**As
      filed with the Securities and Exchange Commission on October 13,
      2006**




**Registration
      No.
      333-**










**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington, DC
      20549**






**FORM S-3**


**REGISTRATION
      STATEMENT**  **UNDER**  **THE
      SECURITIES ACT OF 1933**


**SOUTHERN
      UNION COMPANY**


*(Exact
      name of Registrant as specified in its Charter)*





**Delaware**
              *(State
                or other Jurisdiction*
              *of
                Incorporation or Organization)*
            **75-0571592**
              *(I.R.S.
                Employer Identification No.)*





**5444
      Westheimer Road**


**Houston,
      Texas 77056**


**(713)
      989-2000**


*(Address,
      including zip code, and telephone number, including area code,*


*of
      Registrant’s principal executive offices)*





**Monica
      M. Gaudiosi, Esq.**


**Senior
      Vice President, Associate General Counsel**


**5444
      Westheimer Road**


**Houston,
      Texas 77056**


**(713)
      989-7567**


*(Name,
      address, including zip code, and telephone number, including*


*area
      code, of agent for service)*





**Copies
      to:**


**David
      J. Lavan, Esq.**


**Fleischman
      and Walsh, L.L.P.**


**1919
      Pennsylvania Avenue, N.W., Suite 600**


**Washington,
      DC 20006**


**(202)
      939-7900**









**Approximate
      Date of Commencement of Proposed Sale to Public:** From
      time to time after the effective date of the Registration
      Statement.




If
      the
      only securities being registered on this Form are being offered pursuant to
      dividend or interest reinvestment plans, please check the following box:




If
      any
      securities being registered on this Form are to be offered on a delayed or
      continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
      amended, other than securities offered only in connection with dividend or
      interest reinvestment plans, please check the following box:




If
      this
      form is filed to register additional securities for an offering pursuant to
      Rule
      462(b) under the Securities Act, please check the following box and list the
      Securities Act registration statement number of the earlier effective
      registration statement for the same offering:




If
      this
      form is a post-effective amendment filed pursuant to Rule 462(c) under the
      Securities Act, check the following box and list the Securities Act registration
      statement number of the earlier effective registration statement for the same
      offering:




If
      this
      form is a registration statement pursuant to General Instruction I.D. or a
      post-effective amendment thereto that shall become effective upon filing with
      the Commission pursuant to Rule 462(e) under the Securities Act, please check
      the following box:




If
      this
      form is a post-effective amendment to a registration statement filed pursuant
      to
      General Instruction I.D. filed to register additional securities or additional
      classes of securities pursuant to Rule 413(b) under the Securities Act, check
      the following box:







**CALCULATION
      OF REGISTRATION FEE**




**Title
                of each class of**
              
              
              **securities
                to be registered**
            **Amount
                to be**
              
              
              **registered
                (1)**
            **Proposed
                maximum**
              
              
              **offering
                price per**
              
              
              **share
                (1)**
            **Proposed
                maximum**
              
              
              **aggregate
                offering**
              
              
              **price
                (1)**
            **Amount
                of**
              
              
              **registration
                fee (1)**Debt
                securities;Common
                stock, par value $1.00;Preferred
                stock, no par value,Warrants
                to purchase debt securities,
              
              common
                stock and preferred stock;Securities
                Purchase Contracts; Securities Purchase Units; and Depositary
                Shares;All
                securities of Southern Union Company




(1)
            An
                indeterminate amount of each identified class of securities to be
                offered
                at indeterminate prices is being registered pursuant to this Registration
                Statement. The Registrant is deferring payment of the registration
                fee
                pursuant to Rule 456(b) and is omitting this information in reliance
                on Rule 456(b) and Rule 457(r), except that a registration fee
                of $121,358 was previously paid in connection with the Registration
                Statement on Form S-3 (No. 333-113757) filed by the Registrant
                on March 19, 2004, of which $27,850.24 remains unutilized and will
                be
                offset against any fees due pursuant to this Registration Statement.
                Any
                additional registration fees will be paid subsequently on a pay-as-you-go
                basis in accordance with
                Rule 457(r).














**PROSPECTUS**





**SOUTHERN
      UNION COMPANY**





**Debt
      Securities; Common Stock; Preferred Stock;**


**Warrants
      to Purchase Debt Securities, Common Stock and Preferred
      Stock;**


**Securities
      Purchase Contracts; Securities Purchase Units; and Depositary
      Shares**





We
      may
      offer and sell the securities from time to time in one or more offerings. This
      prospectus provides you with a general description of the securities we may
      offer. Each time we sell securities we will provide a prospectus supplement
      to
      this prospectus that contains specific information about the offering and the
      terms of the securities. The prospectus supplement may also add, update or
      change information contained in this prospectus. You should carefully read
      this
      prospectus and the accompanying prospectus supplement before you invest in
      any
      of our securities. This prospectus may not be used to sell securities unless
      accompanied by a prospectus supplement that describes the method and terms
      of
      the related offering.





Southern
      Union Company may offer and sell the following securities:





·
            debt
                securities;


·
            common
                stock;


·
            preferred
                stock;


·
            warrants
                to purchase debt securities, common stock and preferred
                stock;


·
            securities
                purchase contracts and securities purchase units;
                and


·
            depositary
                shares.





The
      common stock of Southern Union Company is listed for trading on the New York
      Stock Exchange under the ticker symbol “SUG.” Our principal executive offices
      are located at 5444 Westheimer Road, Houston, Texas 77056, and our telephone
      number is (713) 989-2000.




**Investing
      in these securities involves risks. You should carefully consider the
      information referred to under the heading “Risk Factors” beginning on page
      3.**


____________________




**Neither
      the Securities and Exchange Commission nor any state securities commission
      has
      approved or disapproved of these securities or determined if this prospectus
      is
      truthful or complete. Any representation to the contrary is a criminal offense.**


____________________





We
      may
      offer and sell these securities to or through one or more underwriters, dealers
      and agents, or directly to purchasers, on an immediate, continuous or delayed
      basis. We will set forth in the related prospectus supplement the name of the
      underwriters or agents, the discount or commission received by them from us
      as
      compensation, our other expenses for the offering and sale of these securities
      and the net proceeds we receive from the sale. See “Plan of Distribution.”


This
      prospectus is dated _____ __, 2006

















**TABLE
      OF CONTENTS**





**Page**About
                this Prospectus
            1A
                Warning About Forward-Looking Statements
            1Where
                You Can Find More Information
            2About
                Southern Union
            3Risk
                Factors
            3Use
                of Proceeds
            4Ratio
                of Earnings to Combined Fixed Charges
            4Description
                of the Securities
            5Description
                of Debt Securities
            5Description
                of Common Stock and Preferred Stock
            14Description
                of Warrants
            16Description
                of Securities Purchase Contracts and Securities Purchase
                Units
            17Description
                of Depository Shares
            18Description
                of Subordinated Debt Securities
            21Description
                of Global Securities
            29Plan
                of Distribution
            31Legal
                Matters
            33Experts
            33



















**ABOUT
      THIS PROSPECTUS**




This
      prospectus is part of a registration statement that we filed with the Securities
      and Exchange Commission, or the SEC, using a “shelf” registration process. Under
      this shelf process, we may sell any combination of the securities described
      in
      this prospectus in one or more offerings. The exhibits to our registration
      statement contain the full text of certain contracts and other important
      documents that we have summarized in this prospectus. Since these summaries
      may
      not contain all the information that you may find important in deciding whether
      to purchase the securities we offer, you should review the full text of these
      documents. The registration statement and the exhibits can be obtained from
      the
      SEC as indicated under the heading “Where You Can Find More
      Information.”




This
      prospectus provides you with a general description of the securities that may
      be
      offered by us. Each time we sell securities, we will provide a prospectus
      supplement that will contain specific information about the terms of that
      offering. The prospectus supplement may also add to, update or change
      information contained in the prospectus and, accordingly, to the extent
      inconsistent, information in this prospectus is superseded by the information
      in
      the prospectus supplement.




The
      prospectus supplement to be attached to the front of this prospectus may
      describe, as applicable:




·
            the
                terms of the securities offered;




·
            the
                initial public offering price;




·
            the
                price paid for the securities;




·
            the
                net offering proceeds; and




·
            the
                other specific terms related to the offering of the offered
                securities.




When
      acquiring any securities discussed in this prospectus, you should rely only
      on
      the information provided in this prospectus and the accompanying prospectus
      supplement, including the information incorporated by reference. We have not
      authorized anyone to provide you with different information. We are not offering
      the securities in any state or jurisdiction where the offer is not permitted.
      You should not assume that the information in this prospectus, any accompanying
      prospectus supplement or any document incorporated by reference is accurate
      and
      complete as of any date other than the date on the front cover page of those
      documents.




Unless
      otherwise mentioned or unless the context requires otherwise, all references
      in
      this prospectus to “we,” “us,” “our” or similar references mean Southern Union
      Company and its subsidiaries, and all references in this prospectus to “our
      common stock,” “our stock” or “Company stock” refer only to the common stock,
      references to “our preferred stock” refer only to the preferred stock, and
      references to “our securities” refer only to the securities, of Southern Union
      Company. References to “Southern Union” refer only to Southern Union Company and
      not any of its subsidiaries.




**A
      WARNING ABOUT FORWARD-LOOKING STATEMENTS**




This
      prospectus contains some forward-looking statements that set forth anticipated
      results based on our management’s plans and assumptions. From time to time, we
      also provide forward-looking statements in other materials we release to the
      public as well as oral forward-looking statements. Such statements give our
      current expectations or forecasts of future events; they do not relate strictly
      to historical or current facts. We have tried, wherever possible, to identify
      such statements by using words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “will” and similar expressions in
      connection with any discussion of future operating or financial performance.
      In
      particular, these include statements relating to future actions, future
      performance or results of current and anticipated products, expenses, interest
      rates, the outcome of contingencies, such as legal proceedings, and financial
      results.




We
      cannot
      guarantee that any forward-looking statement will be realized, although our
      management believes that we have been prudent in our plans and assumptions.
      Achievement of future results is subject to risks, uncertainties and potentially
      inaccurate assumptions. If known or unknown risks or uncertainties should
      materialize, or if underlying assumptions should prove inaccurate, actual
      results could differ materially from past results and those anticipated,
      estimated or projected. You should bear this in mind as you consider
      forward-looking statements.




-1-




We
      undertake no obligation publicly to update forward-looking statements, whether
      as a result of new information, future events or otherwise. You are advised,
      however, to consult any further disclosures we make on related subjects in
      our
      Form 10-K, 10-Q and 8-K reports to the SEC. Also note that we provide cautionary
      discussion of risks, uncertainties and possibly inaccurate assumptions relevant
      to our businesses in our reports to the SEC on Forms 10-K, 10-Q and 8-K
      incorporated by reference herein and in prospectus supplements and other
      offering materials. These are factors that, individually or in the aggregate,
      management thinks could cause our actual results to differ materially from
      expected and historical results. We note these factors for investors as
      permitted by the Private Securities Litigation Reform Act of 1995. You should
      understand that it is not possible to predict or identify all such factors.
      Consequently, you should not consider such disclosures to be a complete
      discussion of all potential risks or uncertainties.




**WHERE
      YOU CAN FIND MORE INFORMATION**




We
      file
      annual, quarterly and current reports, proxy statements and other information
      with the SEC. Our SEC filings are available to the public from the SEC’s
      Internet site at http://www.sec.gov or from
      our Internet site at http://www.sug.com .
      You
      also may read and copy any document we file at the SEC’s public reference room
      in Washington, D.C., located at 100 F Street, N.E., Washington D.C. 20549.
      Please call the SEC at 1-800-SEC-0330 for further information on the public
      reference room. Our stock is listed and traded on the New York Stock Exchange
      (the “NYSE”). You may also inspect the information we file with the SEC at the
      NYSE’s offices at 20 Broad Street, New York, New York 10005. Information about
      us is also available at our Internet site at http://www.sug.com .
      However, the information on our Internet site is not a part of, and is not
      incorporated into, this prospectus.




The
      SEC
      allows us to “incorporate by reference” in this prospectus the information in
      the documents that we file with it, which means that we can disclose important
      information to you by referring you to those documents. The information
      incorporated by reference is considered to be a part of this prospectus, and
      information in documents that we subsequently file with the SEC will
      automatically update and supersede information contained in documents filed
      earlier with the SEC or contained in this prospectus. We incorporate by
      reference in this prospectus the documents listed below and any future filings
      that we may make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
      the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), until we sell
      all of the securities that may be offered by this prospectus; provided, however,
      that we are not incorporating any information furnished under either Item 2.02
      or Item 7.01 (or former Item 9 or Item 12) of any Current Report on Form 8-K.




·
            Annual
                Report on Form 10-K for the fiscal year ended December 31,
                2005.




·
            Definitive
                Proxy Statement for the 2006 annual meeting of
                shareholders;




·
            Quarterly
                Reports on Form 10-Q for the quarterly periods ended March 31, 2006
                and
                June 30, 2006;




·
            Current
                Report on Form 8-K filed on January 30,
                2006;




·
            Current
                Report on Form 8-K filed on February 17,
                2006;




·
            Current
                Report on Form 8-K filed on March 6,
                2006;




·
            Current
                Report on Form 8-K filed on March 17,
                2006;




·
            Current
                Report on Form 8-K filed on May 8,
                2006;




·
            Current
                Report on Form 8-K/A filed on May 17,
                2006;




·
            Current
                Report on Form 8-K filed on July 17,
                2006;




·
            Current
                Report on Form 8-K/A filed on August 9,
                2006;




·
            Current
                Report on Form 8-K/A filed on August 10,
                2006;




·
            Current
                Report on Form 8-K filed on August 30,
                2006;




****· ****
            Current
                Report on Form 8-K filed on September 18, 2006; and




-2-




·
            The
                description of our common stock and our preferred stock contained
                in our
                registration statement filed under the Exchange Act, including all
                amendments and reports updating that description.




