- 
   Other Income/(Deductions),
      net of income taxes:
      Allowance for equity funds used
        during construction                                     125             144             106 
      Equity in partnership earnings                          2,910           2,037           1,032 
      Other income/(deductions)                                (338)            248            (872)
      Nonrecurring items                                          -             892           3,624 
      Income taxes                                             (665)         (1,115)         (1,839)
                                                          ---------       ---------       --------- 
                                                              2,032           2,206           2,051 
                                                          ---------       ---------       --------- 
   Income Before Interest Charges                            29,916          32,710          31,210 
                                                          ---------       ---------       --------- 

   Interest and Debt Expense, net:
      Interest on long-term debt                             11,345          11,825          12,158 
      Other interest                                          1,200           1,585           1,650 
      Allowance for borrowed funds used
        during construction                                     (84)            (96)            (70)
      Amortization of debt expense                              380             401             453 
                                                          ---------       ---------       --------- 
                                                             12,841          13,715          14,191 
                                                          ---------       ---------       --------- 
   Net Income                                                17,075          18,995          17,019 

   Less-Dividends on Preferred Stock                             62              63              62 
                                                          ---------       ---------       --------- 
   Net Income Applicable to Common Stock                  $  17,013       $  18,932       $  16,957 
                                                          =========       =========       ========= 
</TABLE>
    
    The accompanying notes are an integral part of these consolidated 
    financial statements.
    
   <PAGE>
<TABLE>
<CAPTION>
                             Consolidated Statements of Income (Concluded)
                         For the Years Ended September 30, 1997, 1996 and 1995
                           (Thousands of Dollars Except for Per Share Data)
    
   <S>                                                    <C>             <C>             <C>
                                                             1997            1996            1995   
                                                             ----            ----            ----   

   Net Income Applicable to Common Stock                  $  17,013       $  18,932       $  16,957 
                                                          =========       =========       ========= 

   Average Common Shares Outstanding
      During the Period                                  10,632,001      10,146,932       9,926,980 
                                                         ==========      ==========       ========= 

   Income Per Average Share of
      Common Stock                                        $    1.60       $    1.87       $    1.71 
                                                          =========       =========       ========= 

   Dividend Per Share of Common Stock                     $    1.52       $    1.50       $    1.48 
                                                          =========       =========       ========= 
    
</TABLE>
    
   The accompanying notes are an integral part of these consolidated 
   financial statements.
    
   <PAGE>
<TABLE>
<CAPTION>
                                 Consolidated Statements of Cash Flows
                         For the Years Ended September 30, 1997, 1996 and 1995
                                        (Thousands of Dollars)
    
   <S>                                                       <C>          <C>          <C>
                                                               1997         1996         1995   
                                                               ----         ----         ----   

   Cash Flows from Operations:                               $ 31,315     $ 39,175     $ 53,415 
                                                             --------     --------     -------- 

   Cash Flows from Investing Activities:
      Capital expenditures                                    (24,593)     (24,281)     (26,839)
      Other investing activities                                   54       (1,338)        (395)
                                                             --------     --------     -------- 
      Net cash used in investing activities                   (24,539)     (25,619)     (27,234)
                                                             --------     --------     -------- 
   Cash Flows from Financing Activities:
      Dividends paid                                          (16,177)     (15,491)     (14,761)
      Issuance of common stock                                    622       15,557        8,474 
      Other stock activity, net                                  (652)         (38)          (5)
      Principal retired on long-term debt                     (22,126)      (3,911)      (3,673)
      Short-term debt                                          27,500       (4,200)     (14,300)
                                                             --------     --------     -------- 
      Net cash provided (used) by
         financing activities                                 (10,833)      (8,083)     (24,265)
                                                             --------     --------     -------- 
   Increase (Decrease) in Cash and
      Cash Equivalents                                         (4,057)       5,473        1,916 
   Cash and Cash Equivalents at
      Beginning of Year                                         8,515        3,042        1,126 
                                                             --------     --------     -------- 
   Cash and Cash Equivalents at
      End of Year                                            $  4,458     $  8,515     $  3,042 
                                                             ========     ========     ======== 
</TABLE>
    
    
   The accompanying notes are an integral part of these consolidated 
   financial statements.
    
   <PAGE>
<TABLE>
<CAPTION>
                           Consolidated Statements of Cash Flows (Concluded)
                         For the Years Ended September 30, 1997, 1996 and 1995
                                        (Thousands of Dollars)
    
   <S>                                                       <C>          <C>          <C>
                                                               1997         1996         1995   
                                                               ----         ----         ----   
   Schedule Reconciling Earnings to
      Cash Flows from Operations:
      Net Income                                             $ 17,075     $ 18,995     $ 17,019 
                                                             --------     --------     -------- 
      Adjustments to reconcile income
         to net cash:
         Depreciation and amortization                         18,098       17,909       17,216 
         Provision for uncollectible
           accounts                                             3,855        4,600        4,886 
         Deferred income taxes, net                             4,115        1,886          897 
         Equity in partnership earnings                        (2,910)      (2,037)      (1,032)
         Cash distributions received from
           investments                                          1,761        2,061          336 
      Changes in assets and liabilities:
         Accounts receivable                                   (3,873)      (1,640)      (5,571)
         Accrued utility revenue                                 (444)         913       (1,379)
         Inventories                                           (1,616)      (1,457)       3,815 
         Purchased gas costs                                   (1,298)       3,712        6,069 
         Prepaid expenses                                       2,017       (4,825)       4,012 
         Accounts payable and accrued expenses                 (1,682)      (5,902)       7,671 
         Other assets/liabilities                              (3,783)       4,960         (524)
                                                             --------     --------     -------- 
           Total adjustments                                   14,240       20,180       36,396 
                                                             --------     --------     -------- 
      Net cash provided by
         operations                                          $ 31,315     $ 39,175     $ 53,415 
                                                             ========     ========     ======== 



   Supplemental Disclosures of Cash Flow
      Information:
   Cash Paid During the Year for:
      Interest                                               $ 13,058     $ 12,193     $ 12,446 
                                                             ========     ========     ======== 
      Income taxes                                           $  8,261     $ 17,633     $  8,967 
                                                             ========     ========     ======== 
</TABLE>

    
    
      The accompanying notes are an integral part of these consolidated 
      financial statements.


   <PAGE>
<TABLE>
<CAPTION>
                               Consolidated Statements of Capitalization
                                      September 30, 1997 and 1996
                                        (Thousands of Dollars)
   <S>                                                                      <C>           <C>
                                                                              1997          1996   
                                                                              ----          ----   
   Common Stock Equity:
      Common stock, no par, authorized 20,000,000
        shares, issued and outstanding 10,652,169
        shares in 1997 and 10,620,439 shares in 1996                        $120,409      $120,168 
      Retained earnings                                                       49,924        49,026 
                                                                            --------      -------- 
                                                                             170,333       169,194 
                                                                            --------      -------- 
      Less:  Unearned compensation - restricted
               stock awards                                                   (1,034)         (312)
                                                                            --------      -------- 
                                                                             169,299       168,882 
                                                                            --------      -------- 

   Preferred Stock, Not Subject to Mandatory
      Redemption:
      $3.125 par value, 8%, noncallable, authorized
        909,898 shares in 1997 and 913,832 shares
        in 1996, issued and outstanding 134,426 shares
        in 1997 and 138,360 shares in 1996, entitled to
        preference on liquidation at $6.25 per share                             420           432 

      $100 par value, callable, authorized 9,999,602
        shares in 1997 and 9,999,631 shares in 1996
        6% Series B, issued and outstanding 4,638
          shares in 1997 and 4,667 shares in 1996                                464           467 
                                                                            --------      -------- 
                                                                                 884           899 
                                                                            --------      -------- 
   Long-Term Debt:
      First Mortgage Bonds -
        8.8%, due 2001                                                             -        10,000 
        9.16%, due 2004                                                       18,000        18,000 
      Industrial Revenue Demand Bonds -
        1986 and 1988 series,
        weighted average interest rate of
        3.66% in 1997 and 3.589% in 1996, due 2006                            11,400        12,100 
      First Mortgage Notes -
        10.5%, due 2010                                                          963           999 
      Secured Notes -
        9.32%, due 1999                                                            6            10 
        6.89%, due 2010                                                       12,905        13,510 
      Secured Term Note, 10.72%, due 1997                                          -           781 
      Unsecured Medium Term Notes -
        6.48%, due 1997                                                            -        10,000 
        7.61% to 7.82%, due 2002 to 2004                                      20,000        20,000 
        6.85% to 9.1%, due 2012 to 2016                                       40,000        40,000 
        8.96%, due 2017                                                       20,000        20,000 
        8.49%, due 2024                                                        5,000         5,000 
      Less - Current Maturities                                               (1,487)      (13,968)
                                                                            --------      -------- 
                                                                             126,787       136,432 
                                                                            --------      -------- 
                                                                            $296,970      $306,213 
                                                                            ========      ======== 
</TABLE>

      The accompanying notes are an integral part of these consolidated 
      financial statements.
    
   <PAGE>
<TABLE>
<CAPTION>
                            Consolidated Statements of Common Stock Equity
                         For the Years Ended September 30, 1997, 1996 and 1995
                             (Thousands of Dollars Except for Share Data)
    

                                        Common Stock 
                                     --------------------      Unearned         Retained 
                                     Shares        Amount    Compensation       Earnings 
                                     ----------  ---------- --------------     --------- 
   <S>                               <C>          <C>            <C>           <C>
   Balance at September 30, 1994      9,539,079    $ 96,374       $   (157)     $ 43,264 
     Public offering                    392,200       8,474              -             - 
     Net income after
      preferred dividends                     -           -              -        16,957 
     Amortization and
      adjustment of
      restricted shares                       -         112           (214)            - 
     Dividends                                -           -              -       (14,699)
                                     ----------    --------       --------      -------- 
   Balance at September 30, 1995      9,931,279     104,960           (371)       45,522 
     Public offering                    700,000      15,557              -             - 
     Net income after
      preferred dividends                     -           -              -        18,932 
     Purchase of restricted
      stock awards                            -           -            (33)            - 
     Amortization and
      adjustment of
      restricted shares                 (10,840)       (349)            92             - 
     Dividends                                -           -              -       (15,428)
                                     ----------    --------       --------      -------- 
   Balance at September 30, 1996     10,620,439     120,168           (312)       49,026 
     Net income after
      preferred dividends                     -           -              -        17,013 
     Purchase of restricted
      stock awards                       16,078         501         (1,131)            - 
     Issues to dividend
      reinvestment and
      employee benefit plans             29,145         622              -             - 
     Establish holding company                -        (508)             -             - 
     Amortization and
      adjustment of
      restricted shares                 (13,493)       (374)           409             - 
     Dividends                                -           -              -       (16,115)
                                     ----------    --------       --------      -------- 
   Balance at September 30, 1997     10,652,169    $120,409       $ (1,034)     $ 49,924 
                                     ==========    ========       ========      ======== 
</TABLE>
    
   The accompanying notes are an integral part of these consolidated
   financial statements.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
    
   1.  Summary of Significant Accounting Policies:
    
   Organization-
    
   As of March 31, 1997, CTG Resources, Inc. ("the Company" or "CTG") became
   the holding company and parent of the Connecticut Natural Gas Corporation
   ("CNG") and its unregulated subsidiaries The Energy Network, Inc. ("TEN")
   and CNG Realty Corp. ("CNGR").  As of April 30, 1997, TEN was transferred
   to and became a wholly owned subsidiary of CTG.  The operating divisions
   and subsidiaries of TEN represent the Company's unregulated diversified
   businesses.
    
    
   Principles of consolidation-
    
   The consolidated financial statements represent CTG, including its wholly
   owned subsidiaries:  CNG and TEN.  All significant intercompany
   transactions and accounts have been eliminated in consolidation.  Certain
   prior year amounts have been reclassified to conform with current year
   presentations.
    
    
   Use of estimates-
    
   The preparation of financial statements in conformity with generally
   accepted accounting principles requires management to make estimates and
   assumptions that affect the reported amounts of assets and liabilities and
   disclosure of contingent assets and liabilities at the date of the
   financial statements and the reported amounts of revenues and expenses
   during the reporting period.  Actual results could differ from those
   estimates.
    
    
   Revenues-
    
   Revenues are recorded based on deliveries to customers through the end of
   the accounting period.  Regulated gas operations revenues are based on
   rates authorized by the Connecticut Department of Public Utility Control
   ("DPUC").
    
   The Company is required to provide natural gas service to residential
   customers within its defined service territory and is precluded by 
   Connecticut State law from discontinuing service to hardship residential
   customers during a winter moratorium period (November - April).
    