You
      may
      request a copy of these filings (other than exhibits to such filings, unless
      the
      exhibits are specifically incorporated by reference in such filings) at no
      cost
      to you by calling (713) 989-2000 or writing to the following
      address:




Southern
      Union Company


5444
      Westheimer Road


Houston,
      Texas 77056


Attn:
      Investor Relations









**ABOUT
      SOUTHERN UNION**




We
      are
      engaged primarily in the transportation, storage, gathering, processing and
      distribution of natural gas and own and operate both regulated and unregulated
      assets. Through our wholly-owned subsidiary, Panhandle Eastern Pipe Line
      Company, LP, and its subsidiaries (collectively, “Panhandle Energy”), we own and
      operate interstate pipelines that transport natural gas from the Gulf of Mexico,
      South Texas and the Panhandle regions of Texas and Oklahoma to major U.S.
      markets in the Midwest and Great Lakes regions. Panhandle Energy also owns
      and
      operates a liquefied natural gas (“LNG”) import terminal, located on Louisiana’s
      Gulf Coast, which is one of the largest operating LNG facilities in North
      America. Through our investment in CCE Holdings, LLC, we have an interest in
      and
      operate Transwestern Pipeline Company and Florida Gas Transmission Company,
      interstate pipeline companies that transport natural gas from producing areas
      in
      western Texas, Colorado and New Mexico to markets throughout the Southwest
      and
      to California, and from producing areas along the Gulf Coast and in the Gulf
      of
      Mexico to Florida. Through our wholly-owned subsidiary, Southern Union Gas
      Services, Ltd., we own and operate approximately 4,600 miles of pipelines and
      are engaged in the gathering, transmission, treating, processing and redelivery
      of natural gas and natural gas liquids in Texas and New Mexico. Through our
      two
      regulated utility divisions - Missouri Gas Energy and New England Gas Company
      -
      we serve natural gas end-user customers in Missouri and
      Massachusetts.




We
      were
      incorporated in 1932 in the state of Delaware. Our principal offices are located
      at 5444 Westheimer Road, Houston, Texas 77056. Our telephone number is
      (713) 989-2000, and our website can be accessed at http://www.sug.com .
      Information contained in our website does not constitute part of, and is not
      incorporated into, this prospectus.




**RISK
      FACTORS**




Investing
      in our securities involves risks. You should carefully consider the information
      under the heading “Risk Factors” in the following documents before investing in
      any of our securities:




·
            any
                prospectus supplement relating to any securities we are
                offering;




·
            our
                Annual Report on Form 10-K for the fiscal year ended December 31,
                2005,
                which is incorporated by reference into this
                prospectus;




·
            our
                Quarterly Reports on Form 10-Q for the quarterly periods ending on
                March
                31, 2006 and June 30, 2006, which are incorporated by reference into
                this
                prospectus;




·
            our
                Current Report on Form 8-K dated July 17, 2006, which is incorporated
                by
                reference into this prospectus; and




·
            documents
                we file with the SEC after the date of this prospectus and which
                are
                deemed incorporated by reference into this
                prospectus.




-3-




**USE
      OF PROCEEDS**




Unless
      otherwise indicated in the prospectus supplement, the net proceeds received
      by
      Southern Union from the sale of securities offered by this prospectus will
      be
      used to repay debt, to fund acquisitions and for general corporate purposes.
      Net
      proceeds may be temporarily invested prior to use.









**RATIO
      OF EARNINGS TO COMBINED FIXED CHARGES**




The
      following table sets forth the ratio of earnings to fixed charges for Southern
      Union:




·
            on
                a historical basis for each of the four fiscal years in the period
                ended
                June 30, 2004, for the six-month period ended December 31, 2004,
                for the
                year ended December 31, 2005, and for the six-month period ended
                June 30,
                2006; and




·
            on
                a pro forma basis, for the six-month period ended June 30, 2006,
                giving
                effect to the following, as if they all had occurred on January 1,
                2006:




o
            the
                acquisition of the Sid Richardson assets and related financings;
                and




o
            the
                sales of the assets of our PG Energy natural gas distribution division
                and
                the Rhode Island assets of our New England Gas Company natural gas
                distribution division and the application of $1.046 billion of net
                proceeds from those sales to reduce the indebtedness outstanding
                under our
                bridge loan facility, which we incurred to fund our acquisition of
                the Sid
                Richardson assets.




For
      the
      purpose of calculating such ratios, “earnings” consist of income from continuing
      operations before income taxes and fixed charges. “Fixed charges” consist of
      interest expense, amortization of debt discount or premiums and an estimate
      of
      interest implicit in rentals.




**Pro
                Forma**
              **Six
                Months Ended**
              **June
                30,**
              **2006**
            **Six
                Months**
              **Ended**
              **June
                30,**
              **2006**
            **Year
                Ended**
              **December
                31,**
              **2005**
            **Six
                Months**
              **Ended**
              **December
                31,**
              **2004**
            **Year
                Ended June
                30,****2004**
            **2003**
            **2002**
            **2001**Ratio
                of Earnings to
              
              
              Fixed
                Charges
            2.56
            2.19
            2.43
            1.25
            1.80
            (a)
            (a)
            (a)





(a)
            The
                earnings were inadequate to cover fixed charges by approximately
                $14.4 million, $78.6 million and $460,000 for the years ended
                June 30, 2003, 2002 and 2001, respectively. In accordance with U.S.
                generally accepted accounting principles, we did not allocate interest
                expense or other corporate costs to discontinued operations for any
                periods presented (except where the underlying debt was assumed by
                the
                buyers of these operations), resulting in the recognition of losses
                from
                continuing operations for the years ended June 30, 2003, 2002 and
                2001. All outstanding debt of Southern Union Company and its subsidiaries,
                other than Panhandle Energy, is maintained at Southern
                Union.







**DESCRIPTION
      OF THE SECURITIES**




The
      following is a general description of the terms and provisions of the securities
      we may offer and sell by this prospectus. These summaries are not meant to
      be a
      complete description of each security. This prospectus and any accompanying
      prospectus supplement will contain the material terms and conditions for each
      security being offered by the respective prospectus supplement. The accompanying
      prospectus supplement may add, update or change the terms and conditions of
      the
      securities as described in this prospectus. For more information about the
      securities offered by us, please refer to the following:




·
            the
                indenture between Southern Union and JP Morgan Chase Bank N.A., as
                trustee, relating to the issuance of each series of senior debt securities
                by Southern Union (the “senior indenture”);
                and




·
            the
                indenture between Southern Union and JP Morgan Chase Bank N.A., as
                trustee, relating to the issuance of each series of subordinated
                debt
                securities by Southern Union (the “subordinated
                indenture”).




Forms
      of
      these documents are filed as exhibits to the registration statement. The
      indentures listed above are sometimes collectively referred to as the
“indentures” and individually referred to as an “indenture.” The indentures are
      subject to and governed by the Trust Indenture Act of 1939, as amended, and
      may
      be supplemented or amended from time to time following their
      execution.




**DESCRIPTION
      OF DEBT SECURITIES**




**General**




This
      section describes the general terms of the debt securities that we may offer
      and
      sell by this prospectus. This prospectus and any accompanying prospectus
      supplement will contain the material terms and conditions for each class of
      debt
      security. The accompanying prospectus supplement may add, update or change
      the
      terms and conditions of the debt securities as described in this prospectus.
      In
      addition, we refer you to the description under the caption “Description of
      Subordinated Debt Securities” for additional details regarding the terms and
      conditions that may apply to any subordinated debt securities that we may
      offer.




The
      debt
      securities may be issued as either senior debt securities or subordinated debt
      securities. The senior debt securities will be governed by the senior indenture,
      and the subordinated debt securities will be governed by the subordinated
      indenture. Each indenture gives Southern Union Company broad authority to set
      the particular terms of each series of debt securities, including the right
      to
      modify certain of the terms contained in the applicable indenture. The
      particular terms of a series of debt securities and the extent, if any, to
      which
      the particular terms of the issue modify the terms of the applicable indenture
      will be described in the prospectus supplement relating to such series of debt
      securities.




Each
      indenture contains the full legal text of the matters described in this section.
      Because this section is a summary, it does not describe every aspect of the
      debt
      securities or the applicable indenture. This summary is subject to and qualified
      in its entirety by reference to all the provisions of the applicable indenture,
      including definitions of terms used in such indenture. Whenever we refer to
      defined terms of the indentures in this prospectus or in a prospectus
      supplement, these sections or defined terms are incorporated by reference into
      this prospectus or into the prospectus supplement. This summary also is subject
      to and qualified by reference to the description of the particular terms of
      a
      particular series of debt securities described in the applicable prospectus
      supplement or supplements. Keep in mind that it is the indenture pursuant to
      which the debt securities you purchase are issued and not this summary that
      defines your rights. There may be other provisions that are not described in
      this summary which also are important to you. Each indenture is filed as an
      exhibit to the registration statement that includes this prospectus. See “Where
      You Can Find More Information” for information on how to obtain a copy of the
      indentures.




**Issuance
      in Series**




Southern
      Union may issue an unlimited amount of debt securities under the indentures
      in
      one or more series. Southern Union is not required to issue all debt securities
      of one series at the same time and, unless otherwise provided in a prospectus
      supplement, may reopen a series, without the consent of the holders of the
      debt
      securities of that series, for issuances of additional debt securities of that
      series. The debt securities of Southern Union will be unsecured obligations
      of
      the Company.




-5-




Prior
      to
      the issuance of each series of debt securities, the terms of the particular
      securities will be specified in either a supplemental indenture (including
      any
      pricing supplement) and a board resolution of Southern Union or in one or more
      officers’ certificates of Southern Union pursuant to a supplemental indenture or
      a board resolution, both of which will be made publicly available in a filing
      we
      will make with the SEC with respect to any offering of debt
      securities.




**Ranking**




The
      senior debt securities will be the Company’s unsecured and unsubordinated
      obligations. The indebtedness represented by the senior debt securities will
      rank equally with all of the Company’s other unsecured and unsubordinated debt,
      except that the senior debt securities will be senior in right of payment to
      any
      subordinated indebtedness of the Company which states in its terms that it
      is
      subordinate to the senior debt securities. As a result, holders of senior debt
      securities have priority over holders of subordinated indebtedness with respect
      to the right to payment by the Company. The indebtedness represented by the
      subordinated debt securities will rank junior and subordinate in right of
      payment to our prior payment in full of our senior debt, to the extent and
      in
      the manner set forth under the caption “—Subordination” below and as may be set
      forth in a prospectus supplement from time to time. The debt securities are
      obligations of Southern Union exclusively, and are not the obligations of any
      of
      our subsidiaries.




**Denominations**




The
      prospectus supplement for each issuance of debt securities will state whether
      the securities will be issued in registered form of $1,000 each or in multiples
      of $1,000 or such lesser amount as may be indicated in a prospectus supplement
      for a specific series of debt securities, or in bearer form of $5,000 each,
      or
      in global form.




**Covenants**




Under
      the
      indentures, we will:




·
            pay
                the principal of, and interest and any premium on, the debt securities
                when due;




·
            maintain
                a place of payment;




·
            deliver
                a report to the trustee at the end of each fiscal year reviewing
                our
                obligations under the indenture;
                and




·
            deposit
                sufficient funds with any paying agent on or before the due date
                for any
                principal, interest or premium.




**Consolidations,
      Mergers and Sales**




The
      indentures provide that Southern Union will not consolidate with or merge with
      or into any other entity, or convey, transfer or lease, or permit one or more
      of
      its subsidiaries to convey, transfer or lease, all or substantially all of
      our
      properties and assets on a consolidated basis to any entity, unless Southern
      Union is the continuing corporation or:




·
            such
                corporation or entity assumes by supplemental indenture all of Southern
                Union’s obligations under the debt securities and the respective
                indentures;




·
            no
                default or event of default is existing immediately after the
                transaction;




·
            the
                surviving entity is a corporation, partnership or trust organized
                and
                validly existing under the laws of the United States of America,
                any state
                of the United States or the District of Columbia;
                and




·
            certain
                other conditions are met.







-6-




**Liens**




Pursuant
      to the indentures, Southern Union will not, and will not permit any subsidiary
      to, create, incur, issue or assume any debt secured by any lien on any property
      or assets owned by Southern Union or any of its subsidiaries, and Southern
      Union
      will not permit any of its subsidiaries to, create, incur, issue or assume
      any
      debt secured by any lien on any shares of stock or debt of any subsidiary (such
      shares of stock or debt of any subsidiary being called “restricted securities”),
      unless:




·
            in
                the case of new debt that is expressly by its terms subordinate or
                junior
                in right of payment to the applicable series of debt securities,
                the
                applicable series of debt securities are secured by a lien on such
                property or assets that is senior to the new lien with the same relative
                priority as such subordinated debt has with respect to the applicable
                series of debt securities; or




·
            in
                the case of liens securing new debt that is ranked equally with the
                applicable series of debt securities, the applicable series of debt
                securities are secured by a lien on such property or assets that
                is equal
                and ratable with the new lien, except that any lien securing such
                debt
                securities may be junior to any lien on our accounts receivable,
                inventory
                and related contract rights securing debt under our revolving credit
                facility.




These
      restrictions do not prohibit Southern Union from creating any of the following
      liens:




(1)  liens
      on
      any of our property, assets or restricted securities or those of any subsidiary
      existing as of the date of the first issuance by us of the debt securities
      issued pursuant to the indenture, or such other date as may be specified in
      a
      prospectus supplement for an applicable series of debt securities issued
      pursuant to the indenture, subject to the provisions of subsection
      (8) below;




(2)  liens
      on
      any property or assets or restricted securities of any corporation existing
      at
      the time such corporation becomes a subsidiary, or arising after such time
      (a) otherwise than in connection with the borrowing of money arranged after
      the corporation became a subsidiary and (b) pursuant to contractual
      commitments entered into prior to and not in contemplation of such corporation
      becoming a subsidiary;




(3)  liens
      on
      any of our property, assets or restricted securities or those of any subsidiary
      existing at the time of acquisition of such property, assets or securing the
      payment of all or any part of the purchase price or construction cost of such
      property, assets or restricted securities, or securing any debt incurred prior
      to, at the time of or within 120 days after the later of the date of the
      acquisition of such property, assets or restricted securities or the completion
      of any such construction, for the purpose of financing all or any part of the
      purchase price or construction cost (subject to certain
      limitations);




(4)  liens
      on
      any property or assets to secure all or any part of the cost of development,
      operation, construction, alteration, repair or improvement of all or any part
      of
      such property or assets or to secure debt incurred by us or any of our
      subsidiaries prior to, at the time of or within 120 days after, the
      completion of such development, operation, construction, alteration, repair
      or
      improvement, whichever is later, for the purpose of financing all or any related
      costs;




(5)  liens
      in
      favor of the trustee for the benefit of the holders and subsequent holders
      of
      the debt securities securing the debt securities;




(6)  liens
      secured by any of our property or assets or those of any subsidiary that
      comprise no more than 20 percent of our Consolidated Net Tangible Assets (as
      defined under “Terms Described in the Indentures” below);




(7)  liens
      that secure debt owing by a subsidiary to Southern Union or another
      subsidiary;




(8)
            liens
                that secure senior indebtedness or any part thereof;
                and




-7-


(9)
            any
                extension, renewal, substitution or replacement, in whole or in part,
                of
                any of the liens referred to above or the debt secured by the liens;
                provided that:




(a)  such
      extension, renewal, substitution or replacement lien will be limited to all
      or
      any part of the same property, assets or restricted securities that secured
      the
      prior lien plus improvements on such property and plus any other property or
      assets not then owned by us or one of our subsidiaries or constituting
      restricted securities; and




(b)  in
      the
      case of items (1) through (3) above, the debt secured by such lien at
      such time is not increased.




If
      we
      give a guarantee that is secured by a lien on any property or assets or
      restricted securities, or we create a lien on any property or assets or
      restricted securities to secure debt that existed prior to the creation of
      such
      lien, the indenture will deem that we have created debt in an amount equal
      to
      the principal amount guaranteed or secured by such lien. The amount of debt
      secured by liens on property, assets and restricted securities will be computed
      without cumulating the indebtedness with any guarantee or lien securing the
      same
      indebtedness.




**Limitation
      on Sale and Leaseback Transactions**




The
      indentures also provide that we will not, nor will we permit any of our
      subsidiaries to, engage in a sale-leaseback transaction, unless:




(1)  the
      sale-leaseback transaction involves a lease for a period, including renewals,
      of
      not more than three years;




(2)  Southern
      Union or any of its subsidiaries, within 180 days after such sale-leaseback
      transaction, apply or cause to be applied an amount equal to the greater of
      the
      net sale proceeds from such sale-leaseback transaction or the fair market value
      of the property sold and leased back at the time of the transaction to the
      repayment, redemption or retirement of its short-term funded debt or funded
      debt
      of any such subsidiary (which amount may be reduced under certain
      circumstances); or




(3)  the
      Attributable Debt (as defined below under “Terms Described in the Indentures”)
      from such sale-leaseback transaction (after giving pro forma effect thereto),
      together with all other sale and leaseback transactions entered into after
      the
      date of the first issuance by us of debt securities pursuant to the indenture
      other than sale-leaseback transactions permitted by clauses (1) and
      (2) above does not exceed 20 percent of our Consolidated Net Tangible
      Assets (as defined below under “Terms Described in the Indentures”
below).




**Events
      of Default**




The
      indentures provide that any one of the following events is an event of
      default:




·
            failure
                to pay any interest or any additional amounts due on any debt security,
                or
                of any coupon, for 30 days;




·
            failure
                to pay the principal of or any premium on any debt security when
                due,
                whether at maturity, upon redemption, by declaration or
                otherwise;




·
            failure
                to make any sinking fund payment when due (if
                applicable);




·
            failure
                to perform any other covenant or agreement in the indenture which
                continues for 60 days after written notice is given to us by the
                trustee or the holders of at least 25 percent of the outstanding
                debt
                securities of that series;




·
            cross-acceleration
                of our other debt in excess of ten percent of our consolidated net
                worth;




·
            certain
                events in any bankruptcy, insolvency or reorganization of Southern
                Union
                or its assets; or




·
            any
                other event of default listed in the indenture for debt securities
                of that
                series.




-8-





We
      are
      required to file annually with the trustee an officer’s certificate as to
      Southern Union compliance with all conditions and covenants under the
      indentures. The indentures permit the trustee to withhold notice to the holders
      of debt securities of any default, except in the case of a failure to pay the
      principal of (or premium, if any), or interest on, any debt securities or the
      payment of any sinking fund installment with respect to such securities, if
      the
      trustee considers it in the interest of the holders of debt securities to do
      so.




If
      an
      event of default, other than events with respect to Southern Union’s bankruptcy,
      insolvency and reorganization, occurs and is continuing with respect to debt
      securities, the trustee or the holders of at least 25 percent in principal
      amount of outstanding debt securities of that series may declare the outstanding
      debt securities of that series due and payable immediately. If our bankruptcy,
      insolvency or reorganization, causes an event of default for debt securities
      of
      a particular series, then the principal of all the outstanding debt securities
      of that series, and accrued and unpaid interest thereon, will automatically
      be
      due and payable without any act on the part of the trustee or any
      holder.




If
      an
      event of default with respect to debt securities of a particular series occurs
      and is continuing, the trustee will be under no obligation to exercise any
      of
      its rights or powers under the indenture at the request or direction of any
      of
      the holders of debt securities of such series (other than duties listed in
      the
      indenture), unless such holders offer to the trustee reasonable indemnity and
      security against the costs, expenses and liabilities that might be incurred
      by
      the trustee to comply with the holders’ request. If they provide this indemnity
      to the trustee, the holders of a majority in principal amount of the outstanding
      debt securities of such series will have the right to direct the time, method
      and place of conducting any proceeding for any remedy available to the trustee
      under the indenture, or exercising any trust or power given to the trustee
      with
      respect to the debt securities of that series. The trustee may refuse to follow
      directions in conflict with law or the indenture that may subject the trustee
      to
      personal liability or may be unduly prejudicial to holders not joining in such
      directions.




The
      holders of not less than a majority in principal amount of the outstanding
      debt
      securities of any series may, on behalf of the holders of all the debt
      securities of such series and any related coupons (or in the case of an event
      of
      default related to Southern Union’s bankruptcy, insolvency or reorganization,
      the holders of not less than a majority in principal amount of all debt
      securities may), waive any past default under the indenture with respect to
      such
      series and its consequences, except a default:




·
            in
                the payment of the principal of (or premium, if any) or interest
                on or
                additional amounts payable in respect of any debt security of such
                series
                unless such default has been cured and a sum sufficient to pay all
                matured
                installments of interest and principal due otherwise than by acceleration
                and any applicable premium has been deposited with the trustee; or




·
            in
                respect of a covenant or provision that cannot be modified or amended
                without the consent of the holder of each outstanding debt security
                of
                such series affected by the modification or
                amendment.




**Modification
      or Waiver**




We
      and
      the trustees generally may modify and amend the indentures with the consent
      of
      the holders of not less than a majority in principal amount of all outstanding
      indenture securities or any series that is affected by such modification or
      amendment. However, the consent of the holder of each outstanding debt security
      of a series is required in order to undertake the following
      actions:




·
            change
                the stated maturity of the principal of (or premium, if any), or
                any
                installment of principal or interest on any debt security of such
                series;




·
            reduce
                the principal amount or the rate of interest on or any additional
                amounts
                payable, or any premium payable upon the redemption of such series;




·
            change
                our obligation to pay additional amounts in respect of any debt security
                of such series;




·
            reduce
                the amount of principal of a debt security that is an original issue
                discount security and would be due and payable upon a declaration
                of
                acceleration of the maturity of that debt security;




·
            adversely
                affect any right of repayment at the option of the holder of any
                debt
                security of such series;




-9-


·
            change
                the place or currency of payment of principal of, or any premium
                or
                interest on, any debt security of such series;




·
            impair
                the right to institute suit for the enforcement of any such payment
                on or
                after the stated maturity of the debt securities of such series or
                any
                redemption date or repayment date for such debt securities;




·
            reduce
                the percentage in principal amount of outstanding debt securities
                of such
                series necessary to modify or amend the indenture or to consent to
                any
                waiver under the indenture or reduce the requirements for voting
                or quorum
                described below; or




·
            modify
                the requirements for waiver of past default or modify any of the
                above
                requirements, except to increase any percentage required or to provide
                that other provisions of the indenture that affect such series cannot
                be
                modified or waived without the consent of the holder of each outstanding
                debt security of such series.




We
      and
      the trustees may modify and amend the indentures without the consent of any
      holder for the following purposes:




·
            to
                evidence the succession of another entity to us as obligor under
                an
                indenture;




·
            to
                add to our covenants for the benefit of the holders of all or any
                series
                of debt securities;




·
            to
                add events of default for the benefit of the holders of all or any
                series
                of debt securities;




·
            to
                add or change any provisions of the indentures to facilitate the
                issuance
                of bearer securities;




·
            to
                change or eliminate any provisions of the indentures but only if
                any such
                change or elimination will become effective only when there are no
                outstanding debt securities of any series created prior to the change
                or
                elimination that is entitled to the benefit of such
                provision;




·
            to
                establish the form or terms of debt securities of any series and
                any
                related coupons;




·
            to
                secure any series of debt
                securities;




·
            to
                provide for the acceptance of appointment by a successor trustee
                or
                facilitate the administration of the trusts under the indentures
                by more
                than one trustee;




·
            to
                change the indentures with respect to the authentication and delivery
                of
                additional series of debt securities, in order to cure any ambiguity,
                defect or inconsistency in the indentures, but only if such action
                does
                not adversely affect the interest of holders of debt securities of
                any
                series in any material respect; and




·
            to
                supplement any of the provisions of the indenture to permit or facilitate
                satisfaction and discharge or defeasance of any series, but only
                if any
                such action does not adversely affect the interests of holders of
                that
                series or any other series in any material
                respect.




The
      indentures contain provisions for convening meetings of the holders of debt
      securities of a series if debt securities of that series are issuable as bearer
      securities. A meeting may be called at any time by the trustee and also by
      such
      trustee pursuant to a request made to the trustee by us or the holders of at
      least ten percent in principal amount of the debt securities of such series
      outstanding. In any case, notice must be given as provided in the indentures.
      Any resolution presented at a meeting or duly reconvened adjourned meeting
      at
      which a quorum is present may be adopted by the affirmative vote of the holders
      of a majority in principal amount of the debt securities of that series, except
      for any consent that must be given by the holder of each debt security affected,
      as described above in this section. Any resolution passed or decision made
      in
      accordance with the indentures at any duly held meeting of holders of debt
      securities of any series will be binding on all holders of the debt securities
      of that series and any related coupons. The quorum at any meeting called to
      adopt a resolution, and at any reconvened meeting, will consist of persons
      entitled to vote a majority in principal amount of the debt securities of a
      series outstanding, unless a specified percentage in principal amount of the
      debt securities of a series outstanding is required for the consent or waiver,
      then the persons entitled to vote such specified percentage in principal amount
      of the outstanding debt securities of such series will constitute




-10-




a
      quorum.
      If, however, any action is to be taken at a meeting of holders of debt
      securities of any series with respect to any request, demand, authorization,
      direction, notice, consent, waiver or other action that the indentures expressly
      provide may be made, given or taken by the holders of a specified percentage
      in
      principal amount of all outstanding debt securities affected, or of the holders
      of such series of debt securities and one or more additional series, then:




·
            there
                will be no minimum quorum requirement for such meeting; and




·
            the
                principal amount of the outstanding debt securities of such series
                that
                vote in favor of such request, demand, authorization, direction,
                notice,
                consent, waiver or other action will be taken into account in determining
                whether such request, demand, authorization, direction, notice, consent,
                waiver or other action has been made, given or taken under the
                indentures.




**Defeasance**




We
      will
      be discharged from our obligations on the debt securities of any series at
      any
      time if we deposit with the trustee sufficient cash or government securities
      to
      pay the principal, interest, any premium and any other sums due to the stated
      maturity date or a redemption date of the debt securities of the series. If
      this
      happens, the holders of the debt securities of the series will not be entitled
      to the benefits of the indenture except for registration of transfer and
      exchange of debt securities and replacement of lost, stolen or mutilated debt
      securities.




Under
      U.S. federal income tax laws as of the date of this prospectus, a discharge
      may
      be treated as an exchange of the related debt securities. Each holder might
      be
      required to recognize gain or loss equal to the difference between the holder’s
      cost or other tax basis for the debt securities and the value of the holder’s
      interest in the trust. Holders might be required to include as income a
      different amount than would be includable without the discharge. Prospective
      investors should seek tax advice to determine their particular consequences
      of a
      discharge, including the applicability and effect of tax laws other than the
      U.S. federal income tax laws.




**Financial
      Information**




While
      the
      debt securities are outstanding, we will file with the SEC, to the extent
      permitted under the Exchange Act, the annual reports, quarterly reports and
      other documents otherwise required to be filed with the SEC pursuant to
      Section 13(a) or 15(d) of the Exchange Act even if we stop being subject to
      those sections, and we will also provide to all holders and file with the
      trustee copies of such reports and documents within 15 days after filing
      them with the SEC or, if our filing such reports and documents with the SEC
      is
      not permitted under the Exchange Act, within 15 days after we would have
      been required to file such reports and documents if permitted, in each case
      at
      our cost.




**Terms
      Described in the Indentures**




“Attributable
      Debt” means, with respect to a lease under which any entity is liable for a term
      of more than 12 months, the total net amount of rent required to be paid by
      the entity under such lease during the remaining term (excluding any subsequent
      renewal or other extension options held by the lessee), discounted from the
      respective due dates of the rent to the date that the Attributable Debt is
      being
      determined at a rate equal to the weighted average of the interest rates borne
      by the outstanding debt securities, compounded monthly. The net amount of rent
      required to be paid under any lease for any such period will be the aggregate
      amount of the rent payable by the lessee with respect to such period after
      excluding any amounts required to be paid on account of maintenance and repairs,
      services, insurance, taxes, assessments, water rates and similar charges and
      contingent rents (such as those based on sales). In the case of any lease that
      is terminable by the lessee upon the payment of a penalty, such net amount
      of
      rent will include the lesser of:




·
            the
                total discounted net amount of rent required to be paid from the
                later of
                the first date upon which such lease may be so terminated or the
                date of
                the determination of such net amount of rent, and




·
            the
                amount of such penalty (in which event no rent shall be considered
                as
                required to be paid under such lease subsequent to the first date
                upon
                which it may be so terminated).




-11-





“Consolidated
      Net Tangible Assets” means the total amount of our assets and those of our
      consolidated subsidiaries (less applicable reserves and other properly
      deductible items) after deducting the following:




·
            all
                current liabilities (excluding any current liabilities that are by
                their
                terms extendible or renewable at the option of the obligor to a time
                more
                than 12 months after the time as of which the amount of the
                Consolidated Net Tangible Assets is being computed);
                and




·
            all
                goodwill, trade names, trademarks, patents, unamortized debt discount
                and
                expense and other like intangibles, all as set forth on our most
                recent
                consolidated balance sheet and computed in accordance with generally
                accepted accounting principles.




**Payment,
      Registration and Transfer**




Unless
      we
      specify otherwise in a prospectus supplement, we will pay principal, interest
      and any premium on the debt securities, and they may be surrendered for payment
      or transferred, at the offices of the trustee. We will make payment on
      registered securities by checks to the persons in whose names the debt
      securities are registered or by transfer to an account maintained by the
      registered holder on days specified in the indenture or any prospectus
      supplement. If we make debt securities payments in other forms, we will specify
      the form and place in a prospectus supplement.




We
      will
      maintain a corporate trust office of the trustee or another office or agency
      for
      the purpose of transferring or exchanging fully registered securities, without
      the payment of any service charge except for any tax or governmental
      charge.