   In compliance with Connecticut law, the Company has an accounts receivable
   forgiveness program for qualified hardship natural gas customers.  The
   total payments made by these customers and the energy assistance funds
   received on their behalf are matched by the Company.  The DPUC allows the
   Company to defer this matched amount and to recover it from ratepayers in a
   future period.  At September 30, 1997 and 1996, deferred balances of
   approximately $4,100 and $2,300, respectively, are included in other assets
   pending future amortization and recovery from ratepayers.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   Purchased gas costs-
    
   The Company passes on to its firm customers changes in gas costs from those
   reflected in its tariff charges.  In accordance with this procedure, any
   current under or over-recoveries of gas costs are charged or credited to
   the cost of gas and included in current assets or liabilities.  Such
   amounts are collected or refunded in subsequent periods under purchased gas
   adjustment provisions ("PGA"). 
     

   Allowance for funds used during construction-
    
   In the ordinary course of business an allowance for funds used during
   construction ("AFUDC") is calculated on the construction of physical assets
   which exceed a minimum cost threshold and are constructed over an extended
   period of time.  
    
   AFUDC for the regulated operations is computed based on the weighted
   average cost of capital used to determine the rates charged to customers,
   as allowed by the DPUC.  It is computed at current borrowing rates for the
   diversified businesses.
    
    
   Plant-
    
   Plant is stated at original cost, which includes an apportionment of
   general and administrative costs, and, for certain long-term construction
   projects, AFUDC.
    
   Substantially all of the plant of the regulated operations is subject to
   the lien of the Indenture of Mortgage and Deed of Trust securing its First
   Mortgage Bonds.  Most properties owned by the diversified businesses are
   also subject to the liens associated with their term loans or letters of
   credit (See Notes 7 and 8).
    
   During the fourth quarter of fiscal 1996, TEN sold land and a building
   situated thereon.  This resulted in a nonrecurring net gain of $515 or $.05
   per share.
    
   In fiscal 1997, the Company adopted Statement of Financial Accounting
   Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
   Assets and Long-Lived Assets to be Disposed Of" ("SFAS No. 121").  This
   statement requires that long-lived assets be reviewed for impairment
   whenever events indicate that the carrying amount of any asset may not be
   recoverable.  The adoption of SFAS No. 121 did not have a material impact
   on the Company's financial condition or results of operations.
    
    
   Depreciation-
    
   The Company and its subsidiaries, except CNGR, provide depreciation on a
   straight-line basis.  The composite rates applied by the regulated
   operations were 4.1% in 1997 and 1996 and 4.2% in 1995, as approved by the
   DPUC.  The operating and administrative center, owned by CNGR, is being
   depreciated under a DPUC approved sinking fund method through 2010.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   The average depreciation rates for diversified businesses' depreciable
   plant were 3.6% in 1997, 3.8% in 1996 and 3.7% in 1995.
    
    
   Cash and cash equivalents-
    
   Cash in excess of daily requirements is invested in short-term interest
   bearing securities with maturities of three months or less.
    
    
   Investments-
    
   The Company has investments of $11,530 at September 30, 1997.  These
   include $10,132 for a 4.87% investment in the Iroquois Gas Transmission
   System Partnership ("Iroquois"), $859 for a 50% investment in the Downtown
   Cogeneration Associates Limited Partnership ("DCA"), $439 for a 50%
   interest in KBC Energy Services ("KBC") and $100 for a 2.15% interest in
   the AGA Gas Finance Company ("GasFinCo").  All of the Company's investments
   are accounted for on the equity method of accounting.
    
   Iroquois owns and operates a natural gas pipeline which transports Canadian
   natural gas into New York State, Massachusetts and Connecticut.  DCA owns
   and operates a cogeneration facility in Hartford, Connecticut.  KBC markets
   natural gas supplies, other energy sources and energy management related
   services on an unregulated basis primarily to commercial and industrial end
   users, mostly in New England.  GasFinCo provides loans through Fannie Mae
   to finance energy investments in owner-occupied residences.
    
   During fiscal 1997 and 1996, the Company sold gas to KBC which, in total,
   was not material to the financial statements.  The Company purchases
   natural gas transportation service, by contract, from Iroquois.

    
   Inventories-
    
   Gas inventories are stated at their weighted average cost.  Other
   inventories are accounted for using the first-in, first-out or average cost
   method.
    
    
   Accounting for the effects of regulation-
    
   The Company's natural gas distribution business is subject to regulation by
   the DPUC.  The Company prepares its financial statements in accordance with
   the provisions of SFAS No. 71, "Accounting for the Effects of Certain Types
   of Regulation" ("SFAS No. 71").  SFAS No. 71 requires a cost-based, rate-
   regulated enterprise such as the Company to reflect the impact of
   regulatory decisions in its financial statements.  In certain
   circumstances, SFAS No. 71 requires that certain costs and/or obligations
   (such as incurred costs not currently recovered through rates, but expected
   to be so recovered in the future) be reflected in a deferred account in the
   balance sheet and not be reflected in the statement of income until
   matching revenues and/or expenses are recognized.  The Company records
   regulatory assets and liabilities based on prior rate orders issued by the
   DPUC, which provide a mechanism for recovery in regulated rates, or on
   historical rate treatment, which provides evidence as to the probability of
   future rate recovery.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   In the application of SFAS No. 71, the Company follows accounting policies
   that reflect the impact of the rate treatment of certain events or
   transactions that are permitted to differ from generally accepted
   accounting principles.  The most significant of these policies include the
   recording of an unfunded deferred income tax liability, with a
   corresponding unrecovered receivable, for temporary differences between
   book and tax depreciation previously flowed through to ratepayers,
   regulated assets pending future recovery, regulated assets recovered over
   time as directed by the DPUC and the method of depreciation utilized for
   certain property.  The DPUC permits recovery of depreciation on the
   operating and administrative center, owned by CNGR, under a sinking fund
   method through 2010.  The overall impact of annual depreciation expense
   under this method, versus straight line depreciation recovery, is not
   material to the overall financial statements.
    
   It is the Company's policy to continually assess the recoverability of
   costs recognized as regulatory assets and the Company's ability to continue
   to account for its regulated activities in accordance with SFAS No. 71,
   based on each regulatory action and the criteria set forth in SFAS No. 71. 
   Based on current regulation and recent DPUC decisions, the Company believes
   that its use of regulatory accounting is appropriate and in accordance with
   the provisions of SFAS No. 71.
    
   The Company's consolidated balance sheets at September 30, 1997 and 1996
   contain the following amounts as a result of the application of SFAS No.
   71:
<TABLE>
    
   <S>                                                         <C>            <C>
                    Assets/(Liabilities)                         1997           1996   
                    --------------------                         ----           ----   
   Unrecovered Future Taxes                                    $ 37,177       $ 44,812 
   Hardship Arrearage Forgiveness                                 4,138          2,331 
   Deferred Income Taxes                                          3,141          2,897 
   Other Postretirement Benefits                                  2,973          2,654 
   Other Deferred Charges                                         1,154          1,554 
   Recoverable Transition Costs                                     839          2,858 
   Revenue Sharing Mechanisms                                    (2,184)        (2,349)
   Refundable Taxes                                              (3,491)        (3,445)
   Deferred Gas Costs                                            (4,694)        (6,002)
   Pipeline Refunds, Surcharges and Interest                     (5,265)        (4,518)
                                                               --------       -------- 
                                                               $ 33,788       $ 40,792 
                                                               ========       ======== 
</TABLE>

   New accounting standards-
    
   In February 1997, the Financial Accounting Standards Board ("FASB") issued
   SFAS No. 128, "Earnings Per Share" ("SFAS No. 128").  This statement
   specifies the computation, presentation and disclosure requirements for
   earnings per share for entities with publicly held common stock.  Adoption
   of SFAS No. 128 is required in fiscal 1998.  Based on current analyses and
   assumptions, the Company does not expect that the adoption of SFAS No. 128
   will change its computation or presentation of earnings per share.

   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
      
   In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
   Income" ("SFAS No. 130").  This statement establishes standards for
   reporting and display of comprehensive income and its components in the
   financial statements.  Adoption of SFAS No. 130 is required in fiscal 1999. 
   Based on current analyses and assumptions, the Company does not expect that
   the adoption of SFAS No. 130 will have a material impact on its disclosure
   of stockholders' equity.
    
   In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
   an Enterprise and Related Information" ("SFAS No. 131").  This statement
   requires that public business enterprises report certain information about
   operating segments in complete sets of financial statements of the
   enterprise and in condensed financial statements of interim periods issued
   to shareholders.  It also requires that public business enterprises report
   certain information about their products and services, the geographic areas
   in which they operate, and their major customers.  Adoption of SFAS No. 131
   is required in fiscal 1999.  The Company currently discloses certain
   financial data by segment (See Note 11) in accordance with existing
   accounting and disclosure requirements.  At the appropriate time the
   Company will modify its current presentation, if necessary, to meet the
   requirements of SFAS No. 131.  The adoption of SFAS No. 131 will have no
   impact on the Company's financial condition or results of operations.
    
    
   2.  Regulatory Matters:
    
   During fiscal 1996, the DPUC initiated a review of the need to continue PGA
   accounting for gas costs for all Connecticut natural gas distribution
   companies.  The review was prompted by the deregulation at the Connecticut
   local gas distribution companies ("LDCs") level and the offering of
   unbundled services that began in fiscal 1996.  It was conducted to
   determine whether PGA accounting should be discontinued or modified.  In
   April 1997, the DPUC issued a decision affirming the need to continue the
   PGA.
    
   In October 1995, the DPUC issued a decision which allowed the Company to
   increase its rates for natural gas by $8,900 or 3.64% on an annual basis. 
   This decision allowed a rate of return on equity of 10.76% and provided for
   recovery of all significant items deferred on the balance sheet pending
   recovery at September 30, 1994.  Rates were effective for service rendered
   on or after October 13, 1995.  As part of this decision, the DPUC also
   approved the Company's Firm Transportation rates for commercial and
   industrial natural gas customers, effective April 1, 1996 (See Management's
   Discussion and Analysis, "Competitive Environment"). 
    
    
   3.  Pension and Employee Benefit Plans:
    
   The Company has noncontributory retirement plans ("Plans") covering
   substantially all employees.  Pension benefits are based on years of
   credited service and employees' average annual earnings, as defined in the
   Plans.  The Company's funding policy is to contribute, annually, an amount
   at least equal to that which will satisfy the minimum funding requirements
   of the Employee Retirement Income Security Act.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   The assumptions used in determining the pension obligations were:
    
<TABLE>
    <S>                                                   <C>         <C>         <C>
                                                          1997        1996        1995
                                                          ----        ----        ----

    Weighted Average Discount Rate                        7.50%       8.25%       8.25%
    Rate of Increase in Future Compensation Levels        4.00%       4.40%       4.50%
    Expected Long-term Rate of Return on Assets           9.00%       8.75%       8.95%
</TABLE>
    
    
   The following table represents the Plans' funded status and amounts
   included in the balance sheets at September 30, 1997 and 1996:
    
<TABLE>
    <C>                                                          <C>            <C>
                                                                   1997           1996   
                                                                   ----           ----   
    Actuarial present value of benefit obligations:


        Accumulated benefit obligation, including vested
            benefits of $76,545 in 1997 and of $65,411 in
            1996                                                 $ 78,882       $ 67,900 
                                                                 ========       ======== 
        Projected benefit obligation for service rendered
            to date                                              $ 93,472       $ 79,645 
    Assets at fair value, primarily publicly traded stocks
        and bonds                                                 113,331         97,697 
                                                                 --------       -------- 
    Value of assets over the projected benefit obligation
                                                                   19,859         18,052 
    Unrecognized net gain from past experience different
        from that assumed                                         (18,294)       (18,421)

    Prior service cost not yet recognized in net periodic
        pension cost                                                  874            981 
    Unrecognized net asset at January 1, 1986 being
        recognized over 15 years                                   (1,087)        (1,398)
                                                                 --------       -------- 
    Accrued/(prepaid) pension liability                          $  1,352       $   (786)
                                                                 ========       ======== 
</TABLE>
    
   Net pension costs included in the statements of income for the years ending
   September 30, include the following components:
    
<TABLE>
       <S>                                         <C>            <C>           <C>
                                                      1997           1996          1995  
                                                      ----           ----          ----  

       Service cost                                $  2,113       $  2,095      $  2,059 
       Interest cost                                  6,373          6,183         6,056 
       Return on plan assets                        (18,616)       (11,503)      (12,474)
       Net amortization and deferral                 10,139          3,653         4,919 
                                                   --------       --------      -------- 
       Net cost                                    $      9       $    428      $    560 
                                                   ========       ========      ======== 
</TABLE>

   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
    
   The Company also provides its officers with a supplemental retirement plan.
   The actuarially determined accumulated benefit obligation was approximately
   $4,454 at September 30, 1997 and $3,685 at September 30, 1996.  The cost of
   this plan is being accrued over the service lives of the individual
   officers.  Net expense related to this plan was $548 for 1997, $540 for
   1996 and $607 for 1995.  The Company contributes to a trust to fund the
   liability for these supplemental retirement plan benefits.  The trust
   balance included in other assets at September 30, 1997 and 1996, was $4,953
   and $3,708, respectively.
     