The
      debt
      securities may be issued as registered securities or bearer securities.
      Registered securities will be securities recorded in the securities register
      kept at the corporate office of the trustee for the trust that issued that
      series of securities. A bearer security is any debt security other than a
      registered security. Registered securities will be exchangeable for other
      registered securities of the same series and of a like aggregate principal
      amount and tenor in different authorized denominations. If (but only if)
      provided for in any prospectus supplement, bearer securities (with all unmatured
      coupons, except as provided below, and all matured coupons in default) of any
      series may be exchanged for registered securities of the same series of any
      authorized denominations and of a like aggregate principal amount and tenor.
      In
      such event, bearer securities surrendered in a permitted exchange for registered
      securities between a regular record date and the relevant date for payment
      of
      interest will be surrendered without the coupon relating to such date for
      payment of interest. Interest will not be payable on such date on the registered
      security issued in exchange for such bearer security but will be payable only
      to
      the holder of such coupon when due, in accordance with the terms of the
      indenture. Unless otherwise specified in any prospectus supplement, bearer
      securities will not be issued in exchange for registered securities.




In
      the
      event of any redemption of debt securities, we will not be required to take
      any
      of the following actions:




·
            issue,
                register the transfer of or exchange debt securities of any series
                during
                a period beginning at the opening of business 15 days before any
                selection of debt securities of that series to be redeemed and ending
                at
                the close of business on (a) the day of mailing of the relevant
                notice of redemption if debt securities of the series are issuable
                only as
                registered securities, (b) the day of mailing of the relevant notice
                of redemption if the debt securities of the series are also issuable
                as
                registered securities and there is no publication, and (c) the day of
                the first publication of the relevant notice of redemption if the
                debt
                securities are issuable as bearer
                securities;




·
            register
                the transfer of or exchange any registered security, or portion thereof,
                called for redemption, except the unredeemed portion of any registered
                security being redeemed in part;




·
            exchange
                any bearer security selected for redemption, except to exchange such
                bearer security for a registered security of that series and like
                tenor
                that simultaneously is surrendered for redemption;
                or




·
            issue,
                register the transfer of or exchange any debt securities that have
                been
                surrendered for repayment at the option of the holder, except any
                portion
                not to be repaid.




-12-




**Subordination**




Unless
      indicated differently in a prospectus supplement, Southern Union’s subordinated
      debt securities will be subordinated in right of payment to the prior payment
      in
      full of all of Southern Union’s senior debt. This means that, upon:




(a)  any
      distribution of the assets of Southern Union upon its dissolution, winding-up,
      liquidation or reorganization in bankruptcy, insolvency, receivership or other
      proceedings;




(b)  acceleration
      of the maturity of the subordinated debt securities;




(c)  a
      failure
      to pay any senior debt or interest thereon when due and continuance of that
      default beyond any applicable grace period; or




(d)
            acceleration
                of the maturity of any senior debt as a result of a default, the
                holders
                of all of Southern Union’s senior debt will be entitled to receive:




·
            in
                the case of clauses (a) and (b) above, payment of all amounts
                due or to become due on all senior debt;


·  and
      in
      the case of clauses (c) and (d) above, payment of all amounts due on
      all senior debt,




before
      the holders of any of the subordinated debt securities are entitled to receive
      any payment. So long as any of the events in clauses (a), (b), (c) or
      (d) above has occurred and is continuing, any amounts payable on the
      subordinated debt securities will instead be paid directly to the holders of
      all
      senior debt to the extent necessary to pay the senior debt in full and, if
      any
      payment is received by the subordinated indenture trustee under the subordinated
      indenture or the holders of any of the subordinated debt securities before
      all
      senior debt is paid in full, the payment or distribution must be paid over
      to
      the holders of the unpaid senior debt. Subject to paying the senior debt in
      full, the holders of the subordinated debt securities will be subrogated to
      the
      rights of the holders of the senior debt to the extent that payments are made
      to
      the holders of senior debt out of the distributive share of the subordinated
      debt securities.




“Senior
      debt” means with respect to the subordinated debt securities, the principal of,
      and premium, if any, and interest on and any other payment in respect of
      indebtedness due pursuant to any of the following, whether outstanding on the
      date the subordinated debt securities are issued or thereafter incurred, created
      or assumed:




·
            indebtedness
                of Southern Union for money borrowed by Southern Union or evidenced
                by
                securities, debentures (other than the subordinated debt securities),
                bonds or similar instruments issued by Southern Union, including
                any of
                Southern Union’s mortgage bonds;




·
            capital
                lease obligations of Southern
                Union;




·
            obligations
                of Southern Union incurred for deferring the purchase price of property,
                with respect to conditional sales, or under any title retention agreement
                (but excluding trade accounts payable arising in the ordinary course
                of
                business);




·
            obligations
                of Southern Union with respect to letters of credit, banker’s acceptances,
                security purchase facilities or similar credit transitions;
                and




·
            all
                indebtedness of others of the type referred to in the four preceding
                clauses assumed by or guaranteed in any manner by Southern Union
                or in
                effect guaranteed by Southern
                Union.




Due
      to
      the subordination, if assets of Southern Union are distributed upon insolvency,
      certain of its general creditors may recover more, ratably, than holders of
      subordinated debt securities. The subordination provisions will not apply to
      money and securities held in trust under the satisfaction and discharge and
      the
      defeasance provisions of the applicable subordinated indenture.




-13-





The
      subordinated debt securities and the subordinated indenture do not limit
      Southern Union’s ability to incur additional indebtedness, including
      indebtedness that will rank senior to subordinated debt securities. Southern
      Union expects that it will incur substantial additional amounts of indebtedness
      in the future.




The
      terms
      and conditions of any series of debt securities being offered that are
      convertible into common stock of Southern Union will be set forth in a
      prospectus supplement. These terms will include the conversion price, the
      conversion period, provisions as to whether conversion will be at the option
      of
      the holder or the company issuing the debt securities, the events requiring
      an
      adjustment of the conversion price and provisions affecting conversion in the
      event that such series of debt securities are redeemed.




**Governing
      Law**




Each
      indenture and the related debt securities will be governed by and construed
      in
      accordance with the laws of the State of New York, without regard to the
      conflict of laws provisions thereunder.




**DESCRIPTION
      OF COMMON STOCK AND PREFERRED STOCK**




**General**




Unless
      indicated differently in a prospectus supplement, this section describes the
      terms of Southern Union’s common stock and preferred stock. The following
      description of Southern Union’s common stock and preferred stock is only a
      summary. The descriptions of Southern Union’s common stock and preferred stock
      are qualified in their entirety by reference to Southern Union’s certificate of
      incorporation and bylaws. Keep in mind that it is Southern Union’s certificate
      of incorporation and bylaws, along with the Delaware General Corporation Law
      (the “DGCL”), that will define your rights as a holder of Southern Union’s
      common stock or preferred stock. Therefore, you should read carefully the more
      detailed provisions of Southern Union’s certificate of incorporation and bylaws,
      copies of which are incorporated by reference as exhibits to the registration
      statement of which this prospectus is a part.




Southern
      Union’s authorized capital stock consists of (1) 200,000,000 shares of
      common stock, par value $1 per share, and (2) 6,000,000 shares of preferred
      stock, no par value. As of September 30, 2006, 119,564,073.497 shares of our
      common stock and 920,000 shares of our preferred stock were issued and
      outstanding. No other classes of capital stock currently are authorized under
      our certificate of incorporation. All issued and outstanding shares of our
      common stock and preferred stock are duly authorized, validly issued, fully
      paid, nonassessable and free of preemptive rights.




**Common
      Stock**




The
      holders of our common stock are entitled to one vote for each share held of
      record on all matters submitted to a vote of stockholders.




The
      holders of our common stock are entitled to receive dividends as and when
      declared by the Southern Union board out of funds legally available for such
      payment, subject to any preferential dividend rights of holders of outstanding
      shares of our preferred stock.




Subject
      to any preferential rights of holders of outstanding shares of our preferred
      stock, upon liquidation, dissolution or winding up of Southern Union, the
      holders of our common stock are entitled to receive ratably the net assets
      of
      Southern Union available after the payment of all debts and other
      liabilities.




Holders
      of our common stock have no preemptive, subscription, redemption or conversion
      rights.




The
      registrar and transfer agent for the Southern Union common stock is
      Computershare.




-14-




**Other
      Considerations Relating to Southern Union Common Stock**




As
      a
      natural gas utility operating in Massachusetts, Southern Union is subject to
      the
      provisions of Chapter 164 of the Massachusetts General Law (the “MGL”), which
      governs the rates and terms of service provided by gas and electric utilities
      operating in Massachusetts. Southern Union is exempt from the provisions of
      the
      Massachusetts business law (Chapter 156B), except to the extent that any of
      its
      provisions are incorporated into Chapter 164 of the MGL. Chapter 164
      incorporates only minor aspects of the corporate governance provisions of
      Chapter 156B. Except for a limited exception discussed below, there are no
      material differences between those provisions and the corresponding provisions
      of the DGCL.




With
      respect to Southern Union, the single material difference between the provisions
      of Chapter 164 of the MGL and the DGCL pertains to the requirements of
      stockholder approval in the limited circumstance where there is a merger
      involving Southern Union and another gas utility operating in Massachusetts.
      This type of transaction would require approval by the Massachusetts Department
      of Telecommunications and Energy. The applicable provision of Chapter 164 also
      would require that such a merger be approved by the vote of the holders of
      two-thirds of the Company’s common stock. In contrast, the DGCL would require
      that such a merger be approved by the vote of the holders of a majority of
      the
      Company’s common stock.




**Preferred
      Stock**




Southern
      Union, by resolution of the Southern Union board and without any further vote
      or
      action by the holders of Southern Union common stock, has the authority, subject
      to certain limitations, to issue up to an aggregate of 6,000,000 shares of
      preferred stock in one or more classes or series, and to determine the
      designation and the number of shares of any class or series and to fix the
      designation, powers, preferences and rights of each such series and the
      qualifications, limitations or restrictions thereof. As of September 30, 2006,
      920,000 shares of our preferred stock were issued and outstanding.




Prior
      to
      the issuance of shares of each series of our preferred stock, Southern Union’s
      board must adopt resolutions and file a certificate of designation with the
      Secretary of State of the State of Delaware with respect to such series of
      preferred stock, both of which we will make publicly available in a filing
      we
      will make with the SEC with respect to any offering of preferred stock. The
      certificate of designation will fix for each series the designation and number
      of shares and the rights, preferences, privileges and restrictions of the shares
      including, but not limited to, the following:




·
            the
                number of shares constituting that series and the distinctive designation
                of each such series;




·
            the
                dividend rate on the shares of that series, whether dividends shall
                be
                cumulative, and, if so, from which date or dates, and the relative
                rights
                of priority, if any, of payment of dividends on shares of each
                series;




·
            whether
                each series shall have voting rights, in addition to the voting rights
                provided by law, and if so, the terms of such voting
                rights;




·
            whether
                each series shall have conversion privileges, and, if so, the terms
                and
                conditions of such conversion, including provision for adjustment
                of the
                conversion rate in such events as our board shall
                determine;




·
            whether
                or not the shares of each series shall be redeemable, and, if so,
                the
                terms and conditions of such redemption, including the date or date
                upon
                or after which they shall be redeemable, and the amount per share
                payable
                in case or redemption, which amount may vary under different conditions
                and at different redemption dates;




·
            whether
                each series shall have a sinking fund for the redemption or purchase
                of
                shares of each such series, and if so, the terms and amount of such
                sinking fund;




·
            the
                rights of the shares of each series in the event of voluntary or
                involuntary liquidation, dissolution or winding up of Southern Union,
                and
                the relative rights of priority, if any, of payment of shares of
                each
                series; and




·
            any
                other relative rights, preferences and limitations of each
                series.




-15-





All
      shares of
      our preferred stock, when issued, will be fully paid and nonassessable and
      will
      not have any preemptive or similar rights.




In
      addition to the terms listed above, we will set forth in a prospectus supplement
      the following terms relating to the class or series of Southern Union preferred
      stock being offered:




·
            the
                number of shares of Southern Union preferred stock offered, the
                liquidation preference per share and the offering price of the Southern
                Union preferred stock;




·
            the
                procedures for any auction and remarketing, if any, for the Southern
                Union
                preferred stock;




·
            any
                listing of the preferred stock on any securities exchange; and




·
            a
                discussion of any material and/or special United States federal income
                tax
                considerations applicable to the Southern Union preferred stock.




**Rank**




Our
      preferred stock will rank, with respect to dividends and upon our liquidation,
      dissolution or winding up:




·
            senior
                to all classes or series of our common stock and to all of our equity
                securities ranking junior to our preferred stock;




·
            on
                a parity with all of our equity securities the terms of which specifically
                provide that the equity securities rank on a parity with our preferred
                stock; and




·
            junior
                to all of our equity securities the terms of which specifically provide
                that the equity securities rank senior to our preferred stock.




**DESCRIPTION
      OF WARRANTS**




**General**




This
      section describes the general terms of the warrants that Southern Union may
      offer and sell by this prospectus. This prospectus and any accompanying
      prospectus supplement will contain the material terms and conditions for each
      warrant. The accompanying prospectus supplement may add, update or change the
      terms and conditions of the warrants as described in this
      prospectus.




We
      may
      issue warrants to purchase debt securities, preferred stock or common stock.
      Warrants may be issued independently or together with any securities and may
      be
      attached to or separate from those securities. The warrants will be issued
      under
      warrant agreements to be entered into between us and a bank or trust company,
      as
      warrant agent, all of which will be described in the prospectus supplement
      relating to the warrants we are offering. The warrant agent will act solely
      as
      our agent in connection with the warrants and will not have any obligation
      or
      relationship of agency or trust for or with any holders or beneficial owners
      of
      warrants. A copy of the warrant agreement will be made publicly available in
      a
      filing we will make with the SEC with respect to any offering of
      warrants.




**Equity
      Warrants**




We
      may
      issue warrants for the purchase of our equity securities such as our preferred
      stock or common stock. As explained below, each equity warrant will entitle
      its
      holder to purchase equity securities at an exercise price set forth in, or
      to be
      determinable as set forth in, the related prospectus supplement. Equity warrants
      may be issued separately or together with equity securities.




The
      equity warrants are to be issued under equity warrant agreements to be entered
      into between us and one or more banks or trust companies, as equity warrant
      agent, as will be set forth in the prospectus supplement relating to the equity
      warrants being offered by the prospectus supplement and this prospectus. A
      copy
      of the equity warrant agreement, including a form of equity warrant certificate
      representing the equity warranty, will be made publicly available in a filing
      we
      will make with the SEC with respect to any offering of equity
      warrants.




-16-


The
      particular terms of each issue of equity warrants, the equity warrant agreement
      relating to the equity warrants and the equity warrant certificates representing
      equity warrants will be described in the applicable prospectus
      supplement.




Holders
      of equity warrants will not be entitled, solely by virtue of being holders,
      to
      vote, to consent, to receive dividends, to receive notice as stockholders with
      respect to any meeting of stockholders for the election of directors or any
      other matter, or to exercise any rights whatsoever as a holder of the equity
      securities purchasable upon exercise of the equity warrants.