   In September 1996, the Company announced an early retirement program for
   union employees which resulted in the reduction of approximately 1.5% of
   the total workforce through voluntary early retirement.  The approximately
   $400 cost of this program included pension enhancements and other benefits
   and was fully accrued by the Company in the fourth quarter of fiscal 1996. 
    
   The Company may provide certain health care, life insurance or income
   benefits to former or inactive employees after employment but before
   retirement.  The Company accounts for these costs on the accrual basis
   under SFAS No. 112, "Employers' Accounting for Postemployment Benefits".
    
    
   4.  Postretirement Benefits Other Than Pensions:
    
   The Company provides certain health care and life insurance benefits to
   retirees through a benefit plan.  These benefits are available for
   employees leaving the Company who are otherwise eligible to retire and have
   met specific service requirements.  The Company accounts for these costs
   under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
   Other Than Pensions" ("SFAS No. 106") on a prospective basis.  SFAS No. 106
   requires the expected cost of postretirement benefits, primarily health
   care and life insurance benefits, to be charged to expense during the years
   that eligible employees render service.
    
   In fiscal 1994, the Company adopted SFAS No. 106 and began amortizing its
   postretirement accumulated benefit obligation over a twenty-year period. 
   Total health care and life insurance costs under SFAS No. 106 were $3,074
   in 1997, $3,293 in 1996 and $3,274 in 1995.  Actual costs charged to
   expense were $2,755 in 1997 and 1996 and $2,143 in 1995.  The DPUC has
   approved a five-year phase-in of SFAS No. 106 expenses with an allowed
   annual recovery of $2,755 and deferral of additional SFAS No. 106 expenses
   for future recovery.  At September 30, 1997 and 1996, $2,973 and $2,654,
   respectively, were deferred pending future amortization and recovery.  
     
    



   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   The following table represents the plan's funded status reconciled to the
   consolidated balance sheets at September 30, 1997 and 1996:
    
<TABLE>
       <S>                                                        <C>            <C>
                                                                    1997           1996   
                                                                    ----           ----   
       Accumulated postretirement benefit obligation of:

           Retirees                                               $ 19,120       $ 18,577 
           Active employees fully eligible
           to retire                                                 3,015          2,074 
           Active employees not eligible to retire                   6,325          5,977 
                                                                  --------       -------- 
       Total accumulated postretirement benefit obligation
                                                                    28,460         26,628 
       Less:  Market value of plan assets                            8,504          5,695 
                                                                  --------       -------- 

       Accumulated postretirement benefit obligation in
           excess of plan assets                                    19,956         20,933 
       Unrecognized transition amount                              (15,693)       (16,616)
       Unrecognized net loss                                        (1,746)        (1,912)
                                                                  --------       -------- 
       Accrued postretirement benefit
         obligation                                               $  2,517       $  2,405 
                                                                  ========       ======== 
</TABLE>
    
    
   The components of SFAS No. 106 health care and life insurance costs for the
   fiscal years ended September 30, 1997, 1996 and 1995 were:
    
<TABLE>
   <S>                                           <C>           <C>            <C>  
                                                   1997           1996          1995   
                                                   ----           ----          ----   
   Service cost                                  $    425       $    435      $    398 
   Interest cost                                    2,131          2,164         2,054 
   Return on plan assets                           (1,436)          (578)         (290)
   Net amortization                                 1,954          1,272         1,112 
                                                 --------       --------      -------- 
   Net health care and life insurance costs      $  3,074       $  3,293      $  3,274 
                                                 ========       ========      ======== 
</TABLE>
    
   For measurement purposes annual rates of increase of 11% and 9% are assumed
   for nonmedicare and medicare eligible retirees, respectively, in the per
   capita cost of covered health care benefits.  The rate is assumed to
   decrease to 6% for both groups in 2003.  The effect of increasing the
   assumed health care cost trend rates by one percentage point in each year
   would increase the accumulated postretirement benefit obligation as of
   September 30, 1997 and 1996 by $1,402 and $1,530, respectively, and the
   aggregate of the service and interest cost for the years ended September
   30, 1997, 1996 and 1995 by $134, $133 and $134, respectively.  The weighted
   average discount rate used in determining the accumulated post retirement
   benefit obligation was 7.50% in 1997 and 8.25% in 1996 and 1995 and was
   determined by analyzing the interest rates, as of September 30, of each
   year, of long-term, high quality corporate debt securities having a
   duration comparable to the plan.  The expected long-term rate of return on
   plan assets was 7.50% in 1997 and 1996.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
       
   The Company has established two Employee Benefit Trusts ("VEBA") to pay
   current retiree health care and life insurance benefits and to fund the
   Company's retirement benefit liability.  In fiscal 1997, 1996 and 1995 the
   Company funded $2,459, $2,896 and $5,105, respectively, for SFAS No. 106
   costs.  The VEBA balances are primarily invested in life insurance policies
   and commingled fixed income and equity mutual funds.
    
    
   5.  Taxes:
    
   Income Taxes-
    
   The following is an analysis of the provision for federal and state income
   taxes:
<TABLE>
<CAPTION>
                                                                       September 30, 
                                                                  ------------------------
    <S>                                                        <C>         <C>         <C>
                                                                 1997        1996        1995  
                                                                 ----        ----        ----  
    Charged to operations:
        Federal:
            Current                                            $10,330     $ 9,842     $ 6,717 
            Deferred                                             3,069       1,082         778 
                                                               -------     -------     ------- 
                                                                13,399      10,924       7,495 
                                                               -------     -------     ------- 
        State:
            Current                                              2,816       3,118       1,751 
            Deferred                                               965         543         405 
                                                               -------     -------     ------- 
                                                                 3,781       3,661       2,156 
                                                               -------     -------     ------- 
        Deferred investment tax credits                           (221)       (221)       (221)
                                                               -------     -------     ------- 
            Total charged to operations                         16,959      14,364       9,430 
                                                               -------     -------     ------- 
    Charged to other income/(deductions):
        Federal:
            Current                                                531         552       1,478 
            Deferred                                               (34)        232         (87)
                                                               -------     -------     ------- 
                                                                   497         784       1,391 
                                                               -------     -------     ------- 
        State:
            Current                                                179         245         480 
            Deferred                                               (11)         86         (32)
                                                               -------     -------     ------- 
                                                                   168         331         448 
                                                               -------     -------     ------- 
            Total charged to other income/(deductions)
                                                                   665       1,115       1,839 
                                                               -------     -------     ------- 
               Total                                           $17,624     $15,479     $11,269 
                                                               =======     =======     ======= 
</TABLE>
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
      
   Depreciation for federal income tax purposes is computed using accelerated
   cost recovery methods and different lives as permitted under the Internal
   Revenue Code ("Code").  The DPUC has allowed the Company to normalize taxes
   on accelerated depreciation, as required under the Code, for depreciable
   property additions made by the regulated operations subsequent to 1980. 
   For certain other temporary differences, tax reductions are accounted for
   as a reduction of federal income tax expense in accordance with the flow-
   through method of accounting as required by the DPUC.  Under the
   established ratemaking practices followed by the DPUC, deferred income
   taxes not previously provided for will be collected in customer rates when
   such taxes become payable.
    
   Deferred income taxes result from temporary differences between the
   financial statement carrying amounts and the tax basis of existing assets
   and liabilities. Deferred income taxes are primarily a result of normalized
   plant items and temporary differences related to gas costs.  For the
   regulated operations, deferred investment tax credits are amortized to
   income over the average life of the related property.  The diversified
   businesses provide deferred taxes on all temporary differences, including
   depreciation.
    
   The tax effects of the temporary differences which resulted in the deferred
   income taxes on the balance sheets at September 30, 1997 and 1996 were:
    
<TABLE>
      <S>                                                                <C>          <C>
                                                                            1997         1996  
                                                                            ----         ----  

      Property, Plant and Equipment                                      $ 47,067     $ 43,562 
      Other, net                                                           (2,765)      (3,551)
                                                                         --------     -------- 
         Deferred Income Taxes                                           $ 44,302     $ 40,011 
                                                                         ========     ======== 
</TABLE>
    
   The Company accounts for income taxes in accordance with SFAS No. 109,
   "Accounting for Income Taxes" ("SFAS No. 109").  Under the caption
   "Refundable Taxes" the balance sheet reflects refundable taxes to
   ratepayers for reductions in the statutory federal income tax rate on
   normalized plant related temporary differences.  The regulated operations
   also recognize the cumulative deferred income taxes on temporary
   differences which were previously flowed through to ratepayers.  At
   September 30, 1997 and 1996, the Company had $37,177 and $44,812,
   respectively, on the balance sheets as an unfunded deferred income tax
   liability, with a corresponding unrecovered receivable, for temporary
   differences previously flowed through to ratepayers.  These amounts have
   been adjusted for the tax effect of future revenue requirements and will be
   amortized over the life of the related depreciable assets concurrent with
   their recovery in rates.
    
    


   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   A reconciliation of the consolidated federal income tax expense, at the
   statutory tax rate of 35%, to the reported consolidated federal income tax
   expense is as follows:
<TABLE>
    <S>                                                    <C>         <C>         <C>
    
                                                             1997        1996        1995  
                                                             ----        ----        ----  
    Consolidated statutory federal income tax expense      $10,762     $10,669     $ 8,989 

    Change in consolidated federal income tax expense
        resulting from:
        Excess book over tax depreciation                    2,253       1,724       1,456 
        Investment tax credits                                (221)       (221)       (221)
        Bad debts                                              175         175         175 
        Tax reserves                                           714        (500)        200 
        Computer software                                      175         175        (499)
        Cost of removal                                       (324)       (507)     (1,951)
        Nondeductible reserves                                   -        (200)        397 
        Other                                                  141         172         119 
                                                           -------     -------     ------- 
    Consolidated reported federal income tax expense       $13,675     $11,487     $ 8,665 
                                                           =======     =======     ======= 
</TABLE>
     
    
   Outstanding tax issues-
    
   CNG and other gas marketers, including KBC, may be subject to state
   taxation of off-system sales of gas.  Management is working to clarify each
   state's position on the taxation of these sales.
    
   The Company is subject to audit by state and federal tax authorities as it
   relates to income, sales, use and property tax returns filed.  In the
   opinion of management, the ultimate resolution of these issues will not
   have a material impact on the Company's results of operations.
    
    
   6.  Capital Stock:
    
   Common stock- 
    
   In March 1997, pursuant to the Agreement and Plan of Exchange approved by
   shareholders, each outstanding share of common stock, $3.125 par value of
   CNG was exchanged for one new share of common stock, without par value, of
   CTG.  Each outstanding share of CTG common stock held by CNG prior to this
   exchange was cancelled.  As a result, CTG became the sole common stock
   shareholder of CNG, CNG became a subsidiary of CTG and all of the common
   stock of CTG was owned by the former common stock shareholders of CNG.
    
   In June 1996, the Company issued 700,000 shares of its $3.125 Par Common
   Stock at $23.25 per share.  The Company received net proceeds of $15,557
   which were added to working capital and used by the regulated operations to
   fund the current year's construction program and general operations.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   Dividend reinvestment plan and employee savings plans-
    
   The Company maintains a Dividend Reinvestment Plan ("DRIP") which provides
   the Company's holders of common stock and preferred stock the opportunity
   to receive shares of the Company's common stock in lieu of some or all of
   their cash dividends.  In addition, the Company has Employee Savings Plans
   ("ESP"), which are designed to encourage and assist employees to save and
   invest for long-term financial security.  The Company's common stock is one
   of the investment options offered to employees under the ESP.  At September
   30, 1997, there were 560,476 shares of the Company's common stock reserved
   for issuance under the DRIP and ESP.  In the fiscal years ended September
   30, 1997, 1996 and 1995, the Company's contribution to the ESP on behalf of
   employees was $960, $965 and $958, respectively.
    
    
   Restricted stock plan-
    
   In 1990, the Company adopted a restricted stock performance plan.  The plan
   terminates in the year 2000 and is authorized to issue up to 200,000
   shares. On October 1, 1990, October 1, 1993 and October 1, 1996, key
   employees were granted 22,146, 24,040 and 41,800, respectively, of
   restricted shares of the Company's common stock under this plan. 
   Restrictions lapse and the shares vest over a one to five year period
   beginning October 1, 1990, 1993 and 1996, respectively, as certain
   performance goals are achieved.  In October 1995, 5,770 of the restricted
   shares became fully vested and were awarded to qualifying employees.
    
   The market value of the shares awarded under this plan has been recorded as
   unearned compensation and is a separate component of common equity.  The
   unearned compensation is being charged to expense over the vesting period
   based on achievement of the performance criteria.
    
   In fiscal 1995, the Company adopted the provisions of FASB Statement of
   Financial Accounting Standards No. 123, "Accounting for Stock-Based
   Compensation."  The impact of the adoption of this standard was not
   significant to the results of operations or financial condition of the
   Company.
    
    
   Preferred stock-
    
   The preferred stock on the balance sheet was issued by CNG.  CNG is
   prohibited from, among other things, paying dividends on common stock and
   purchasing, redeeming or retiring common stock, if dividends on preferred
   stock are in arrears.
    
   The following table sets forth the changes in the number of shares
   outstanding for each class of the Company's preferred stock not subject to
   mandatory redemption, for the years ended September 30, 1997, 1996 and
   1995:
    
<TABLE>
         <S>                                       <C>            <C>            <C>
                                                     1997           1996           1995  
                                                     ----           ----           ----  
         $3.125 par value                           (3,934)        (1,372)        (1,748)
                                                   =======        =======        ======= 
         $100 par value                                (29)            (3)            (1)
                                                   =======        =======        ======= 
</TABLE>

   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
      
   7.  Long-term Debt:
    
   The Company has various issues of first mortgage bonds and first mortgage
   notes outstanding with maturities from 2004 to 2010.  Under the most
   restrictive terms of the indenture securing the bonds, retained earnings of
   $23,135 are available for CNG to pay dividends at September 30, 1997. 
   Dividends paid on common and preferred stock in fiscal 1997 were $16,177. 
   Sinking fund requirements for outstanding bonds were paid in cash.
    
   Long-term debt amounts which are due during each of the five years ending
   September 30, 1998 through 2002, are as follows:
    
<TABLE>
<CAPTION>
                               Sinking Fund Requirements and Maturities
                               ----------------------------------------
                                             <C>                 <C>
                                             Year                 Total      
                                             ----                -------     
                                             1998                $ 1,487     
                                             1999                  4,136     
                                             2000                  4,183     
                                             2001                  4,343     
                                             2002                 14,504     
                                                                 -------     
                                                                 $28,653     
                                                                 =======     
    
</TABLE>
    
   8.  Short-term Borrowings and Lines of Credit:
    
   The Company maintains a line of credit under a revolving credit agreement
   with a bank.  Under this agreement the Company can borrow up to $20,000 at
   a Eurodollar, Certificate of Deposit or Base Rate of interest plus a
   variable margin through March of 1998.  There is a .1% facility fee and a
   .075% commitment fee on the unused portion of the agreement.  At September
   30, 1997 there were $20,000 outstanding under this agreement.
    
   The Company also maintains a one-year line of credit with a bank for $9,000
   through February 1998.  The Company pays a 1/5 of 1% commitment fee on this
   line of credit.  The interest rate varies according to market conditions. 
   At September 30, 1997 there were $7,500 outstanding under this line of
   credit.
    
   TEN has a $5,000 unsecured revolving credit facility that expires on
   December 15, 1997.  There is a 1/5 of 1% annual facility fee.  The interest
   rate is based upon the Certificate of Deposit, Eurodollar or Cost of Funds
   rate plus a variable margin and is determined at the time of each
   borrowing.  At September 30, 1997 there were no borrowings outstanding
   under this arrangement.
    
   The weighted average interest rate on short-term borrowings outstanding was 
   6.26% at September 30, 1997.  No short-term borrowings were outstanding at
   September 30, 1996.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   9.  Fair Value of Financial Instruments:
    
   The fair value amounts disclosed below have been reported to meet the
   disclosure requirements of SFAS No. 107, "Disclosures About Fair Values of
   Financial Instruments" and are not necessarily indicative of the amounts
   that the Company could realize in a current market exchange.
    
   The carrying amount of cash and cash equivalents; accounts receivable;
   notes payable and commercial paper; accounts payable and accrued expenses;
   and unrecovered or refundable purchased gas costs approximates fair value.
    
   At September 30, 1997 and 1996, the fair value of the Company's long-term
   debt, including current maturities, is estimated to be $139,810 and
   $155,108, respectively.  The fair value at year-end 1997 and 1996, of
   $116,875 and $138,299 of fixed-rate long-term debt, based on the market
   value of similar instruments, is estimated at $128,410 in 1997 and $143,008
   in 1996.  The carrying amount of the variable-rate long-term debt of
   $11,400 in 1997 and $12,100 in 1996 approximates fair value.
    
   The Company has committed to support 4.87% of a letter of credit for
   Iroquois, equivalent to approximately $1,568 at September 30, 1997, which
   approximates fair value.  The letter of credit is used to satisfy Iroquois'
   cash retention requirements with respect to agreements between Iroquois and
   its lenders.
    
    
   10.  Commitments and Contingencies:
    
   Construction expenditures-
    
   Construction expenditures for the fiscal year ending September 30, 1998 are
   estimated at $22,600 for the regulated operations and $13,200 for the
   diversified businesses. 
    
    
   Gas supply-
    
   The Company is party to short-term and long-term contracts for the purchase
   of natural gas and transportation and storage services.
    
    
   FERC Order No. 636 transition costs-
    
   The Company began to be billed for transition costs associated with Federal
   Energy Regulatory Commission ("FERC") Order No. 636 from its pipeline
   suppliers in June 1993.  Through September 30, 1997, the Company has paid
   and recovered from ratepayers $15,000 of an estimated $15,800 of transition
   costs.
    
   In the opinion of management the DPUC has allowed the Company a sufficient
   number of recovery mechanisms to provide for the full recovery of all
   transition costs.  For this reason, management believes that these
   transition costs will not have a material impact on the Company's financial
   condition or results of operations.  The unpaid estimated liability of $800
   at September 30, 1997 is included in Accounts Payable and Accrued Expenses.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
      
    
   Steam supply-
    
   Along with generating steam from their own internal boilers, the district
   heating and cooling ("DHC") operations are party to long-term contracts for
   the purchase of steam.
    
   Through fiscal 1995, one of the DHC operations' suppliers of steam was a
   cogeneration facility owned by an unrelated third party, the Hacogen
   partnership ("Hacogen").  This agreement was terminated, effective
   September 30, 1995.  According to the terms of the negotiated settlement,
   the DHC received consideration of $9,519, representing the payment of all
   past due amounts owed by Hacogen and certain additional amounts as a result
   of the contract termination.  The fiscal 1995 pretax, nonrecurring income
   related to this settlement was $4,124.
    
    
   Letters of credit-
    
   The Company has outstanding letters of credit amounting to $1,500 for
   workers' compensation claims and $2,000 for a purchasing credit line.  As a
   condition of its ownership in the DCA, TEN is contingently liable under a
   letter of credit amounting to $6,000.  As a condition to its variable rate
   long-term debt, TEN holds a long-term letter of credit amounting to the
   principal outstanding:  $11,400 at September 30, 1997 and $12,100 at
   September 30, 1996.
    
    
   Environmental matters-
    
   In the ordinary course of business, the Company may incur costs to clean up
   environmental contaminants related to natural gas activity.  In those
   instances the Company expects that the remediation costs will be
   recoverable in rates.  In the opinion of management, any existing
   environmental matters will not be significant to the future financial
   condition or results of operations of the Company.
    
    
   Leases-
    
   The Company has entered into operating lease agreements for the use of
   computer and office equipment.  For fiscal 1997, 1996 and 1995, these lease
   payments were $1,378, $1,092 and $1,561, respectively.  Future lease
   payments are not expected to change significantly from those shown above.
    
    
   Legal proceedings-
    
   In November 1995, certain Connecticut plumbers and HVAC contractors filed a
   class action suit against the Company and the State's two other LDCs,
   claiming that the LDCs unfairly competed with licensed plumbers and
   contractors by performing customer service work using customer service
   employees who did not possess State trade licenses.  Previously, the LDCs
   have claimed that the work was performed under a statutory exemption
   enacted in 1965 and amended in 1967.  The Connecticut courts have upheld an
   administrative ruling against the LDCs' position.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   The plumbers and contractors are currently asserting claims for profits
   which they allege were lost during prior years.  There has not been any
   settlement demand or any formal statement of alleged damages.  As a result,
   management cannot estimate the potential exposure related to these claims. 
   The Company is vigorously defending this matter.
    
   On July 28, 1997, the Company filed suit in state court against another
   Connecticut LDC seeking to enjoin that company from serving retail
   customers in a town in which the Company currently serves customers.  A
   hearing is scheduled for January 1998, and a decision on the merits of the
   Company's claims is expected in a matter of weeks following that hearing. 
   The outcome of this litigation and its impact cannot be assessed at this
   time. 
    
   The Company is not a party to any other litigation other than ordinary
   routine litigation incident to the operations of the Company or its
   subsidiaries.  In the opinion of management, the resolution of such
   litigation will not have a material adverse effect on the Company's
   financial condition or results of operations.
    
    
   11.  Segment Information:
    
   The Company operates in two segments:  regulated gas related activities and
   unregulated diversified businesses.  Gas related activities consist
   primarily of natural gas distribution to residential, commercial and
   industrial customers.  Diversified businesses consist primarily of district
   heating and cooling services.
    
   Intersegment sales are priced in accordance with terms of existing tariffs
   and contracts.  Information about the Company's operations, by business
   segment, is presented below:
    

   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
<TABLE>
    
    <S>                                              <C>           <C>          <C>
                                                        1997          1996        1995   
                                                     --------      --------     -------- 
    Revenues:
        Gas related activities                       $287,401      $297,016     $255,680 
        Diversified businesses                         22,906        23,628       22,306 
        Intersegment revenues                          (4,742)       (5,281)      (2,801)
                                                     --------      --------     -------- 
            Total                                    $305,565      $315,363     $275,185 
                                                     ========      ========     ======== 
    Pre-Tax Operating Income:
        Gas related activities                       $ 42,839      $ 41,130     $ 33,309 
        Diversified businesses                          2,004         3,739        5,280 
                                                     --------      --------     -------- 
            Total                                      44,843        44,869       38,589 
        Income taxes                                   16,959        14,365        9,430 
                                                     --------      --------     -------- 
            Consolidated Operating Income            $ 27,884      $ 30,504     $ 29,159 
                                                     ========      ========     ======== 
    Depreciation and Amortization:
        Gas related activities                       $ 16,019      $ 15,399     $ 14,655 
        Diversified businesses                          2,165         2,366        2,322 
                                                     --------      --------     -------- 
            Total                                    $ 18,184      $ 17,765     $ 16,977 
                                                     ========      ========     ======== 
    Property Additions:
        Gas related activities                       $ 23,726      $ 23,894     $ 25,311 
        Diversified businesses                            867           387        1,528 
                                                     --------      --------     -------- 
            Total                                    $ 24,593      $ 24,281     $ 26,839 
                                                     ========      ========     ======== 
    Identifiable Assets:
        Gas related activities                       $402,203      $404,210     $400,064 
        Diversified businesses                         62,084        62,769       64,975 
                                                     --------      --------     -------- 
            Consolidated Identifiable Assets         $464,287      $466,979     $465,039 
                                                     ========      ========     ======== 
</TABLE>
    
    
   12.  Subsequent Events:
    
   Recapitalization plan-  
    
   In October 1997, TEN repurchased 2.0 million shares of CTG common stock for
   $52,000.  The purchase was the result of a "dutch auction" tender offer
   that was completed on October 30, 1997.  TEN financed the purchase with a
   combination of revolving bank debt and the issue of $45,000 of Senior
   Subordinated Notes at 6.99%, due 2009.  The Senior Subordinated Notes will
   be repaid in semi-annual principal payments of $2,500 beginning in 2001. 
   The shares repurchased by TEN were transferred directly to CTG by the
   depositary.  In connection with the repurchase, the Company reduced its
   quarterly dividend on common stock from $0.38 ($1.52 annually) to $0.25
   ($1.00 annually) per share, effective with the first quarter of fiscal
   1998.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
      
   The following summary of pro forma financial information gives effect to
   the repurchase of the shares as if the transaction had occurred at the
   beginning of each year presented, in the case of income statement data, or
   at year-end in the case of balance sheet data. This summary pro forma
   financial information is for comparison purposes only and does not purport
   to be indicative of the results that would actually have been obtained had
   the repurchase of the shares been completed at the dates indicated.
    