**Debt
      Warrants**




We
      also
      may issue warrants for the purchase of our debt securities. As explained below,
      each debt warrant will entitle its holder to purchase debt securities at an
      exercise price set forth in, or to be determinable as set forth in, the related
      prospectus supplement. Debt warrants may be issued separately or together with
      debt securities.




The
      debt
      warrants are to be issued under debt warrant agreements to be entered into
      between us and one or more banks or trust companies, as debt warrant agent,
      as
      will be set forth in the prospectus supplement relating to the debt warrants
      being offered by the prospectus supplement and this prospectus. A copy of the
      debt warrant agreement, including a form of debt warrant certificate
      representing the debt warrants, will be made publicly available in a filing
      we
      will make with the SEC with respect to any offering of equity
      warrants.




The
      particular terms of each issue of debt warrants, the debt warrant agreement
      relating to the debt warrants and the debt warrant certificates representing
      debt warrants will be described in the applicable prospectus
      supplement.




Debt
      warrant certificates will be exchangeable for new debt warrant certificates
      of
      different denominations and, if in registered form, may be presented for
      registration of transfer and debt warrants may be exercised at the corporate
      trust office of the debt warrant agent or any other office indicated in the
      related prospectus supplement. Before the exercise of debt warrants, holders
      of
      debt warrants will not be entitled to payments of principal, premium, if any,
      or
      interest, if any on the debt securities purchasable upon exercise of the debt
      warrants, or to enforce any of the covenants in the applicable
      indenture.




**DESCRIPTION
      OF SECURITIES PURCHASE CONTRACTS**




**AND
      SECURITIES PURCHASE UNITS**




**General**




This
      section describes the general terms of the securities purchase contracts and
      securities purchase units that Southern Union may offer and sell by this
      prospectus. This prospectus and any accompanying prospectus supplement will
      contain the material terms and conditions for each securities purchase contract
      and securities purchase unit. The accompanying prospectus supplement may add,
      update or change the terms and conditions of the securities purchase contracts
      and securities purchase units as described in this prospectus.




**Stock
      Purchase Contracts and Stock Purchase Units**




We
      may
      issue stock purchase contracts, representing contracts obligating holders to
      purchase from us, and obligating us to sell to the holders, a specified number
      of shares of common stock or preferred stock at a future date or dates, or
      a
      variable number of shares of common stock or preferred stock for a stated amount
      of consideration. The price per share and the number of shares of common stock
      or preferred stock may be fixed at the time the stock purchase contracts are
      issued or may be determined by reference to a specific formula set forth in
      the
      stock purchase contracts. Any such formula may include anti-dilution provisions
      to adjust the number of shares of common stock or preferred stock issuable
      pursuant to the stock purchase contracts upon certain events.




The
      stock
      purchase contracts may be issued separately or as a part of units consisting
      of
      a stock purchase contract and, as security for the holder’s obligations to
      purchase the shares under the stock purchase contracts, either:




-17-




·
            our
                senior debt securities or subordinated debt securities,
                or




·
            the
                debt obligations of third parties, including U.S. Treasury
                securities.




The
      stock
      purchase contracts may require us to make periodic payments to the holders
      of
      the stock purchase units or vice versa, and such payments may be unsecured
      or
      prefunded on some basis. The stock purchase contracts may require holders to
      secure their obligations in a specified manner, and in certain circumstances
      we
      may deliver newly issued prepaid stock purchase contracts upon release to a
      holder of any collateral securing such holder’s obligations under the original
      stock purchase contract.




The
      applicable prospectus supplement will describe the general terms of any purchase
      contracts or purchase units and, if applicable, prepaid purchase contracts.
      The
      stock purchase contract will be made publicly available in a filing that we
      will
      make with the SEC with respect to any issuance of stock purchase contracts
      or
      stock purchase units.




**Debt
      Purchase Contracts and Debt Purchase Units**




We
      may
      issue debt purchase contracts, representing contracts obligating holders to
      purchase from us, and obligating us to sell to the holders, a specified
      principal amount of debt securities at a future date or dates. The purchase
      price and the interest rate may be fixed at the time the debt purchase contracts
      are issued or may be determined by reference to a specific formula set forth
      in
      the debt purchase contracts.




The
      debt
      purchase contracts may be issued separately or as a part of units consisting
      of
      debt purchase contracts and, as security for the holder’s obligations to
      purchase the securities under the debt purchase contracts, either:




·
            our
                senior debt securities or subordinated debt securities,
                or




·
            the
                debt obligations of third parties, including U.S. Treasury securities.




The
      debt
      purchase contracts may require us to make periodic payments to the holders
      of
      the debt purchase units or vice versa, and such payments may be unsecured or
      prefunded on some basis. The debt purchase contracts may require holders to
      secure their obligations in a specified manner and in certain circumstances
      we
      may deliver newly issued prepaid debt purchase contracts upon release to a
      holder of any collateral securing such holder’s obligations under the original
      debt purchase contract.




The
      applicable prospectus supplement will describe the general terms of any purchase
      contracts or purchase units and, if applicable, prepaid purchase contracts.
      The
      purchase contracts, the collateral arrangements and depositary arrangements,
      if
      applicable, relating to such purchase contracts or purchase units and, if
      applicable, the prepaid purchase contracts and the document pursuant to which
      such prepaid purchase contracts will be issued, all will be made publicly
      available in a filing we will make with the SEC with respect to any issuance
      of
      debt purchase contracts and debt purchase units.




**DESCRIPTION
      OF DEPOSITARY SHARES**




**General**




This
      section describes the general terms of the depositary shares that we may offer
      and sell by this prospectus. This prospectus and any accompanying prospectus
      supplement will contain the material terms and conditions for the depositary
      shares. The accompanying prospectus supplement may add, update or change the
      terms and conditions of the depositary shares as described in this
      prospectus.




We
      may,
      at our option, elect to offer depositary shares, each representing a fraction
      (to be set forth in the prospectus supplement relating to a particular series
      of
      preferred stock) of a share of a particular class or series of preferred stock
      as described below. If we elect to do so, depositary receipts evidencing
      depositary shares will be issued to the public. The shares of any class or
      series of preferred stock represented by depositary shares will




-18-


be
      deposited under a deposit agreement among us, a depositary selected by us and
      the holders of the depositary receipts. The depositary will be a bank or trust
      company having its principal office in the United States and having a combined
      capital and surplus of at least $50,000,000. Subject to the terms of the deposit
      agreement, each owner of a depositary share will be entitled, in proportion
      to
      the applicable fraction of a share of preferred stock represented by such
      depositary share, to all the rights and preferences of the shares of preferred
      stock represented by the depositary share, including dividend, voting,
      redemption and liquidation rights.




The
      depositary shares will be evidenced by depositary receipts issued pursuant
      to
      the deposit agreement. Depositary receipts will be distributed to those persons
      purchasing the fractional shares of the related class or series of preferred
      shares in accordance with the terms of the offering described in the related
      prospectus supplement.




Pending
      the preparation of definitive depositary receipts the depositary may, upon
      our
      written order, issue temporary depositary receipts substantially identical
      to,
      and entitling the holders thereof to all the rights pertaining to, the
      definitive depositary receipts but not in definitive form. Definitive depositary
      receipts will be prepared without unreasonable delay, and temporary depositary
      receipts will be exchangeable for definitive depositary receipts without charge
      to the holder.




**Dividends
      and Other Distributions**




The
      depositary will distribute all cash dividends or other cash distributions
      received for the preferred stock to the entitled record holders of depositary
      shares in proportion to the number of depositary shares that the holder owns
      on
      the relevant record date, provided, however, that if we or the depositary are
      required by law to withhold an amount on account of taxes, then the amount
      distributed to the holders of depositary shares shall be reduced accordingly.
      The depositary will distribute only an amount that can be distributed without
      attributing to any holder of depositary shares a fraction of one cent. The
      depositary will add the undistributed balance to and treat it as part of the
      next sum received by the depositary for distribution to holders of the
      depositary shares.




If
      there
      is a non-cash distribution, the depositary will distribute property received
      by
      it to the entitled record holders of depositary shares, in proportion, insofar
      as possible, to the number of depositary shares owned by the holders, unless
      the
      depositary determines, after consultation with us, that it is not feasible
      to
      make such distribution. If this occurs, the depositary may, with our approval,
      sell such property and distribute the net proceeds from such sale to the
      holders. The deposit agreement also will contain provisions relating to how
      any
      subscription or similar rights that we may offer to holders of the preferred
      stock will be available to the holders of the depositary shares.




**Withdrawal
      of Shares**




Upon
      surrender of the depositary receipts at the corporate trust office of the
      depositary unless the related depositary shares have previously been called
      for
      redemption, converted or exchanged into our other securities, the holder of
      the
      depositary shares evidenced thereby is entitled to delivery of the number of
      whole shares of the related class or series of preferred stock and any money
      or
      other property represented by such depositary shares. Holders of depositary
      receipts will be entitled to receive whole shares of the related class or series
      of preferred stock on the basis set forth in the prospectus supplement for
      such
      class or series of preferred stock, but holders of such whole shares of
      preferred stock will not thereafter be entitled to exchange them for depositary
      shares. If the depositary receipts delivered by the holder evidence a number
      of
      depositary shares in excess of the number of depositary shares representing
      the
      number of whole shares of preferred stock to be withdrawn, the depositary will
      deliver to such holder at the same time a new depositary receipt evidencing
      such
      excess number of depositary shares. In no event will fractional shares of
      preferred stock be delivered upon surrender of depositary receipts to the
      depositary.




**Conversion,
      Exchange and Redemption**




If
      any
      class or series of preferred stock underlying the depositary shares may be
      converted or exchanged, each record holder of depositary receipts representing
      the shares of preferred stock being converted or exchanged will have the right
      or obligation to convert or exchange the depositary shares represented by the
      depositary receipts.




Whenever
      we redeem or convert shares of preferred stock held by the depositary, the
      depositary will redeem or convert, at the same time, the number of depositary
      shares representing the preferred stock to be redeemed or converted. The
      depositary will redeem the depositary shares from the proceeds it receives
      from
      the corresponding redemption of the applicable series of preferred stock. The
      depositary will mail notice of redemption




-19-


or
      conversion to the record holders of the depositary shares that are to be
      redeemed between 30 and 60 days before the date fixed for redemption or
      conversion. The redemption price per depositary share will be equal to the
      applicable fraction of the redemption price per share on the applicable class
      or
      series of preferred stock. If less than all the depositary shares are to be
      redeemed, the depositary will select which shares are to be redeemed by lot
      on a
      pro rata basis or by any other equitable method as the depositary may decide.
      After the redemption or conversion date, the depositary shares called for
      redemption or conversion will no longer be outstanding. When the depositary
      shares are no longer outstanding, all rights of the holders will end, except
      the
      right to receive money, securities or other property payable upon redemption
      or
      conversion.




**Voting
      the Preferred Stock**




When
      the
      depositary receives notice of a meeting at which the holders of the particular
      class or series of preferred stock are entitled to vote, the depositary will
      mail the particulars of the meeting to the record holders of the depositary
      shares. Each record holder of depositary shares on the record date may instruct
      the depositary on how to vote the shares of preferred stock underlying the
      holder’s depositary shares. The depositary will try, if practical, to vote the
      number of shares of preferred stock underlying the depositary shares according
      to the instructions. We will agree to take all reasonable action requested
      by
      the depositary to enable it to vote as instructed.




**Amendment
      and Termination of the Deposit Agreement**




Southern
      Union and the depositary may agree at any time to amend the deposit agreement
      and the depositary receipt evidencing the depositary shares. Any amendment
      that
      imposes or increases certain fees, taxes or other charges payable by the holders
      of the depositary shares as described in the deposit agreement, or otherwise
      materially adversely affects any substantial existing rights of holders of
      depositary shares, will not take effect until such amendment is approved by
      the
      holders of at least a majority of the depositary shares then outstanding. Any
      holder of depositary shares that continue to hold its shares after such
      amendment has become effective will be deemed to have agreed to the
      amendment.




Southern
      Union may direct the depositary to terminate the deposit agreement by mailing
      a
      notice of termination of holders of depositary shares at least 30 days
      prior to termination. The depositary may terminate the deposit agreement if
      90 days have elapsed after the depositary delivered written notice of its
      election to resign and a successor depositary is not appointed. In addition,
      the
      deposit agreement will automatically terminate if:




·
            the
                depositary has redeemed all related outstanding depositary
                shares;




·
            all
                outstanding shares of preferred stock have been converted into or
                exchanged for common stock; or




·
            we
                have liquidated, terminated or wound up our business and the depositary
                has distributed the preferred stock of the relevant series to the
                holders
                of the related depositary shares.




**Reports
      and Obligations**




The
      depositary will forward to the holders of depositary shares all reports and
      communications from us that are delivered to the depositary and that we are
      required by law, the rules of an applicable securities exchange or our amended
      and restated certificate of incorporation to furnish to the holders of the
      preferred stock. Neither we nor the depositary will be liable if the depositary
      is prevented or delayed by law or any circumstances beyond its control in
      performing its obligations under the deposit agreement. The deposit agreement
      limits our obligations to performance in good faith of the duties stated in
      the
      deposit agreement. The depositary assumes no obligation and will not be subject
      to liability under the deposit agreement except to perform such obligations
      as
      are set forth in the deposit agreement without negligence or bad faith. Neither
      we nor the depositary will be obligated to prosecute or defend any legal
      proceeding connected with any depositary shares or class or series of preferred
      stock unless the holders of depositary shares requesting us to do so furnish
      us
      with a satisfactory




-20-




indemnity.
      In performing our obligations, we and the depositary may rely and act upon
      the
      advice of our counsel or accountants, on any information provided to us by
      a
      person presenting shares for deposit, any holder of a receipt, or any other
      document believed by us or the depositary to be genuine and to have been signed
      or presented by the proper party or parties.




**Payment
      of Fees and Expenses**




We
      will
      pay all fees, charges and expenses of the depositary, including the initial
      deposit of the preferred stock and any redemption of the preferred stock.
      Holders of depositary shares will pay taxes and governmental charges and any
      other charges as are stated in the deposit agreement for their
      accounts.




**Resignation
      and Removal of Depositary**




At
      any
      time, the depositary may resign by delivering notice to us, and we may remove
      the depositary at any time. Resignations or removals will take effect upon
      the
      appointment of a successor depositary and its acceptance of the appointment.
      The
      successor depositary must be appointed within 90 days after the delivery of
      the notice of resignation or removal and must be a bank or trust company having
      its principal office in the United States and having a combined capital and
      surplus of at least $50,000,000.