<TABLE>
<CAPTION>
                                     Year Ended            Year Ended             Year Ended
                                 September 30, 1997    September 30, 1996     September 30, 1995
                                 ------------------    ------------------     ------------------
  <S>                           <C>       <C>          <C>       <C>          <C>       <C>
                                           Pro Forma              Pro Forma              Pro Forma
                                          $26.00 per             $26.00 per             $26.00 per
                                             Share                  Share                  Share
                                   As      Purchase       As      Purchase       As      Purchase
                                Reported     Price     Reported     Price     Reported     Price
                                --------   ---------   --------   ---------   --------   ---------
   Income Statement Data:
   ---------------------
   Net Income Applicable to                                                            
     Common Stock                $ 17,013   $ 14,855   $ 18,932    $ 16,780   $ 16,957    $ 14,818 
                                 ========   ========   ========    ========   ========    ======== 
   Income Per Average Share of
     Common Stock (1)
                                   $ 1.60     $ 1.72     $ 1.87      $ 2.06     $ 1.71      $ 1.87 
                                   ======     ======     ======      ======     ======      ====== 
   Average Common Shares
     Outstanding During the
     Period (2)                    10,632      8,632     10,147       8,147      9,927       7,927 
                                   ======     ======     ======      ======      =====       ===== 
   Dividends per Share of
     Common Stock (3)              $ 1.52     $ 1.00     $ 1.50      $ 1.00     $ 1.48      $ 1.00 
                                   ======     ======     ======      ======     ======      ====== 

   Balance Sheet Data:
   ------------------
   Total Assets                  $464,287   $464,287   $466,979    $466,979   $465,039    $465,039 
                                 ========   ========   ========    ========   ========    ======== 
   Long-term Debt (Less
     Current Maturities) (4)     $126,787   $177,254   $136,432    $186,899   $150,390    $200,857 
                                 ========   ========   ========    ========   ========    ======== 
   Total Common Equity           $169,299   $116,599   $168,882    $116,182   $150,111    $ 97,411 
                                 ========   ========   ========    ========   ========    ======== 
    
   ----------------------------------------------------------------------------
<FN>
   (1)   Represents earnings per share based on pro forma net income divided 
         by the pro forma shares outstanding.  Lower pro forma earnings 
         reflect additional after tax interest due to the higher debt 
         outstanding.
   (2)   Represents shares outstanding less the 2,000 shares purchased pursuant
         to the tender offer.
   (3)   Pro Forma represents dividends at $0.25 per share per quarter.
   (4)   Represents long-term debt outstanding plus $45,000 of pro forma debt
         from the Senior Subordinated Notes at 6.99% and $8,200 of pro forma 
         debt at a rate of 6.37% under the revolving credit facilities.
</TABLE>

   <PAGE>

   NOTES TO FINANCIAL STATEMENTS (Continued)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
     
   In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
   committed to fund $7,500 per year into TEN from 1998 through 2009 for an
   aggregate additional cash infusion in TEN of $90,000.  In exchange, TEN
   caused all shares of CTG common stock purchased through the October 1997
   tender offer to be transferred directly to CTG by the depositary.  As a
   provision of this agreement CTG is restricted from declaring or paying any
   dividends or distributions to its holders of common stock if any amounts
   due and payable under this agreement are in arrears.
    
    
   Long-term debt- 
    
   In October 1997, the Company issued a total of $19,000 of Medium Term Notes
   ("MTNs") due 2007.  These MTNs are unsecured and have no call provisions or
   sinking fund requirements.  The proceeds were used to refinance existing
   short-term debt.  The face values and interest rates of these MTNs are:

<TABLE>
                            <S>                     <C>
                            Face Value              Interest Rate
                            ----------              -------------
                                $ 1,000                  6.62%   
                                $ 1,000                  6.65%   
                                $17,000                  6.69%   
</TABLE>
                            
    
    
   Sale of assets-
    
   In October 1997, the Company entered into an agreement to sell the physical 
   assets and contracts of ENServe Corp., a wholly owned subsidiary of TEN 
   engaged in the HVAC business, for approximately $1,200.  The transaction 
   will be completed in fiscal 1998.
    
    
   13.  Quarterly Results (Unaudited):
    
   The following table sets forth information with respect to the consolidated 
   quarterly results of operations for the fiscal years 1997 and 1996.  The 
   amounts are unaudited but, in the opinion of management, present fairly the 
   results of operations.
     
   The quarterly results of operations reflect the seasonal nature of the 
   Company's operations.  The results of any one quarter during the year are 
   not indicative of the results of future quarters or the results of the 
   Company's fiscal year.
    
   <PAGE>


   NOTES TO FINANCIAL STATEMENTS (Concluded)
   (In thousands of dollars, except per share amounts)
   September 30, 1997
    
    
<TABLE>
<CAPTION>
                        Consolidated Results of Operations
                        ----------------------------------
   --------------------------------------------------------------------------------------------
   <S>                              <C>           <C>            <C>          <C>
                                    December 31,  March 31,      June 30,     September 30,        
   Quarter Ended                         1996        1997           1997           1997            
   --------------------------------------------------------------------------------------------
    
      Operating Revenues               $ 89,269    $124,681       $ 53,234       $ 38,381          

      Operating Income (Loss)          $  9,421    $ 16,050       $  3,342       $   (929)         

      Net Income (Loss)                $  6,716    $ 12,689       $    658       $ (2,988)         

      Net Income (Loss) Per Common
           Share*                      $    .63    $   1.19       $    .06       $   (.28)         

   --------------------------------------------------------------------------------------------
                                    December 31,  March 31,      June 30,      September 30,    
   Quarter Ended                         1995        1996           1996           1996         
   --------------------------------------------------------------------------------------------

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

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

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

      Net Income (Loss) Per Common
         Share*                        $    .82    $   1.40       $   (.06)       $   (.24)     
</TABLE>
   * The sum of quarterly earnings per share does not equal annual earnings
   per share as reported on the statements of income because of quarterly
   changes in weighted average shares outstanding. 
    
   <PAGE>

   ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
   ------------------------------------------------------------
    
    
   There have been no disagreements required to be disclosed under this item.
    
    


















































   <PAGE>


                                     PART III
    
    
    
   ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   -----------------------------------------------------------
    
       The information required by this item regarding directors of the
       registrant and the disclosure of delinquent filers pursuant to Item 405
       of Regulation S-K is contained in the section entitled "Biographical
       Information" in the Company's proxy statement for its January 1998
       Annual Meeting, which the Company files with the Securities and Exchange
       Commission pursuant to Regulation 14A of the Securities Exchange Act of
       1934.  This information is hereby incorporated by reference.  The
       information required by this item regarding executive officers of the
       registrant is included in Part I hereof.
    
    
   ITEM 11. EXECUTIVE COMPENSATION
   -------------------------------
    
       The information required by this item is contained in the sections
       entitled "Compensation of Directors","Compensation Committee Report on
       Executive Compensation", "Compensation Committee Interlocks and Insider
       Participation", "Summary Executive Compensation", "Change of Control",
       "Long Term Incentive Plan", "Retirement Plans" and "Corporate
       Performance Graph" in the Company's proxy statement for its January 1998
       Annual Meeting, which the Company files with the Securities and Exchange
       Commission pursuant to Regulation 14A.  This information is hereby
       incorporated by reference.
    
    
   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   -----------------------------------------------------------------------
    
       The information required by this item is contained in the section
       entitled "Ownership of Company Stock" in the Company's proxy statement
       for its January 1998 Annual Meeting, which the Company files with the
       Securities and Exchange Commission pursuant to Regulation 14A.  This
       information is hereby incorporated by reference.
    
    
   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
   -------------------------------------------------------
    
       The information required by this item is contained in the section
       entitled "Certain Relationships and Related Transactions" in the
       Company's proxy statement for its January 1998 Annual Meeting, which the
       Company files with the Securities and Exchange Commission pursuant to
       Regulation 14A.  This information is hereby incorporated by reference.
    
    
    





   <PAGE>


                                      PART IV
    
   ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
   -------------------------------------------------------------------------
    
   (a)  1. Financial Statements:
           --------------------
    
           The consolidated balance sheets, statements of income, statements of
           cash flows, statements of capitalization and statements of common
           stock equity, together with the notes to the financial statements
           and report thereon of Arthur Andersen LLP dated November 6, 1997,
           are included in Part II, Item 8 herein.
    
        2. Financial Statement Schedules:
           -----------------------------
    
           The following financial statement schedules included herein under
           Item 14(d) are filed as part of this report.
    
              II  Valuation and Qualifying Accounts and Reserves for the fiscal
                  years ended September 30, 1997, 1996 and 1995
    
             Schedules I, III, IV, and V are not submitted because they are not
           applicable or the information required to be included therein is
           contained in the financial statements and footnotes.
    
        3. Exhibits
           --------
    
      Exhibit
      Number
   ------------
    
    3   Articles of Incorporation and By-Laws
    
             (1)  Amended and Restated Certificate of Incorporation of the
                  Company, filed as Exhibit 3.2 to the Company's Registration
                  Statement on Form S-4, Amendment No. 1, filed with the
                  Commission on December 27, 1996 (Commission File No. 333-
                  16297)
    
             (2)  Amended and Restated By-Laws of the Company, filed as Exhibit
                  No. 3.4 to the Company's Registration Statement on Form S-4,
                  Amendment No. 1, filed with the Commission on December 27,
                  1996 (Commission File No. 333-16297)
    
    
    4   Instruments Defining Rights of Security Holders, Including Indentures
    
             (1)  Indenture of Mortgage and Deed of Trust between The Hartford
                  Gas Company and The First National Bank of Hartford, Trustee
                  dated February 1, 1947, filed as Exhibit No. 2.2 to the
                  Connecticut Natural Gas Corporation's Registration Statement
                  on Form S-7 filed with the Commission on December 8, 1970
                  (Commission File No. 2-38993)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
             (2)  In addition to the Indenture of Mortgage and Deed of Trust
                  referred to in 4(1) above, there have been sixteen
                  supplemental indentures thereto, all of which have been filed
                  with the Commission as follows:
    
                  (a)  Supplemental indentures 1-9 filed as Exhibit No. 2.2 to
                       the Connecticut Natural Gas Corporation's Registration
                       Statement on Form S-7 filed with the Commission on
                       December 8, 1970 (Commission File No. 2-38993)
    
                  (b)  Tenth Supplemental Indenture filed as Exhibit No. 2.3 to
                       the Connecticut Natural Gas Corporation's Registration
                       Statement on Form S-7 filed with the Commission on March
                       3, 1972 (Commission File No. 2-43286)
    
                  (c)  Eleventh Supplemental Indenture filed as Exhibit No. V
                       to the Connecticut Natural Gas Corporation's Annual
                       Report on Form 10-K for the fiscal year ended December
                       31, 1974, filed with the Commission in March, 1975
                       (Commission File No. 1-7727)
    
                  (d)  Twelfth Supplemental Indenture filed as Exhibit No. 4(h)
                       to the Connecticut Natural Gas Corporation's
                       Registration Statement on Form S-7 filed with the
                       Commission on December 23, 1981 (Commission File No. 2-
                       75457)
    
                  (e)  Thirteenth Supplemental Indenture filed as Exhibit No. 4
                       to the Connecticut Natural Gas Corporation's Quarterly
                       Report on Form 10-Q for the quarter ended June 30, 1982,
                       filed with the Commission in August, 1982 (Commission
                       File No. 1-7727)
    
                  (f)  Fourteenth Supplemental Indenture filed as Exhibit No.
                       4(iii) to the Connecticut Natural Gas Corporation's
                       Current Report on Form 8-K, dated August 28, 1986, filed
                       with the Commission in September, 1986 (Commission File
                       No. 1-7727)
    
                  (g)  Fifteenth Supplemental Indenture filed as Exhibit No.
                       4(iii) to the Connecticut Natural Gas Corporation's
                       Current Report on Form 8-K, dated December 8, 1987,
                       filed with the Commission in December, 1987 (Commission
                       File No. 1-7727)
    
                  (h)  Sixteenth Supplemental Indenture filed as Exhibit No.
                       4(ii)(h) to the Connecticut Natural Gas Corporation's
                       Quarterly Report on Form 10-Q for the quarter ended
                       September 30, 1989, filed with the Commission in
                       November, 1989 (Commission File No. 1-7727)

    
    9   Voting Trust Agreement
           Not applicable
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10   Material Contracts
    
             (1)  Canadian gas transportation contract (rate schedule CGT-NE)
                  between the Connecticut Natural Gas Corporation and
                  Tennessee, dated December 1, 1987, filed as Exhibit No.
                  10(xxiii) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1987, filed with the Commission on March 29, 1988 (Commission
                  File No. 1-7727)
    
             (2)  Gas purchase contract between the Connecticut Natural Gas
                  Corporation and TransCanada Pipelines Limited, dated
                  September 14, 1987, filed as Exhibit No. 10(xxiv) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended December 31, 1987, filed with
                  the Commission on March 29, 1988 (Commission File No. 1-7727)
    
             (3)  Gas sales agreement between the Connecticut Natural Gas
                  Corporation and Boundary Gas, Inc., dated September 14, 1987,
                  filed as Exhibit No. 10(xxv) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1987, filed with the Commission on March
                  29, 1988 (Commission File No. 1-7727)
    
             (4)  Steam Supply Agreement between The Hartford Steam Company and
                  Independent Energy Operations, Inc., dated December 3, 1987,
                  filed as Exhibit No. 10(xxv) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1989, filed with the Commission on March
                  28, 1990 (Commission File No. 1-7727)
    
             (5)  Open-End Mortgage and Security Agreement between Energy
                  Networks, Inc. and The Connecticut National Bank, dated March
                  1, 1989, filed as Exhibit No. 10(xxviii) to the Connecticut
                  Natural Gas Corporation's Annual Report on Form 10-K for the
                  fiscal year ended December 31, 1989, filed with the
                  Commission on March 28, 1990 (Commission File No. 1-7727)
    
             (6)  Collateral Assignment of Lease and Rentals, dated March 1,
                  1989, to the Open-End Mortgage and Security Agreement between
                  Energy Networks, Inc. and The Connecticut National Bank,
                  dated March 1, 1989 (filed as Exhibit 10(5) herein), filed as
                  Exhibit No. 10(xxix) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1989, filed with the Commission on March
                  28, 1990 (Commission File No. 1-7727)
    
             (7)  Precedent Agreement to First Amendment, dated September 14,
                  1988, to the Gas Sales Agreement between the Connecticut
                  Natural Gas Corporation and Boundary Gas, Inc., dated
                  September 14, 1987, filed as Exhibit No. 10(xxxi) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended December 31, 1989, filed with
                  the Commission March 28, 1990 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10        (8)  First Amendment, dated January 1, 1990, to the Gas Sales
                  Agreement between the Connecticut Natural Gas Corporation and
                  Boundary Gas, Inc., dated September 14, 1987, filed as
                  Exhibit 10(xxxii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the  fiscal year
                  ended December 31, 1989, filed with the Commission on March
                  28, 1990 (Commission File No. 1-7727)
    
             (9)  Medium Term Notes, Series A, Placement Agency Agreement among
                  Connecticut Natural Gas Corporation, PaineWebber Incorporated
                  and Smith Barney, Harris Upham & Co. Incorporated, dated
                  November 1, 1991, filed as Exhibit No. 10(xxxix) to the
                  Connecticut Natural Gas Corporation's Transition Report on
                  Form 10-K for the period October 1, 1990 to September 30,
                  1991, filed with the Commission on December 23, 1991,
                  (Commission File No. 1-7727)
    
            (10)  Issuing and Paying Agency Agreement between The Connecticut
                  National Bank and Connecticut Natural Gas Corporation, for
                  the Medium Term Notes, Series A, dated November 1, 1991,
                  filed as Exhibit No. 10(xl) to the Connecticut Natural Gas
                  Corporation's Transition Report on Form 10-K for the period
                  October 1, 1990 to September 30, 1991, filed with the
                  Commission on December 23, 1991, (Commission File No. 1-7727)
    
            (11)  Connecticut Natural Gas Corporation Executive Restricted
                  Stock Plan, filed as Exhibit A to the Connecticut Natural Gas
                  Corporation's definitive proxy statement dated March 26,
                  1991, filed with the Commission on March 26, 1991 (Commission
                  File No. 1-7727)
    
            (12)  Gas Transportation Contract for Firm Reserved Service, dated
                  February 7, 1991, between the Connecticut Natural Gas
                  Corporation and the Iroquois Gas Transmission System, L.P.,
                  filed as Exhibit No. 10(xxxvii) to the Connecticut Natural
                  Gas Corporation's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1992, filed with the Commission on
                  December 23, 1992, (Commission File No. 1-7727)
    
            (13)  Gas Sales Agreement No. 1, dated February 7, 1991, between
                  the Connecticut Natural Gas Corporation and Alberta Northeast
                  Gas Limited, filed as Exhibit No. 10(xxxviii) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992, filed with
                  the Commission on December 23, 1992, (Commission File No. 1-
                  7727)
    
            (14)  Gas Sales Agreement No. 2, dated February 7, 1991, between
                  the Connecticut Natural Gas Corporation and Alberta Northeast
                  Gas Limited, filed as Exhibit No. 10(xxxix) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992, filed with
                  the Commission on December 23, 1992, (Commission File No. 1-
                  7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (15)  Gas Sales Agreement (ProGas), dated February 7, 1991, between
                  the Connecticut Natural Gas Corporation and Alberta Northeast
                  Gas Limited, filed as Exhibit No. 10(xl) to the Connecticut
                  Natural Gas Corporation's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1992, filed with the
                  Commission on December 23, 1992, (Commission File No. 1-7727)
    
            (16)  Gas Sales Agreement (ATCOR), dated February 7, 1991, between
                  the Connecticut Natural Gas Corporation and Alberta Northeast
                  Limited, filed as Exhibit No. 10(xli) to the Connecticut
                  Natural Gas Corporation's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1992, filed with the
                  Commission on December 23, 1992, (Commission File No. 1-7727)
    
            (17)  Gas Sales Agreement (AEC), dated February 7, 1991, between
                  the Connecticut Natural Gas Corporation and Alberta Northeast
                  Gas Limited, filed as Exhibit No. 10(xlii) to the Connecticut
                  Natural Gas Corporation's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1992, filed with the
                  Commission on December 23, 1992, (Commission File No. 1-7727)
    
            (18)  Gas Transportation Contract for Firm Reserved Service, dated
                  October 20, 1992, between the Connecticut Natural Gas
                  Corporation and the Iroquois Gas Transmission System, L.P.,
                  filed as Exhibit No. 10(xlvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1992, filed with the Commission on
                  December 23, 1992, (Commission File No. 1-7727)
    
            (19)  Revolving Credit Agreement, dated March 30, 1993, between the
                  Connecticut Natural Gas Corporation and The First National
                  Bank of Boston, filed as Exhibit No. 10(xlviii) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 1993, filed with
                  the Commission on May 3, 1993 (Commission File No. 1-7727)
    
            (20)  Secured Note Purchase Agreement, dated July 15, 1993, between
                  the CNG Realty Corp. and the Aid Association for Lutherans,
                  filed as Exhibit No. 10(xlix) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1993, filed with the Commission on August 3,
                  1993 (Commission File No. 1-7727)
    
            (21)  Capital Contribution Support Agreement, dated April 15, 1993,
                  among Connecticut Natural Gas Corporation, ENI Transmission
                  Company and Bank of Montreal, filed as Exhibit No. 10(l) to
                  the Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1993, filed with the
                  Commission on August 3, 1993 (Commission File No. 1-7727)
    
            (22)  Steam and Chilled Water Supply Agreement, dated May 28, 1986,
                  between Capitol District Energy Center Cogeneration
                  Associates and Energy Networks, Incorporated, filed as
                  Exhibit No. 10(xxxvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1993, filed with the Commission December
                  28, 1993 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (23)  Service Agreement #89102 (Rate Schedule AFT-1), dated June 1,
                  1993, between the Connecticut Natural Gas Corporation and
                  Algonquin Gas Transmission Company, filed as Exhibit No.
                  10(xxxviii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
            (24)  Service Agreement #93205 (Rate Schedule AFT-1), dated June 1,
                  1993, between the Connecticut Natural Gas Corporation and
                  Algonquin Gas Transmission Company, filed as Exhibit No.
                  10(xl) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1993, filed with the Commission December 28, 1993 (Commission
                  File No. 1-7727)
    
            (25)  Service Agreement #.6426, dated June 1, 1993, between the
                  Connecticut Natural Gas Corporation and Transcontinental Gas
                  Pipe Line Corporation, filed as Exhibit No. 10(xlv) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1993, filed with
                  the Commission December 28, 1993 (Commission File No. 1-7727)
    
            (26)  Service Agreement #800294 (Rate Schedule FT-1), dated June 1,
                  1993, between the Connecticut Natural Gas Corporation and
                  Texas Eastern Transmission Corporation, filed as Exhibit No.
                  10(xlviii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1993, filed with the Commission December 28,
                  1993 (Commission File No. 1-7727)
    
            (27)  Service Agreement #800295 (Rate Schedule FT-1), dated June 1,
                  1993, between the Connecticut Natural Gas Corporation and
                  Texas Eastern Transmission Corporation, filed as Exhibit No.
                  10(xlix) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1993, filed with the Commission December 28, 1993 (Commission
                  File No. 1-7727)
    
            (28)  Service Agreement (Rate Schedule FTNN), dated October 1,
                  1993, between the Connecticut Natural Gas Corporation and CNG
                  Transmission Corporation, filed as Exhibit No. 10(liii) to
                  the Connecticut Natural Gas Corporation's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1993, filed
                  with the Commission December 28, 1993 (Commission File No. 1-
                  7727)
    
            (29)  Service Agreement (Rate Schedule GSS), dated November 1,
                  1993, between the Connecticut Natural Gas Corporation and CNG
                  Transmission Corporation, filed as Exhibit No. 10(liv) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1993, filed with
                  the Commission December 28, 1993 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (30)  Amended and Restated CNG Officers' Retirement Plan, dated
                  June 28, 1994, filed as Exhibit No. 10(liii) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
            (31)  The Connecticut Natural Gas Corporation Officers' Retirement
                  Plan Trust Agreement, dated January 9, 1989, filed as Exhibit
                  No. 10(liv) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1994, filed with the Commission December 27,
                  1994 (Commission File No. 1-7727)
    
            (32)  First Amendment to the Connecticut Natural Gas Corporation
                  Officers' Retirement Plan and Deferred Compensation Plan
                  Trust Agreement, dated August 5, 1993, filed as Exhibit No.
                  10(lv) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1994, filed with the Commission December 27, 1994 (Commission
                  File No. 1-7727)
    
            (33)  The Connecticut Natural Gas Corporation Deferred Compensation
                  Plan, as amended, dated January 1, 1993, filed as Exhibit No.
                  10(lvi) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1994, filed with the Commission December 27, 1994 (Commission
                  File No. 1-7727)
    
            (34)  First Amendment to the Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated  December 2, 1993, filed as
                  Exhibit No. 10(lvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
            (35)  Second Amendment to the Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated June 28, 1994, filed as
                  Exhibit No. 10(lviii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
            (36)  Agreement and Declaration of Trust, Connecticut Natural Gas
                  Corporation Employee Benefit Trust, dated December 28, 1987,
                  filed as Exhibit No. 10(lix) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
            (37)  First Amendment to Agreement and Declaration of Trust,
                  Connecticut Natural Gas Corporation Employee Benefit Trust,
                  Dated December 2, 1993, filed as Exhibit No. 10(lx) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (38)  Agreement and Declaration of Trust, Connecticut Natural Gas
                  Corporation Union Employee Benefit Trust, dated December 2,
                  1993, filed as Exhibit No. 10(lxi) to the Connecticut Natural
                  Gas Corporation's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1994, filed with the Commission
                  December 27, 1994 (Commission File No. 1-7727)
    
            (39)  CNG Annual Incentive Plan, 1994, filed as Exhibit No.
                  10(lxii) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1994, filed with the Commission December 27, 1994 (Commission
                  File No. 1-7727)
    
            (40)  Letter of Credit and Reimbursement Agreement by and between
                  Energy Networks, Inc. and The Bank of Nova Scotia, dated
                  October 14, 1994, filed as Exhibit No. 10(lxiv) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
            (41)  Medium Term Notes, Series B, Placement Agency Agreement among
                  Connecticut Natural Gas Corporation, Smith Barney Inc., and
                  A.G. Edwards & Sons, Inc., dated June 14, 1994, filed as
                  Exhibit No. 10(lxvi) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1994, filed with the Commission December
                  27, 1994 (Commission File No. 1-7727)
    
            (42)  Issuing and Paying Agency Agreement between Shawmut Bank
                  Connecticut, National Association, and Connecticut Natural
                  Gas Corporation, for Medium Term Notes, Series B, dated June
                  14, 1994, filed as Exhibit No. 10(lxvii) to the Connecticut
                  Natural Gas Corporation's Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1994, filed with the
                  Commission December 27, 1994 (Commission File No. 1-7727)
    
            (43)  Gas Storage Contract, dated February 16, 1990, between the
                  Connecticut Natural Gas Corporation and ENDEVCO Industrial
                  Gas Sales Company, filed as Exhibit No. 10(lxix) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1994, filed with
                  the Commission December 27, 1994 (Commission File No. 1-7727)
    
            (44)  Commercial Revolving Credit Agreement by and between Fleet
                  Bank, National Association, and Energy Networks, Inc., dated
                  December 21, 1994, filed as Exhibit No. 10(lxx) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended December 31, 1994, filed with
                  the Commission January 31, 1995 (Commission File No. 1-7727)
    
            (45)  Service Agreement #86006 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Connecticut Natural Gas
                  Corporation and Algonquin Gas Transmission Company, filed as
                  Exhibit No. 10(lxxi) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (46)  Service Agreement #93005 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Connecticut Natural Gas
                  Corporation and Algonquin Gas Transmission Company, filed as
                  Exhibit No. 10(lxxii) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
            (47)  Service Agreement #9B103 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Connecticut Natural Gas
                  Corporation and Algonquin Gas Transmission Company, filed as
                  Exhibit No. 10(lxxiii) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
            (48)  Service Agreement #9W005 (Rate Schedule AFT-1), dated
                  September 1, 1994, between the Connecticut Natural Gas
                  Corporation and Algonquin Gas Transmission Company, filed as
                  Exhibit No. 10(lxxiv) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
            (49)  KBC Energy Services Partnership Agreement, dated June 19,
                  1995, By and Among Bay State Energy Enterprises, Inc., ENI
                  Gas Services, Inc., and Koch Energy Alliance Company, filed
                  as Exhibit No. 10(lxxv) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1995, filed with the Commission August 2, 1995
                  (Commission File No. 1-7727)
    