**DESCRIPTION
      OF SUBORDINATED DEBT SECURITIES**




**General**




Each
      series of subordinated debt securities will be issued under the subordinated
      indenture, as supplemented by a supplemental indenture for such
      series.  The
      following is a summary of the material terms and provisions of the subordinated
      debt securities and the subordinated indenture. It summarizes only those
      portions of the subordinated debt securities and subordinated indenture that
      we
      believe will be most important to your decision to invest in the subordinated
      debt. You should keep in mind, however, that it is the subordinated indenture,
      and not this summary, that defines your rights. There may be other provisions
      in
      the subordinated indenture that are not described in this summary, which also
      are important to you. You should read the subordinated indenture itself for
      a
      full description of its terms. Both the subordinated indenture and a form of
      the
      supplemental indenture will be made publicly available in a filing we make
      with
      the SEC with respect to any offering we make of subordinated debt securities.
      See “Where You Can Find More Information” for information on how to obtain a
      copy of the form of the subordinated indenture and form of supplemental
      indenture.




Each
      series of subordinated debt securities will be direct, unsecured obligations
      of
      Southern Union. The subordinated debt securities will be subordinated to all
      of
      Southern Union’s senior debt securities.




The
      prospectus supplement with respect to the issuance of subordinated securities
      will include a description of the specific terms of the subordinated debt
      securities. For a description of the terms of any series of the subordinated
      debt securities, you should refer to the applicable prospectus
      supplement.




The
      subordinated indenture does not limit the aggregate principal amount of
      subordinated debt securities that Southern Union may issue pursuant to that
      indenture. The subordinated indenture does not contain any provisions that
      would
      limit Southern Union’s ability to incur debt. The subordinated indenture also
      does not contain any provisions that protect the holders of the subordinated
      debt securities in the event that Southern Union engages in a highly leveraged
      transaction or other transaction in connection with a takeover attempt. Such
      a
      transaction could result in a decline in the credit rating of the subordinated
      debt securities.




Under
      the
      subordinated indenture, Southern Union has the ability to issue subordinated
      debt securities with terms different from any debt securities it has already
      issued, without the consent of the holders of any previously issued series
      of
      debt securities.




**Denominations**




Subordinated
      debt securities will be issued as registered securities in denominations and
      multiples thereof, as will be set forth in the applicable prospectus
      supplement.




-21-





**Subordination**




The
      subordinated debt securities will be subordinated and junior in right of payment
      and upon liquidation to the following indebtedness of Southern Union, whether
      outstanding on the date of execution of the subordinated debt indenture or
      thereafter incurred, created or assumed:




·
            indebtedness
                of Southern Union for money borrowed by Southern Union or evidenced
                by
                securities, debentures (other than the subordinated debt securities),
                bonds or similar instruments issued by Southern Union, including
                any of
                Southern Union’s mortgage bonds;




·
            capital
                lease obligations of Southern
                Union;




·
            obligations
                of Southern Union incurred for deferring the purchase price of property,
                with respect to conditional sales, or under any title retention agreement
                (but excluding trade accounts payable arising in the ordinary course
                of
                business);




·
            obligations
                of Southern Union with respect to letters of credit, banker’s acceptances,
                security purchase facilities or similar credit transitions;
                and




·
            all
                indebtedness of others of the type referred to in the four preceding
                clauses assumed by or guaranteed in any manner by Southern Union
                or in
                effect guaranteed by Southern
                Union.




**Covenants**




Under
      the
      subordinated indenture, Southern Union will:




·
            pay
                the principal of, and interest and any premium on, the subordinated
                debt
                securities when due;




·
            maintain
                a place of payment;




·
            deliver
                a report to the subordinated debt securities trustee at the end of
                each
                fiscal year reviewing its obligations under the indenture;
                and




·
            deposit
                sufficient funds with any paying agent on or before the due date
                for any
                principal, interest or premium.




**Consolidations,
      Mergers and Sales**




The
      subordinated indenture provides that Southern Union will not consolidate with
      or
      merge with or into any other entity, or convey, transfer or lease, or permit
      one
      or more of its subsidiaries to convey, transfer or lease, all or substantially
      all of their properties and assets on a consolidated basis to any other entity,
      unless Southern Union is the surviving corporation or:




·
            such
                other entity assumes by supplemental indenture all of Southern Union’s
                obligations under the indenture and the subordinated debt
                securities;




·
            no
                default or event of default is existing immediately after the
                transaction;




·
            the
                surviving entity is a corporation, partnership or trust organized
                and
                validly existing under the laws of the United States of America,
                any state
                of the United States of America or the District of Columbia;
                and




·
            certain
                other conditions are met.







-22-




**Liens**




Pursuant
      to the indenture, Southern Union will not, and will not permit any of its
      subsidiaries to, create, incur, issue or assume any debt secured by any lien
      on
      any property or assets owned by Southern Union or any of its subsidiaries,
      and
      Southern Union will not, and will not permit any of its subsidiaries to, create,
      incur, issue or assume any debt secured by any lien on any shares of stock
      or
      debt of any subsidiary (such shares of stock or debt of any subsidiary being
      called “restricted securities”), unless:




·
            in
                the case of new debt which is expressly by its terms subordinate
                or junior
                in right of payment to the subordinated debt securities, the subordinated
                debt securities are secured by a lien on such property or assets
                that is
                senior to the new lien with the same relative priority as such
                subordinated debt has with respect to the subordinated debt securities;
                or




·
            in
                the case of liens securing new debt that is ranked equally with the
                subordinated debt securities, the subordinated debt securities are
                secured
                by a lien on such property or assets that is equal and ratable with
                the
                new lien, except that any lien securing such subordinated debt securities
                may be junior to any lien on Southern Union’s accounts receivable,
                inventory and related contract rights securing debt under Southern
                Union’s
                revolving credit facility.




These
      restrictions do not prohibit Southern Union from creating any of the following
      liens:




(1)  any
      liens
      on any of our property, assets or restricted securities or those of any
      subsidiary existing as of the date of the first issuance by us of the debt
      securities issued pursuant to the indenture, or such other date as may be
      specified in a prospectus supplement for an applicable series of debt securities
      issued pursuant to the indenture, subject to the provisions of subsection
      (8) below;




(2)  l iens
      on
      any property or assets or restricted securities of any corporation existing
      at
      the time such corporation becomes a subsidiary, or arising after such time
      (a) otherwise than in connection with the borrowing of money arranged after
      the corporation became a subsidiary and (b) pursuant to contractual
      commitments entered into prior to and not in contemplation of such corporation
      becoming a subsidiary;




(3)  liens
      on
      any of our property, assets or restricted securities or those of any subsidiary
      existing at the time of acquisition of such property, assets or securing the
      payment of all or any part of the purchase price or construction cost of such
      property, assets or restricted securities, or securing any debt incurred prior
      to, at the time of or within 120 days after the later of the date of the
      acquisition of such property, assets or restricted securities or the completion
      of any such construction, for the purpose of financing all or any part of the
      purchase price or construction cost (subject to certain
      limitations);




(4)  liens
      on
      any property or assets to secure all or any part of the cost of development,
      operation, construction, alteration, repair or improvement of all or any part
      of
      such property or assets or to secure debt incurred by us or any of our
      subsidiaries prior to, at the time of or within 120 days after, the
      completion of such development, operation, construction, alteration, repair
      or
      improvement, whichever is later, for the purpose of financing all or any related
      costs;




(5)  liens
      in
      favor of the trustee for the benefit of the holders and subsequent holders
      of
      the debt securities securing the debt securities;




(6)  liens
      secured by any of our property or assets or those of any subsidiary that
      comprise no more than 20 percent of Consolidated Net Tangible Assets (as defined
      under “Terms Described in the Indenture” below);




(7)  liens
      that secure debt owing by a subsidiary to Southern Union or to another
      subsidiary;




(8)  liens
      that secure senior indebtedness owing or any part thereof; and




-23-


(9)  any
      extension, renewal, substitution or replacement in whole or in part, of any
      of
      the liens referred to above or the debt secured by the liens; provided
      that:




(a)
            such
                extension, renewal, substitution or replacement lien will be limited
                to
                all or any part of the same property, assets or restricted securities
                that
                secured the prior lien plus improvements on such property and plus
                any
                other property or assets not then owned by us or one of our subsidiaries
                or constituting restricted securities;
                and




(b)
            in
                the case of items (1) through (3) above, the debt secured by
                such lien at such time is not
                increased.




If
      Southern Union gives a guarantee that is secured by a lien on any property
      or
      assets or restricted securities, or creates a lien on any property or assets
      or
      restricted securities to secure debt that existed prior to the creation of
      such
      lien, the indenture will deem that Southern Union has created debt in an amount
      equal to the principal amount guaranteed or secured by such lien. The amount
      of
      debt secured by liens on property, assets and restricted securities will be
      computed without cumulating the indebtedness with any guarantee or lien securing
      the same indebtedness.




**Election
      to Defer Payments of Interest**




Southern
      Union has the right, at any time during the term of subordinated debt
      securities, to defer payment of interest by extending the interest payment
      period of the subordinated debt securities. If Southern Union has given notice
      of its election to defer payments or interest on subordinated debt securities
      issued to a trust or a related subordinated debt securities trustee by extending
      the interest payment period as provided in the indenture, then:




(1)
            Southern
                Union will not, and will cause any subsidiary that is its wholly-owned
                subsidiary not to, declare or pay dividends on, or make a distribution
                with respect to or redeem, purchase or acquire, or make a liquidation
                payment with respect to, any of Southern Union’s capital stock or the
                capital stock of any such subsidiary;
                and




(2)
            Southern
                Union will not make any payment of interest, principal or premium,
                on or
                repay, repurchase or redeem any subordinated debt securities issued
                by
                Southern Union that rank equally with or junior to such subordinated
                debt
                securities.




The
      restriction in paragraph (1) above does not apply to any stock dividends
      paid by Southern Union, or any of its subsidiaries, where the dividend stock
      is
      the same as the stock on which the dividend is being paid.




**Events
      of Default**




The
      subordinated indenture provides that any one of the following events is an
      event
      of default:




·
            failure
                to pay any interest due on any subordinated debt security for
                thirty days;




·
            failure
                to pay the principal of, or any premium on, any subordinated debt
                security
                when due, whether at maturity, upon redemption, by declaration or
                otherwise;




·
            failure
                to make any sinking fund payment (if
                applicable);




·
            failure
                to perform any other covenant or agreement in the indenture, which
                continues for 60 days after written notice is given to Southern Union
                by the subordinated debt securities trustee or the holders of at
                least 25
                percent of the outstanding subordinated debt securities of that
                series;




·
            failure
                to pay principal of, or premium on, any indebtedness of Southern
                Union or
                any of its subsidiaries in excess of ten percent of Southern Union’s
                consolidated net worth (the sum of stockholder’s equity, preferred stock
                and minority interests), provided that (i) the indebtedness has
                already become due and payable at its stated maturity or (ii) the
                failure results in the acceleration of the maturity of the
                indebtedness;




·
            certain
                events in any bankruptcy, insolvency or reorganization of Southern
                Union
                or its assets; or




·
            any
                other event of default listed in the supplemental indenture for a
                series
                of subordinated debt securities.




-24-


Southern
      Union is required to file annually with the subordinated debt securities trustee
      an officer’s certificate as to its compliance with all conditions and covenants
      under the indenture. The indenture permits the subordinated debt securities
      trustee to withhold notice to the holders of subordinated debt securities of
      any
      default, except in the case of a failure to pay the principal of (or premium,
      if
      any), or interest on, such subordinated debt securities, or the payment of
      any
      sinking fund installment with respect to such securities if the subordinated
      debt securities trustee considers it in the interest of the holders of
      subordinated debt securities to do so.




If
      an
      event of default, other than certain events with respect to Southern Union’s
      bankruptcy, insolvency and reorganization, or the dissolution, winding-up or
      termination of the applicable trust, occurs and is continuing with respect
      to
      the subordinated debt securities, the subordinated debt securities trustee
      or
      the holders of at least 25 percent in principal amount of the outstanding
      subordinated debt securities of that series may declare the outstanding
      subordinated debt securities of that series due and payable immediately. If
      Southern Union’s bankruptcy, insolvency or reorganization, or the dissolution,
      winding-up or termination of the applicable trust, causes an event of default
      for subordinated debt securities of a particular series, then the principal
      of
      all the outstanding subordinated debt securities of that series, and accrued
      and
      unpaid interest thereon, will automatically be due and payable without any
      act
      on the part of the subordinated debt securities trustee or any holder.




If
      an
      event of default with respect to a particular series of subordinated debt
      securities occurs and is continuing, the subordinated debt securities trustee
      will be under no obligation to exercise any of its rights or powers under the
      subordinated debt securities indenture at the request or direction of any of
      the
      holders of subordinated debt securities of such series (other than certain
      duties listed in the indenture), unless such holders offer to the subordinated
      debt securities trustee reasonable indemnity and security against the costs,
      expenses and liabilities that might be incurred by the subordinated debt
      securities trustee to comply with the holders’ request. If they provide this
      indemnity to the subordinated debt securities trustee, the holders of a majority
      in principal amount of the outstanding subordinated debt securities of such
      series will have the right to direct the time, method and place of conducting
      any proceeding for any remedy available to the subordinated debt securities
      trustee under the indenture, or exercising any trust or power given to the
      subordinated debt securities trustee with respect to the subordinated debt
      securities of that series. The subordinated debt securities trustee may refuse
      to follow directions in conflict with law or the indenture that may subject
      the
      subordinated debt securities trustee to personal liability or may be unduly
      prejudicial to holders not joining in such directions.




The
      holders of not less than a majority in principal amount of any series of the
      outstanding subordinated debt securities may, on behalf of the holders of all
      the subordinated debt securities of such series waive any past default under
      the
      indenture with respect to such series and its consequences (other than defaults
      resulting from Southern Union’s bankruptcy, insolvency or reorganization, or the
      dissolution, winding-up or termination of the applicable trust, which may be
      waived by the holders of not less than a majority in principal amount of all
      securities outstanding under the indenture), except a default:




·
            in
                the payment of the principal of (or premium, if any) or interest
                on or
                additional amounts payable in respect of any subordinated debt security
                of
                any series unless such default has been cured and a sum sufficient
                to pay
                all matured installments of interest and principal due otherwise
                than by
                acceleration and any subordinated debt securities premium has been
                deposited with the subordinated debt securities trustee;
                or




·
            in
                respect of a covenant or provision that cannot be modified or amended
                without the consent of the holder of each outstanding subordinated
                debt
                security of such series affected by the modification or
                amendment.