            (50)  Gas Storage Agreement No. 1626 (Rate Schedule FS), dated
                  September 1, 1993, by and between the Connecticut Natural Gas
                  Corporation and Tennessee Gas Pipeline Company, filed as
                  Exhibit No. 10(lxix) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
            (51)  Gas Transportation Agreement No. 2498 (Rate Schedule FT-A),
                  dated September 1, 1993, by and between the Connecticut
                  Natural Gas Corporation and Tennessee Gas Pipeline Company,
                  filed as Exhibit No. 10(lxx) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
            (52)  Gas Transportation Agreement No. 3900 (Rate Schedule FT-A),
                  dated October 1, 1993, by and between the Connecticut Natural
                  Gas Corporation and Tennessee Gas Pipeline Company, filed as
                  Exhibit No. 10(lxxi) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (53)  Gas Transportation Agreement No. 3901 (Rate Schedule FT-A),
                  dated October 1, 1993, by and between the Connecticut Natural
                  Gas Corporation and Tennessee Gas Pipeline Company, filed as
                  Exhibit No. 10(lxxii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
            (54)  Gas Transportation Agreement No. 2075 (Rate Schedule FT-A),
                  dated September 1, 1993, by and between the Connecticut
                  Natural Gas Corporation and Tennessee Gas Pipeline Company,
                  filed as Exhibit No. 10(lxxiii) to the Connecticut Natural
                  Gas Corporation's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1995, filed with the Commission
                  December 18, 1995 (Commission File No. 1-7727)
    
            (55)  Second Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated June 27, 1995, filed as Exhibit
                  No. 10(lxxvi) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
            (56)  Second Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated January 24, 1995, filed as
                  Exhibit No. 10(lxxvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)
    
            (57)  Third Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated June 27, 1995, filed as Exhibit
                  No. 10(lxxviii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
            (58)  Amendment to Connecticut Natural Gas Corporation Officers'
                  Retirement Plan, dated June 27, 1995, filed as Exhibit No.
                  10(lxxix) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1995, filed with the Commission December 18, 1995 (Commission
                  File No. 1-7727)
    
            (59)  Third Amendment to Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated June 27, 1995, filed as
                  Exhibit No. 10(lxxx) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1995, filed with the Commission December
                  18, 1995 (Commission File No. 1-7727)

            (60)  Third Amendment to The Connecticut Natural Gas Corporation
                  Officers' Retirement Plan and Deferred Compensation Plan
                  Trust Agreement, dated September 12, 1995, filed as Exhibit
                  No. 10(lxxxi) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (61)  Second Amendment to Restricted Stock Agreement (Under the
                  Connecticut Natural Gas Corporation Executive Restricted
                  Stock plan), dated June 27, 1995, filed as Exhibit No.
                  10(lxxxii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
            (62)  Third Amendment to Restricted Stock Agreement (Under the
                  Connecticut Natural Gas Corporation Executive Restricted
                  Stock plan), dated June 27, 1995, filed as Exhibit No.
                  10(lxxxiii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1995, filed with the Commission December 18,
                  1995 (Commission File No. 1-7727)
    
            (63)  Amended and Restated CNG Nonemployee Directors' Fee Plan,
                  dated September 29, 1995, filed as Exhibit No. 10(lxxxiv) to
                  the Connecticut Natural Gas Corporation's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 1995, filed
                  with the Commission December 18, 1995 (Commission File No. 1-
                  7727)
    
            (64)  CNG Nonemployee Directors' Fee Plan Trust Agreement, by and
                  between the Connecticut Natural Gas Corporation and Fleet
                  Bank, N.A., dated September 28, 1995, filed as Exhibit No.
                  10(lxxxv) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1995, filed with the Commission December 18, 1995 (Commission
                  File No. 1-7727)
    
            (65)  Irrevocable Standby Letter of Credit by and between Energy
                  Networks, Inc. and The Bank of Nova Scotia, dated March 20,
                  1996, filed as Exhibit No. 10(lxxxvii) to the Connecticut
                  Natural Gas Corporation's Quarterly Report on Form 10-Q for
                  the quarter ended March 31, 1996, filed with the Commission
                  May 1, 1996 (Commission File No. 1-7727)
    
            (66)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 86) dated September 1, 1993, between the
                  Connecticut Natural Gas Corporation and Tennessee Gas
                  Pipeline Company, filed as Exhibit No. 10(lxxxviii) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)

            (67)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 1625) dated September 1, 1993, between the
                  Connecticut Natural Gas Corporation and Tennessee Gas
                  Pipeline Company, filed as Exhibit No. 10(lxxxix) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (68)  Gas Transportation Agreement (FT-A Rate Schedule, Service
                  Package No. 2655) dated September 1, 1993, between the
                  Connecticut Natural Gas Corporation and Tennessee Gas
                  Pipeline Company, filed as Exhibit No. 10(xc) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
            (69)  Gas Storage Contract (Rate Schedule FS, Service Package No.
                  1626) dated December 1, 1994, between the Connecticut Natural
                  Gas Corporation and Tennessee Gas Pipeline Company, filed as
                  Exhibit No. 10(xciii) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1996, filed with the Commission July 29, 1996
                  (Commission File No. 1-7727)
    
            (70)  Amendment No.1-A to Gas Storage Contract (Rate Schedule FS,
                  Service Package No. 1626) dated July 1, 1995 between the
                  Connecticut Natural Gas Corporation and Tennessee Gas
                  Pipeline Company, filed as Exhibit No. 10(xciv) to the
                  Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
            (71)  Service Agreement (#N01719, FST Service) dated March 28, 1996
                  between the Connecticut Natural Gas Corporation and National
                  Fuel Gas Supply Corporation, filed as Exhibit No. 10(xcv) to
                  the Connecticut Natural Gas Corporation's Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1996, filed with the
                  Commission July 29, 1996 (Commission File No. 1-7727)
    
            (72)  Amendment No. 1 to Service Agreement (#N01719, FST Service)
                  dated April 1, 1996, between the Connecticut Natural Gas
                  Corporation and National Fuel Gas Supply Corporation, filed
                  as Exhibit No. 10(xcvi) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1996, filed with the Commission July 29, 1996
                  (Commission File No. 1-7727)
    
            (73)  Service Agreement (#O01718, FSS Service) dated March 28, 1996
                  between the Connecticut Natural Gas Corporation and National
                  Fuel Gas Supply Corporation, filed as Exhibit No. 10(xcvii)
                  to the Connecticut Natural Gas Corporation's Quarterly Report
                  on Form 10-Q for the quarter ended June 30, 1996, filed with
                  the Commission July 29, 1996 (Commission File No. 1-7727)
    
            (74)  Amendment No. 1 to Service Agreement (#O01718, FSS Service)
                  dated April 1, 1996, between the Connecticut Natural Gas
                  Corporation and National Fuel Gas Supply Corporation, filed
                  as Exhibit No. 10(xcviii) to the Connecticut Natural Gas
                  Corporation's Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1996, filed with the Commission July 29, 1996
                  (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (75)  First Amendment to Agreement and Declaration of Trust,
                  Connecticut Natural Gas Corporation Union Employee Benefit
                  Trust, dated January 24, 1995, between the Connecticut
                  Natural Gas Corporation and Fleet Bank, N.A., filed as
                  Exhibit No. 10(xcii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (76)  CNG Nonemployee Directors' Fee Plan, dated October 1, 1996,
                  filed as Exhibit No. 10(xciii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (77)  First Amendment to CNG Nonemployee Directors' Fee Plan Trust
                  Agreement, dated October 1, 1996, between the Connecticut
                  Natural Gas Corporation and Putnam Fiduciary Trust Company,
                  filed as Exhibit No. 10(xciv) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (78)  Second Amendment to CNG Nonemployee Directors' Fee Plan Trust
                  Agreement, dated October 1, 1996, between the Connecticut
                  Natural Gas Corporation and Putnam Fiduciary Trust Company,
                  filed as Exhibit No. 10(xcv) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (79)  Third Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated October 31, 1995, filed as
                  Exhibit No. 10(xcvi) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (80)  Fourth Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated December 19, 1995, filed as
                  Exhibit No. 10(xcvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (81)  Fifth Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan, dated February 27, 1996, filed as
                  Exhibit No. 10(xcviii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (82)  Fourth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated October 31, 1995, filed as
                  Exhibit No. 10(xcix) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (83)  Fifth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated December 19, 1995, filed as
                  Exhibit No. 10(c) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (84)  Sixth Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan, dated February 27, 1996, filed as
                  Exhibit No. 10(ci) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (85)  Settlement Agreement and Release of All Claims between
                  Connecticut Natural Gas Corporation and Harry Kraiza, Jr.,
                  dated September 25, 1996, filed as Exhibit No. 10(cii) to the
                  Connecticut Natural Gas Corporation's Annual Report on Form
                  10-K for the fiscal year ended September 30, 1996, filed with
                  the Commission on December 19, 1996 (Commission File No. 1-
                  7727)

            (86)  Service Agreement (#93305, Rate Schedule AFT-1), dated June
                  1, 1993, between the Connecticut Natural Gas Corporation and
                  Algonquin Gas Transmission Company, filed as Exhibit No.
                  10(ciii) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1996, filed with the Commission on December 19, 1996
                  (Commission File No. 1-7727)

            (87)  Service Agreement (#400507, Rate Schedule FSS-1), dated       
                  November 15,1996, between the Connecticut Natural Gas
                  Corporation and Texas Eastern Transmission Corporation, filed
                  as Exhibit No. 10(civ) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)

            (88)  Service Agreement (#800424, Rate Schedule CDS), dated         
                  November 15, 1996, between the Connecticut Natural Gas
                  Corporation and Texas Eastern Transmission Corporation, filed
                  as Exhibit No. 10(cvii) to the Connecticut Natural Gas
                  Corporation's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1996, filed with the Commission on
                  December 19, 1996 (Commission File No. 1-7727)
    
   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (89)  Connecticut Natural Gas Corporation Employee Savings Plan
                  Trust Agreement, including amendments thereto, filed as
                  exhibit 4(ii) to the Connecticut Natural Gas Corporation
                  Employee Savings Plan Registration Statement on Form S-8,
                  filed with the Commission on July 20, 1994 (Commission File
                  No. 33-54643)

            (90)  Connecticut Natural Gas Corporation Union Employee Savings
                  Plan Trust Agreement, including amendments thereto, filed as
                  exhibit 4(ii) to the Connecticut Natural Gas Corporation
                  Union Employee Savings Plan Registration Statement on Form S-
                  8, filed with the Commission on July 20, 1994 (Commission
                  File No. 33-54653)

            (91)  First Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan Trust Agreement, dated March 25, 1997,
                  filed as Exhibit No. 10(cx) to the CTG Resources, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended June 30,
                  1997, filed with the Commission on August 14, 1997
                  (Commission File No. 1-12859)

            (92)  First Amendment to Connecticut Natural Gas Corporation Union
                  Employee Savings Plan Trust Agreement, dated March 25, 1997,
                  filed as Exhibit No. 10(cxi) to the CTG Resources, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended June 30,
                  1997, filed with the Commission on August 14, 1997
                  (Commission File No. 1-12859)

            (93)  Amendment to Connecticut Natural Gas Corporation Officers'
                  Retirement Plan, dated March 25, 1997, filed as Exhibit No.
                  10(cxii) to the CTG Resources, Inc.'s Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1997, filed with the
                  Commission on August 14, 1997 (Commission File No. 1-12859)

            (94)  Fourth Amendment to Connecticut Natural Gas Corporation
                  Deferred Compensation Plan, dated March 25, 1997, filed as
                  Exhibit No. 10(cxiii) to the CTG Resources, Inc.'s Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 1997,
                  filed with the Commission on August 14, 1997 (Commission File
                  No. 1-12859)

            (95)  First Amendment to Connecticut Natural Gas Corporation
                  Executive Restricted Stock Plan, dated March 25, 1997, filed
                  as Exhibit No. 10(cxiv) to the CTG Resources, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended June 30,
                  1997, filed with the Commission on August 14, 1997
                  (Commission File No. 1-12859)

            (96)  Third Amendment to CNG Nonemployee Directors' Fee Plan Trust
                  Agreement, dated March 25, 1997, filed as Exhibit No. 10(cxv)
                  to the CTG Resources, Inc.'s Quarterly Report on Form 10-Q
                  for the quarter ended June 30, 1997, filed with the
                  Commission on August 14, 1997 (Commission File No. 1-12859)

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10       (97)  Fourth Amendment to The Connecticut Natural Gas Corporation
                  Officers Retirement Plan and Deferred Compensation Plan Trust
                  Agreement, dated March 25, 1997, filed as Exhibit No.
                  10(cxvi) to the CTG Resources, Inc.'s Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1997, filed with the
                  Commission on August 14, 1997 (Commission File No. 1-12859)

            (98)  Second Amendment to Agreement and Declaration of Trust,
                  Connecticut Natural Gas Corporation Employee Benefit Trust,
                  dated March 25, 1997, filed as Exhibit No. 10(cxvii) to the
                  CTG Resources, Inc.'s Quarterly Report on Form 10-Q for the
                  quarter ended June 30, 1997, filed with the Commission on
                  August 14, 1997 (Commission File No. 1-12859)

            (99)  Sixth Amendment to Connecticut Natural Gas Corporation
                  Employee Savings Plan (As Amended and Restated, Effective as
                  of January 1, 1989), dated May 2, 1997, filed as Exhibit No.
                  10(cxviii) to the CTG Resources, Inc.'s Quarterly Report on
                  Form 10-Q for the quarter ended June 30, 1997, filed with the
                  Commission on August 14, 1997 (Commission File No. 1-12859)

           (100)  Seventh Amendment to Connecticut Natural Gas Corporation
                  Union Employee Savings Plan (As Amended and Restated,
                  Effective as of January 1, 1989), dated May 2, 1997, filed as
                  Exhibit No. 10(cxix) to the CTG Resources, Inc.'s Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 1997,
                  filed with the Commission on August 14, 1997 (Commission File
                  No. 1-12859)

           (101)  First Amendment to CNG Nonemployee Directors' Fee Plan, dated
                  May 2, 1997, filed as Exhibit No. 10(cxxx) to the CTG
                  Resources, Inc.'s Quarterly Report on Form 10-Q for the
                  quarter ended June 30, 1997, filed with the Commission on
                  August 14, 1997 (Commission File No. 1-12859)

           (102)  Three-year Revolving Credit Agreement between TEN and Fleet
                  National Bank, filed as Exhibit No. 99(B)(2) to the CTG
                  Resources, Inc.'s Issuer Tender Offer Statement on Schedule
                  13E-4, filed with the Commission on October 2, 1997
                  (Commission File No. 5-51659)

           (103)  364-Day Revolving Credit Agreement between and TEN and Fleet
                  National Bank, filed as Exhibit No. 99(B)(3) to the CTG
                  Resources, Inc.'s Issuer Tender Offer Statement on Schedule
                  13E-4, filed with the Commission on October 2, 1997
                  (Commission File No. 5-51659)

           (104)  Note Purchase Agreement among TEN, Metropolitan Life
                  Insurance Company and Texas Life Insurance Company, filed as
                  Exhibit No. 99(B)(4) to the CTG Resources, Inc.'s Issuer
                  Tender Offer Statement on Schedule 13E-4, filed with the
                  Commission on October 2, 1997 (Commission File No. 5-51659)

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10     (105)   Forward Equity Purchase Agreement, dated October 1, 1997,
                  between CTG and TEN, filed as Exhibit No. 99(C) to the CTG
                  Resources, Inc.'s Issuer Tender Offer Statement on Schedule
                  13E-4, filed with the Commission on October 2, 1997
                  (Commission File No. 5-51659)
    
          (106)*  Amendment to ANE Gas Sales Agreement No. 1, dated August 19,
                  1997, between the Connecticut Natural Gas Corporation and
                  Alberta Northeast Gas Limited
    
          (107)*  Amendment to ANE Gas Sales Agreement No. 2, dated August 19,
                  1997, between the Connecticut Natural Gas Corporation and
                  Alberta Northeast Gas Limited
    
          (108)*  Amendment to Phase 2 Gas Sales Agreement, dated August 20,
                  1997, between the Connecticut Natural Gas Corporation and
                  Boundary Gas, Inc.
    
          (109)*  Storage Service Agreement (#300094, Rate Schedule GSS), dated
                  April 1, 1997, between the Connecticut Natural Gas
                  Corporation and CNG Transmission Corporation
    
          (110)*  Seasonal Transportation Service Agreement (#200106, Rate
                  Schedule FT), dated April 1, 1997, between the Connecticut
                  Natural Gas Corporation and CNG Transmission Corporation
    
          (111)*  Storage Service Agreement (#1623, Rate Schedule SS-NE), dated
                  September 1, 1993, between the Connecticut Natural Gas
                  Corporation and Tennessee Gas Pipeline Company
    
          (112)*  Transportation Service Agreement (#1627, Rate Schedule FT-A),
                  dated September 1, 1993, between the Connecticut Natural Gas
                  Corporation and Tennessee Gas Pipeline Company
    
          (113)*  Transportation Service Agreement (#10781, Rate Schedule FT-
                  A), dated June 1, 1995, between the Connecticut Natural Gas
                  Corporation and Tennessee Gas Pipeline Company
    
          (114)*  Amended Transportation Service Agreement (#10781, Rate
                  Schedule FT-A), dated November 21, 1996, between the
                  Connecticut Natural Gas Corporation and Tennessee Gas
                  Pipeline Company
    
          (115)*  Service Agreement (#820009, Rate Schedule CDS), dated
                  November 15, 1996, between the Connecticut Natural Gas
                  Corporation and Texas Eastern Transmission Corporation
    
          (116)*  Service Agreement (#830035, Rate Schedule FT-1), dated
                  November 15, 1996, between the Connecticut Natural Gas
                  Corporation and Texas Eastern Transmission Corporation
    
          (117)*  Service Agreement (#400223, Rate Schedule SS-1), dated
                  November 15, 1996, between the Connecticut Natural Gas
                  Corporation and Texas Eastern Transmission Corporation

   <PAGE>


   (a)  3. Exhibits (continued)
           --------
    
      Exhibit
      Number
   ------------
    
   10     (118)*  First Amendment to Issuing and Paying Agency Agreement, dated
                  August 13, 1997, by and among State Street Bank and Trust
                  Company, Fleet National Bank and Connecticut Natural Gas
                  Corporation
    
          (119)*  Medium Term Notes, Series B, Amended and Restated Placement
                  Agency Agreement, dated August 13, 1997, among Connecticut
                  Natural Gas Corporation, PaineWebber Incorporated and A.G.
                  Edwards & Sons, Inc. 

   11*  Computation of Consolidated Primary and Fully Diluted Earnings Per
        Share
    
   12   Computation of Ratios
           Not applicable
    
   13   Annual Report to Stockholders for the Fiscal Year Ended September 30,
        1997
           Not applicable
    
   16   Letter Regarding Change in Certifying Accountant
           Not applicable
    
   18   Letter Regarding Change in Accounting Principles
           Not applicable
    
   21*  Subsidiaries of the Registrant
    
   22   Published Report Regarding Matters Submitted to Vote of Security
        Holders
           None
    
   23*  Consent of Independent Public Accountants
    
   24*  Power of Attorney
    
   27*  Financial Data Schedule
    
   28   Information from Reports Furnished to State Insurance Regulatory
        Authorities
           Not applicable
    
   99   Additional Exhibits
         
            (1)*  Exhibit Index
    
    


   <PAGE>


   (a)  3. Exhibits (concluded)
           --------
    
   99       (2)   Information required by Form 11-K with respect to the
                  Connecticut Natural Gas Corporation Employee Savings Plan for
                  the fiscal year ending December 31, 1996, filed as Exhibit
                  99(ii) to the Connecticut Natural Gas Corporation's Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1996, filed with the Commission on December 19, 1996, as
                  amended by Form 10-K Amendment No. 1, filed with the
                  Commission on June 5, 1997 (Commission File No. 1-7727)
    
            (3)   Information required by Form 11-K with respect to the
                  Connecticut Natural Gas Corporation Union Employee Savings
                  Plan for the fiscal year ending December 31, 1996, filed as
                  Exhibit 99(iii) to the Connecticut Natural Gas Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  September 30, 1996, filed with the Commission on December 19,
                  1996, as amended by Form 10-K Amendment No. 1, filed with the
                  Commission on June 5, 1997 (Commission File No. 1-7727)
    
    
   *    All exhibits listed above which have an asterisk (*) next to the
   exhibit number are filed herewith.  All other exhibits listed above which
   have previously been filed with the Securities and Exchange Commission
   pursuant to the Securities Act of 1933 and the Securities Exchange Act of
   1934, and which were designated as noted above and have not been amended,
   are hereby incorporated by reference.
    
    
   (b)  Reports on Form 8-K
        -------------------
    
        There were no current reports filed on Form 8-K during the last quarter
        of fiscal 1997.
    
    



















   <PAGE>


                                    SIGNATURES
                                    ----------
    
         Pursuant to the requirements of Section 13 or 15(d) of the Securities
   Exchange Act of 1934, the Registrant has duly caused this report to be
   signed on its behalf by the undersigned, thereunto duly authorized.
    
     
                                                    CTG RESOURCES, INC.        
                                            -----------------------------------
                                                        (Registrant)           
                                                                               
                                                S/ Victor H. Frauenhofer       
                                           ------------------------------------
                                                  (Victor H. Frauenhofer)      
                                           Chairman and Chief Executive Officer
                                                                               
                                                                               
         Pursuant to the requirements of the Securities Exchange Act of 1934,
   this report has been signed below by the following persons on behalf of the
   Registrant and in the capacities and on the dates indicated.
    
    

<TABLE>
    <S>                                   <C>                       <C>
     S/ Victor H. Frauenhofer             Chairman, Chief Executive December 17, 1997
    -------------------------------       Officer and Director
       (Victor H. Frauenhofer)


     S/ Arthur C. Marquardt               President, Chief           December 17, 1997
    -------------------------------       Operating Officer and
       (Arthur C. Marquardt)              Director



     S/ James P. Bolduc                   Executive Vice President   December 17, 1997
    -------------------------------       and Chief Financial
       (James P. Bolduc)                  Officer


                                           
    S/ Andrew H. Johnson                  Treasurer and Chief        December 17, 1997
    -------------------------------       Accounting Officer
      (Andrew H. Johnson)
     
                                                                     
     S/ R. L. Babcock                                                December 17, 1997
    -------------------------------
       (R. L. Babcock)
     as Attorney-in-fact for:

            Bessye W. Bennett, Esq.                Director
            James F. English, Jr.                  Director
            Herman J. Fonteyne                     Director
            Beverly L. Hamilton                    Director
            Harvey S. Levenson                     Director
            Denis F. Mullane                       Director
            Richard J. Shima                       Director
            Laurence A. Tanner                     Director
            Michael W. Tomasso                     Director
    
</TABLE>
    
   <PAGE>


                                CTG RESOURCES, INC.
                            Annual Report on Form 10-K
                                  Schedule Index

                       Fiscal Year Ended September 30, 1997

      Item                                   Description
   ----------                                -----------
      
     II                 Financial Statement Schedule II; Valuation and
                        Qualifying Accounts and Reserves for the fiscal years
                        ended September 30, 1997, 1996 and 1995
    
    











































   <PAGE>

<TABLE>
<CAPTION>
   (d) Financial Statement Schedules
       -----------------------------                                                   Page 1 of 1

                                 CTG RESOURCES, INC. AND SUBSIDIARIES
                                 -------------------------------------
                     SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                    --------------------------------------------------------------
                         FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
                         -----------------------------------------------------
                                        (THOUSANDS OF DOLLARS)
    
   Column A                         Column B           Column C            Column D    Column E
                                                       Additions
                                              --------------------------
   <S>                             <C>        <C>              <C>      <C>            <C>
                                   Balance At    Charged       Charged    Deductions    Balance  
                                   Beginning    To Costs       To Other      From        At End  
   Description                     of Period  And Expenses     Accounts  Reserves (1)  of Period 
   -----------                     ---------- ------------     --------  -----------   --------- 
   YEAR ENDED SEPTEMBER 30, 1997
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  4,425     $  3,689     $      -     $  5,148    $  2,966 
             Other                        394          166            -           87         473 
                                     --------     --------     --------     --------    -------- 
                                     $  4,819     $  3,855     $      -     $  5,235    $  3,439 
                                     ========     ========     ========     ========    ======== 
   YEAR ENDED SEPTEMBER 30, 1996
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  4,066     $  4,959     $      -     $  4,600    $  4,425 
             Other                        524           82            -          212         394 
                                     --------     --------     --------     --------    -------- 
                                     $  4,590     $  5,041     $      -     $  4,812    $  4,819 
                                     ========     ========     ========     ========    ======== 
   YEAR ENDED SEPTEMBER 30, 1995
   -----------------------------
     RESERVE DEDUCTED IN THE
     BALANCE SHEET FROM THE
     ASSET TO WHICH IT APPLIES:
       Allowance for doubtful
          accounts -
             Gas                     $  3,273     $  4,653     $      -     $  3,860    $  4,066 
             Other (2)                    744          233           24          477         524 
                                     --------     --------     --------     --------    -------- 
                                     $  4,017     $  4,886     $     24     $  4,337    $  4,590 
                                     ========     ========     ========     ========    ======== 
</TABLE>
[FN]
   Note: (1)   Deductions From Reserves include the write-off of uncollectible 
               accounts, net of recoveries of accounts previously written off.
         (2)   $24 Charged to Other Accounts represents recognition of trade 
               receivables acquired with the purchase of certain assets by the 
               unregulated operations.