**Modification
      or Waiver**




Southern
      Union and the subordinated debt securities trustee may modify and amend the
      subordinated indenture with the consent of the holders of not less than a
      majority in principal amount of all outstanding subordinated debt securities
      or
      any series of subordinated debt securities that is affected by such modification
      or amendment. The consent of the holder of each outstanding subordinated debt
      security of a series is required in order to:




-25-




·
            change
                the stated maturity of the principal of (or premium, if any), or
                any
                installment of principal or interest on, any subordinated debt security
                of
                such series;




·
            reduce
                the principal amount or the rate of interest on or any additional
                amounts
                payable, or any premium payable upon the redemption of such
                series;




·
            change
                Southern Union’s obligation to pay additional amounts in respect of any
                subordinated debt security of such
                series;




·
            reduce
                the amount of principal of a subordinated debt security that is an
                original issue discount security and would be due and payable upon
                a
                declaration of acceleration of the maturity of that subordinated
                debt
                security;




·
            adversely
                affect any right of repayment at the option of the holder of any
                subordinated debt security of such
                series;




·
            change
                the place or currency of payment of principal of, or any premium
                or
                interest on, any subordinated debt security of such
                series;




·
            impair
                the right to institute suit for the enforcement of any such payment
                on or
                after the stated maturity of the subordinated debt security or any
                redemption date or repayment date for the subordinated debt
                security;




·
            reduce
                the percentage in principal amount of outstanding subordinated debt
                securities of such series necessary to modify or amend the indenture
                or to
                consent to any waiver under the subordinated indenture or reduce
                the
                requirements for voting or quorum described below; or




·
            modify
                the requirements for waiver of past default or modify any of the
                above
                requirements, except to increase any percentage required or to provide
                that other provisions of the indenture that affect such series cannot
                be
                modified or waived without the consent of the holder of each outstanding
                debt security of such series.




Southern
      Union and the subordinated debt securities trustee may modify and amend the
      subordinated indenture without the consent of any holder for the following
      purposes:




·
            to
                evidence the succession of another entity to Southern Union as obligor
                under the subordinated indenture;




·
            to
                add to Southern Union’s covenants for the benefit of the holders of all or
                any series of subordinated debt
                securities;




·
            to
                add events of default for the benefit of the holders of all or any
                series
                of subordinated debt securities;




·
            to
                add or change any provisions of the subordinated indenture to facilitate
                the issuance of bearer securities;




·
            to
                change or eliminate any provisions of the subordinated indenture
                but only
                if any such change or elimination will become effective only when
                there
                are no outstanding subordinated debt securities of any series created
                prior to the change or elimination that is entitled to the benefit
                of such
                provision;




·
            to
                establish the form or terms of subordinated debt securities of any
                other
                series;




·
            secure
                the subordinated debt securities;




·
            to
                provide for the acceptance of appointment by a successor trustee
                or
                facilitate the administration of the trust under the subordinated
                indenture by more than one trustee;
                or




·
            to
                change the subordinated indenture with respect to the authentication
                and
                delivery of additional series of subordinated debt securities, in
                order to
                cure any ambiguity, defect or inconsistency in the subordinated indenture,
                but only if such action does not adversely affect the interest of
                holders
                of subordinated debt securities of any series in any material
                respect.




-26-


The
      subordinated indenture contains provisions for convening meetings of the holders
      of subordinated debt securities of a series if subordinated debt securities
      of
      that series are issuable as bearer securities. A meeting may be called at any
      time by the subordinated debt securities trustee, by Southern Union or by the
      holders of at least ten percent in principal amount of the subordinated debt
      securities of such series outstanding. In any case, notice must be given as
      provided in the indenture. Any resolution presented at a meeting or duly
      reconvened adjourned meeting at which a quorum is present may be adopted by
      the
      affirmative vote of the holders of a majority in principal amount of the
      subordinated debt securities of that series, except for any consent that must
      be
      given by the holder of each subordinated debt security affected, as described
      above in this section. Any resolution passed or decision made in accordance
      with
      the subordinated indenture at any duly held meeting of holders of subordinated
      debt securities of that series will be binding on all holders of the
      subordinated debt securities of that series. The quorum at any meeting called
      to
      adopt a resolution, and at any reconvened meeting, will consist of persons
      entitled to vote a majority in principal amount of the subordinated debt
      securities of a series outstanding, unless a specified percentage in principal
      amount of the subordinated debt securities of a series outstanding is required
      for the consent or waiver, then the persons entitled to vote such specified
      percentage in principal amount of the outstanding subordinated debt securities
      of such series will constitute a quorum. If, however, any action is to be taken
      at a meeting of holders of subordinated debt securities of any series with
      respect to any request, demand, authorization, direction, notice, consent,
      waiver or other action that the indenture expressly provides may be made, given
      or taken by the holders of a specified percentage in principal amount of all
      outstanding subordinated debt securities affected, or of the holders of such
      series of subordinated debt securities and one or more additional series,
      then:




·
            there
                will be no minimum quorum requirement for such meeting;
                and




·
            the
                principal amount of the outstanding subordinated debt securities
                of such
                series that vote in favor of such request, demand, authorization,
                direction, notice, consent, waiver or other action will be taken
                into
                account in determining whether such request, demand, authorization,
                direction, notice, consent, waiver or other action has been made,
                given or
                taken under the subordinated
                indenture.




**Defeasance
      and Covenant Defeasance**




Southern
      Union may elect either (i) to defease and be discharged from any and all
      obligations with respect to the subordinated debt securities (except as
      otherwise provided in the subordinated indenture) (“defeasance”) or (ii) to
      be released from its obligations with respect to certain covenants that are
      described in the subordinated indenture (“covenant defeasance”), upon the
      deposit with the subordinated debt securities trustee, in trust for such
      purpose, of money and/or specified government obligations that through the
      payment of principal, premium, if any, and interest in accordance with their
      terms will provide money in an amount sufficient, without reinvestment, to
      pay
      the principal of, premium, if any, and interest on the subordinated debt
      securities of such series to maturity or redemption, as the case may be, and
      any
      mandatory sinking fund or analogous payments thereon. As a condition to
      defeasance or covenant defeasance, Southern Union must deliver to the
      subordinated debt securities trustee an opinion of counsel to the effect that
      the holders of the subordinated debt securities of such series will not
      recognize income, gain or loss for United States federal income tax purposes
      as
      a result of such defeasance or covenant defeasance and will be subject to United
      States federal income tax on the same amounts, in the same manner and at the
      same times as would have been the case if such defeasance or covenant defeasance
      had not occurred. Such opinion of counsel, in the case of defeasance under
      clause (i) above, must refer to and be based upon a ruling of the Internal
      Revenue Service or a change in applicable United States federal income tax
      law
      occurring after the date of the applicable prospectus supplement.




Southern
      Union may exercise its defeasance option with respect to the subordinated debt
      securities of any series notwithstanding its prior exercise of its covenant
      defeasance option. If Southern Union exercises its defeasance option, payment
      of
      the subordinated debt securities of such series may not be accelerated because
      of an event of default. If Southern Union exercises its covenant defeasance
      option, payment of the subordinated debt securities of such series may not
      be
      accelerated by reference to any covenant from which Southern Union is released
      as described under clause (ii) above. However, if acceleration were to
      occur for other reasons, the realizable value at the acceleration date of the
      money and government obligations in the defeasance trust could be less than
      the
      principal and interest then due on the subordinated debt securities of such
      series, in that the required deposit in the defeasance trust is based upon
      scheduled cash flow rather than market value, which will vary depending upon
      interest rates and other factors.




-27-


**Financial
      Information**




While
      any
      of the subordinated debt securities are outstanding, Southern Union will file
      with the SEC, to the extent permitted under the Exchange Act, the annual
      reports, quarterly reports and other documents otherwise required to be filed
      with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act even if
      Southern Union stops being subject to those sections, and Southern Union will
      also provide to all holders and file with the trustees copies of such reports
      and documents within 15 days after filing them with the SEC or, if its
      filing such reports and documents with the SEC is not permitted under the
      Exchange Act, within 15 days after Southern Union would have been required
      to file such reports and documents if permitted, in each case at Southern
      Union’s cost.




**Payment,
      Registration and Transfer**




Unless
      Southern Union specifies otherwise in a prospectus supplement, it will pay
      principal, interest and any premium on the subordinated debt securities, and
      they may be surrendered for payment or transferred, at the offices of the
      subordinated debt securities trustee. Southern Union will make payment on
      registered subordinated debt securities by checks mailed to the persons in
      whose
      names the subordinated debt securities are registered or by transfer to an
      account maintained by the registered holder on days specified in the
      subordinated indenture or any prospectus supplement. If Southern Union makes
      subordinated debt securities payments in other forms, we will specify the form
      and place in a prospectus supplement.




Southern
      Union will maintain a corporate trust office of the trustee or another office
      or
      agency for the purpose of transferring or exchanging fully registered
      subordinated debt securities, without the payment of any service charge except
      for any tax or governmental charge.




In
      the
      event of any redemption of subordinated debt securities, Southern Union will
      not
      be required to:




·
            issue,
                register the transfer of or exchange subordinated debt securities
                of any
                series during a period beginning at the opening of business 15 days
                before any selection of subordinated debt securities of that series
                to be
                redeemed and ending at the close of business on (a) the day of
                mailing of the relevant notice of redemption if subordinated debt
                securities of the series are issuable only as registered subordinated
                debt
                securities, (b) the day of mailing of the relevant notice of
                redemption if the subordinated debt securities of the series are
                also
                issuable as registered subordinated debt securities and there is
                no
                publication, and (c) the day of the first publication of the relevant
                notice of redemption if the subordinated debt securities are issuable
                as
                bearer securities;




·
            register
                the transfer of or exchange any registered security, or portion thereof,
                called for redemption, except the unredeemed portion of any registered
                security being redeemed in part; or




·
            issue,
                register the transfer of or exchange any subordinated debt securities
                that
                have been surrendered for repayment at the option of the holder,
                except
                any portion not to be repaid.




**Governing
      Law**




The
      subordinated debt securities and the subordinated indenture will be governed
      by,
      and construed in accordance with, the laws of the State of New York, without
      regard to the conflict of laws provisions thereunder.




**Information
      Concerning the Subordinated Debt Securities Trustee**




Prior
      to
      the occurrence of a default with respect to the subordinated indenture and
      after
      the curing or waiving of all events of default with respect to the subordinated
      indenture, the subordinated debt securities trustee undertakes to perform only
      those duties as are specifically set forth in the subordinated indenture. In
      case an event of default has occurred and has not been cured or waived, the
      trustee will exercise the same degree of care and skill as a prudent individual
      would exercise or use in the conduct of his or her own affairs. Subject to
      these
      provisions, the subordinated debt securities trustee is under no obligation
      to
      exercise any of the powers vested in it by the subordinated indenture at the
      request of any holder of subordinated debt securities unless it is offered
      reasonable indemnity against the costs, expenses and liabilities which might
      be
      incurred through the exercise of those powers.




-28-





Southern
      Union and certain of its affiliates may, from time to time, maintain a banking
      relationship with the subordinated debt securities trustee.




**Miscellaneous**




We
      will
      have the right at all times to assign any of our rights or obligations under
      the
      subordinated indenture to one of our direct or indirect wholly-owned
      subsidiaries. In the event of such an assignment, we will remain liable for
      all
      of its obligations. The subordinated indenture otherwise will be binding upon
      and exist for the benefit of the parties to the subordinated debt securities
      indenture and their successors and assigns. The subordinated indenture provides
      that it may not otherwise be assigned by the parties thereto.




**DESCRIPTION
      OF GLOBAL SECURITIES**




**Book-Entry,
      Delivery and Form**




Unless
      we
      indicate differently in a supplemental prospectus, when we issue the debt
      securities, warrants, common stock, preferred stock, stock purchase contracts,
      stock purchase units or depositary shares (the “securities”) the securities
      initially will be issued in book-entry form and represented by one or more
      global notes or global securities (collectively, “global securities”). The
      global securities will be deposited with, or on behalf of, The Depositary Trust
      Company, New York, New York, as depositary (“DTC”), and registered in the name
      of Cede & Co., the nominee of DTC. Unless and until it is exchanged for
      individual certificates evidencing securities under the limited circumstances
      described below, a global security may not be transferred except as a whole
      by
      the depositary to its nominee or by the nominee to the depositary, or by the
      depositary or its nominee to a successor depositary or to a nominee of the
      successor depositary.




DTC
      has
      advised each of the issuing companies that it is:




·
            a
                limited-purpose trust company organized under the New York Banking
                Law;




·
            a
                “banking organization” within the meaning of the New York Banking Law;




·
            a
                member of the Federal Reserve System;
                and




·
            a
                “clearing corporation” within the meaning of the New York Uniform
                Commercial Code; and a “clearing agency” registered pursuant to the
                provisions of Section 17A of the Securities Exchange Act of
                1934.




DTC
      holds
      securities that its participants deposit with DTC. DTC also facilitates the
      settlement among its participants of securities transactions, including
      transfers and pledges, in deposited securities through electronic computerized
      book-entry changes in participants’ accounts, which eliminates the need for
      physical movement of securities certificates. “Direct participants” in DTC
      include securities brokers and dealers, including underwriters, banks, trust
      companies, clearing corporations and other organizations. DTC is owned by a
      number of its direct participants and by the New York Stock Exchange, Inc.,
      the American Stock Exchange LLC and the National Association of Securities
      Dealers, Inc. Access to the DTC system is also available to others, which
      we sometimes refer to as “indirect participants,” that clear transactions
      through or maintain a custodial relationship with a direct participant either
      directly or indirectly. The rules applicable to DTC and its participants are
      on
      file with the SEC.




Purchases
      of securities within the DTC system must be made by or through direct
      participants, which will receive a credit for those securities on DTC’s records.
      The ownership interest of the actual purchaser of a security, which we sometimes
      refer to as a “beneficial owner,” is in turn recorded on the direct and indirect
      participants’ records. Beneficial owners of securities will not receive written
      confirmation from DTC of their purchases. However, beneficial owners are
      expected to receive written confirmations providing details of their
      transactions, as well as periodic statements of their holdings, from the direct
      or indirect participants through whom they purchased securities. Transfers
      of
      ownership interests in global securities are to be accomplished by entries
      made
      on the books of participants acting on behalf of beneficial owners. Beneficial
      owners will not receive certificates representing their ownership interests
      in
      the global securities except under the limited circumstances described below.




-29-




To
      facilitate
      subsequent transfers, all global securities deposited with DTC will be
      registered in the name of DTC’s nominee, Cede & Co. The deposit of
      securities with DTC and their registration in the name of Cede & Co.
      will not change the beneficial ownership of the securities. DTC has no knowledge
      of the actual beneficial owners of the securities. DTC’s records reflect only
      the identity of the direct participants to whose accounts the securities are
      credited, which may or may not be the beneficial owners. The participants are
      responsible for keeping account of their holdings on behalf of their customers.




So
      long
      as the securities are in book-entry form, you will receive payments and may
      transfer securities only through the facilities of the depositary and its direct
      and indirect participants. The company issuing the securities will maintain
      an
      office or agency in the Borough of Manhattan, the City of New York where notices
      and demands in respect of the securities and the applicable indenture may be
      delivered to us and where certificated securities may be surrendered for
      payment, registration of transfer or exchange. That office or agency, with
      respect to the applicable indenture, will initially be the office of the trustee
      which is currently located at 10 Wall Street, Suite 1600, New York, New York
      10005, in the case of U.S. Bank Trust National Association, and 101 Barclay
      Street, Floor 21, New York, New York 10286, in the case of The Bank of New
      York,
      Trust Company, N.A.




Conveyance
      of notices and other communications by DTC to direct participants, by direct
      participants to indirect participants and by direct participants and indirect
      participants to beneficial owners will be governed by arrangements among them,
      subject to any legal requirements in effect from time to time.




Redemption
      notices will be sent to DTC or its nominee. If less than all of the securities
      of a particular series are being redeemed, DTC will determine the amount of
      the
      interest of each direct participant in the securities of such series to be
      redeemed in accordance with DTC’s procedures.




In
      any
      case where a vote may be required with respect to securities of a particular
      series, neither DTC nor Cede & Co. will give consents for or vote the
      global securities. Under its usual procedures, DTC will mail an omnibus proxy
      to
      us as soon as possible after the record date. The omnibus proxy assigns the
      consenting or voting rights of Cede & Co. to those direct participants
      to whose accounts the securities of such series are credited on the record
      date
      identified in a listing attached to the omnibus proxy.




So
      long
      as securities are in book-entry form, the company issuing such securities will
      make payments on those securities to the depositary or its nominee, as the
      registered owner of such securities, by wire transfer of immediately available
      funds. If securities are issued in definitive certificated form under the
      limited circumstances described below, the company issuing the securities will
      have the option of paying interest by check mailed to the addresses of the
      persons entitled to payment or by wire transfer to bank accounts in the United
      States designated in writing to the applicable trustee at least 15 days
      before the applicable payment date by the persons entitled to payment.




Principal
      and interest payments on the securities will be made to Cede & Co., as
      nominee of DTC. DTC’s practice is to credit direct participants’ accounts on the
      relevant payment date unless DTC has reason to believe that it will not receive
      payment on the payment date. Payments by direct and indirect participants to
      beneficial owners will be governed by standing instructions and customary
      practices, as is the case with securities held for the account of customers
      in
      bearer form or registered in “street name.” Those payments will be the
      responsibility of participants and not of DTC or us, subject to any legal
      requirements in effect from time to time. Payment of principal and interest
      to
      Cede & Co. is our responsibility, disbursement of payments to direct
      participants is the responsibility of DTC and disbursement of payments to the
      beneficial owners is the responsibility of direct and indirect participants.




Except
      under the limited circumstances described below, purchasers of securities will
      not be entitled to have securities registered in their names and will not
      receive physical delivery of securities. Accordingly, each beneficial owner
      must
      rely on the procedures of DTC and its participants to exercise any rights under
      the securities and the applicable indenture.




The
      laws
      of some jurisdictions may require that some purchasers of securities take
      physical delivery of securities in definitive form. Those laws may impair the
      ability to transfer or pledge beneficial interests in securities.




-30-




DTC
      is
      under no obligation to provide its services as depositary for the securities
      and
      may discontinue providing its services at any time. Neither the company issuing
      the securities nor the applicable trustee will have any responsibility for
      the
      performance by DTC or its direct participants or indirect participants under
      the
      rules and procedures governing DTC. As noted above, beneficial owners of a
      particular series of securities generally will not receive certificates
      representing their ownership interests in those securities. However, if DTC
      notifies the company issuing such securities that it is unwilling or unable
      to
      continue as a depositary for the global security or securities representing
      such
      series of securities or if DTC ceases to be a clearing agency registered under
      the Securities Exchange Act at a time when it is required to be registered
      and a
      successor depositary is not appointed within 90 days of the notification to
      us or of our becoming aware of DTC’s ceasing to be so registered, as the case
      may be; the company issuing such securities determines, in its sole discretion,
      not to have such securities represented by one or more global securities; or
      an
      Event of Default under the applicable indenture has occurred and is continuing
      with respect to such series of securities, the company issuing such securities
      will prepare and deliver certificates for such securities in exchange for
      beneficial interests in the global securities. Any beneficial interest in a
      global security that is exchangeable under the circumstances described in the
      preceding sentence will be exchangeable for securities in definitive
      certificated form registered in the names that the depositary directs. We expect
      that these directions will be based upon directions received by the depositary
      from its participants with respect to ownership of beneficial interests in
      the
      global securities.




**PLAN
      OF DISTRIBUTION**




We
      may
      sell the securities described in this prospectus from time to time in one or
      more transactions:




·  to
      purchasers directly;




·  to
      underwriters for public offering and sale by them;




·  through
      agents;




·  through
      dealers; or




·  through
      a
      combination of any of the foregoing methods of sale.




We
      may
      distribute the securities from time to time in one or more transactions at:




·  a
      fixed
      price or prices, which may be changed;




·  market
      prices prevailing at the time of sale;




·  prices
      related to such prevailing market prices; or




·  negotiated
      prices.




Offered
      securities may also be offered and sold, if so indicated in the applicable
      prospectus supplement, in connection with a remarketing upon their purchase,
      in
      accordance with a redemption or repayment pursuant to their terms, or otherwise,
      by one or more remarketing firms, acting as principals for their own accounts
      or
      as agents for us. Any remarketing firm will be identified and the terms of
      its
      agreements, if any, with us, and any related compensation arrangements
      contemplated thereby will be described in the applicable prospectus supplement.




We
      may
      enter into derivative transactions with third parties, or sell securities not
      covered by this prospectus to third parties in privately negotiated
      transactions. If the applicable prospectus supplement indicates, in connection
      with those derivatives, the third parties may sell securities covered by this
      prospectus and the applicable prospectus supplement, including in short sale
      transactions. If so, the third parties may use securities pledged by the Company
      or borrowed from the Company or others to settle those sales or to close out
      any
      related open borrowings of stock, and may use securities received from the
      Company in settlement of those derivatives to close out any related open
      borrowings of stock. The third parties in such sale transactions will be
      underwriters and, if not identified in this prospectus, will be identified
      in
      the applicable prospectus supplement (or post-effective amendment).




We
      or one
      of our affiliates may loan or pledge securities to a financial institution
      or
      other third party that in turn may sell the securities using this prospectus.
      Such financial institution or third party may transfer its




-31-




short
      position to investors in our securities or in connection with a simultaneous
      offering of other securities offered by this prospectus or otherwise.




**Direct
      Sales**




We
      may
      sell the securities directly to institutional investors or others. A prospectus
      supplement will describe the terms of any sale of securities we are offering
      hereunder.




**To
      Underwriters**




The
      applicable prospectus supplement will name any underwriter involved in a sale
      of
      securities. Underwriters may offer and sell securities at a fixed price or
      prices, which may be changed, or from time to time at market prices or at
      negotiated prices. Underwriters may be deemed to have received compensation
      from
      us from sales of securities in the form of underwriting discounts or commissions
      and may also receive commissions from purchasers of securities for whom they
      may
      act as agent.




Underwriters
      may sell securities to or through dealers, and such dealers may receive
      compensation in the form of discounts, concessions or commissions from the
      underwriters and/or commissions (which may be changed from time to time) from
      the purchasers for whom they may act as agent.




Unless
      otherwise provided in a prospectus supplement, the obligations of any
      underwriters to purchase securities or any series of securities will be subject
      to certain conditions precedent, and the underwriters will be obligated to
      purchase all such securities if any are purchased.




**Through
      Agents and Dealers**




We
      will
      name any agent involved in a sale of securities, as well as any commissions
      payable by us to such agent, in a prospectus supplement. Unless we indicate
      differently in the prospectus supplement, any such agent will be acting on
      a
      reasonable efforts basis for the period of its appointment.




If
      we
      utilize a dealer in the sale of the securities being offered pursuant to this
      prospectus, we will sell the securities to the dealer, as principal. The dealer
      may then resell the securities to the public at varying prices to be determined
      by the dealer at the time of resale.




**Delayed
      Delivery of Securities Purchase Contracts**




We
      may
      authorize our agents and underwriters to solicit offers by certain institutions
      to purchase our securities at the public offering price by means of delayed
      delivery of our securities purchase contracts. Such delayed delivery contracts
      will provide for payment for, and delivery of, the underlying security on future
      dates.




·
            If
                we use delayed delivery contracts, we will disclose that we are using
                them
                in the prospectus supplement and we will tell you when we will demand
                payment and delivery of the securities under the delayed delivery
                contracts.




·
            These
                delayed delivery contracts will be subject only to the conditions
                that we
                set forth in the prospectus supplement.




·
            We
                will indicate in our prospectus supplement the commission that
                underwriters and agents soliciting purchases of our securities under
                delayed delivery contracts will be entitled to receive.




**General
      Information**




Underwriters,
      dealers and agents participating in a sale of the securities may be deemed
      to be
      underwriters as defined in the Securities Act of 1933, as amended (the
“Securities Act”), and any discounts and commissions received by them and any
      profit realized by them on resale of the securities may be deemed to be
      underwriting discounts and commissions, under the Securities Act. We may have
      agreements with underwriters,




-32-




dealers
      and agents to indemnify them against certain civil liabilities, including
      liabilities under the Securities Act, and to reimburse them for certain
      expenses.




Underwriters
      or agents and their associates may be customers of, engage in transactions
      with
      or perform services for us or our affiliates in the ordinary course of business.




Unless
      we
      indicate differently in a prospectus supplement, we will not list the securities
      on any securities exchange, other than shares of our common stock. The
      securities, except for our common stock, will be a new issue of securities
      with
      no established trading market. Any underwriters that purchase securities for
      public offering and sale may make a market in such securities, but such
      underwriters will not be obligated to do so and may discontinue any market
      making at any time without notice. We make no assurance as to the liquidity
      of
      or the trading markets for any securities.




**LEGAL
      MATTERS**




Fleischman
      and Walsh, L.L.P., Washington, D.C., has rendered an opinion as to the validity
      of the securities offered hereby. Attorneys in that firm beneficially own shares
      of our stock that, in the aggregate, represent less than one percent of the
      shares of our outstanding stock.




**EXPERTS**




The
      financial statements incorporated in this Registration Statement by reference
      to
      Southern Union Company's Current Report on Form 8-K dated July 17, 2006 and
      management’s assessment of the effectiveness of internal control over financial
      reporting (which is included in Management’s Report on Internal Control over
      Financial Reporting) incorporated in this Registration Statement by reference
      to
      the Annual Report on Form 10-K of Southern Union Company for the year ended
      December 31, 2005  have
      been
      so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an
      independent registered public accounting firm, given on the authority of said
      firm as experts in auditing and accounting.





The
      financial statements of CCE Holdings, LLC and the financial statements of Citrus
      Corp. incorporated in this Registration Statement by reference to the Annual
      Report on Form 10-K of Southern Union Company for the year ended December 31,
      2005 have been so incorporated in reliance on the reports of
      PricewaterhouseCoopers LLP, an independent registered public accounting firm,
      given on the authority of said firm as experts in auditing and
      accounting.





The
      consolidated financial statements of Southern Union Gas Services, Ltd. as of
      December 31, 2005 and 2004, and for each of the years in the three-year period
      ended December 31, 2005, have been incorporated by reference in this
      registration statement in reliance upon the report of KPMG LLP, independent
      auditors, incorporated by reference herein, and upon the authority of said
      firm
      as experts in accounting and auditing.




The
      financial statements of Southern Union Gas Energy, Ltd. as of December 31,
      2005
      and 2004, and for each of the years in the three-year period ended December
      31,
      2005, have been incorporated by reference in this registration statement in
      reliance upon the report of KPMG LLP, independent auditors, incorporated by
      reference herein, and upon the authority of said firm as experts in accounting
      and auditing.














-33-


**PART
      II**




**INFORMATION
      NOT REQUIRED IN PROSPECTUS**




**Item
      14. Other Expenses of Issuance and Distribution.**




Securities
      and Exchange Commission Filing Fee............. $


* Printing
      and Engraving Fees....................................... $
      10,000


Legal
      Fees and Expenses............................................... $
      50,000


Miscellaneous............................................................... $ 
      5,000




Total........................................................................... $ 
      65,000







____________________


*  An
      unutilized filing fee of $27,850.24 previously paid in connection with
      Registration Statement No. 333-113757 filed on March 19, 2004 is being applied
      to the fee payable pursuant to this Registration Statement pursuant to Rule
      457(p) of the Securities Act. The payment of any additional filing fee is
      deferred pursuant to Rules 456(b) and 457(r).




**Item
      15. Indemnification of Directors and Officers.**




Section 102(b)(7)
      of the Delaware General Corporation Law (the “DGCL”) provides, generally, that
      the certificate of incorporation may contain a provision eliminating or limiting
      the personal liability of a director to the corporation or its stockholders
      for
      monetary damages for breach of fiduciary duty as a director, *provided* that
      such provision may not eliminate or limit the liability of a director
      (i) for any breach of the director’s duty of loyalty to the corporation or
      its stockholders, (ii) for acts or omissions not in good faith or which
      involve intentional misconduct or a knowing violation of law, (iii) under
      section 174 of the DGCL, or (iv) for any transaction from which the
      director derived an improper personal benefit. No such provision may eliminate
      or limit the liability of a director for any act or omission occurring prior
      to
      the date when such provision became effective.




Article
      Twelfth of our certificate of incorporation provides as follows:




TWELFTH:
      To the fullest extent permitted by the Delaware General Corporation Law, as
      it
      now exists or may hereafter be amended, a director of the Corporation shall
      not
      be liable to the Corporation or its stockholders for monetary damages for breach
      of fiduciary duty as a director. Any repeal or modification of this section
      by
      the stockholders of the Corporation shall be prospective only and shall not
      adversely affect any limitation on the personal liability of a director of
      the
      Corporation existing at the time of such repeal or modification.




Section 145
      of the DGCL provides, generally, that a corporation shall have the power to
      indemnify any person who was or is a party or is threatened to be made a party
      to any threatened, pending or completed action, suit or proceeding (except
      actions by or in the right of the corporation) by reason of the fact that such
      person is or was a director, officer, employee or agent of the corporation
      against all expenses, judgments, fines and amounts paid in settlement actually
      and reasonably incurred by such person in connection with such action, suit
      or
      proceeding if such person acted in good faith and in a manner such person
      reasonably believed to be in or not opposed to the best interests of the
      corporation and, with respect to any criminal action or proceeding, had no
      reasonable cause to believe his or her conduct was unlawful. A corporation
      may
      similarly indemnify such person for expenses actually and reasonably incurred
      by
      such person in connection with the defense or settlement of any action or suit
      by or in the right of the corporation, *provided* that
      such person acted in good faith and in a manner he or she reasonably believed
      to
      be in or not opposed to the best interests of the corporation, and, in the
      case
      of claims, issues and matters as to which such person shall have been adjudged
      liable to the corporation, *provided* that a
      court shall have determined, upon application, that, despite the adjudication
      of
      liability but in view of all of the circumstances of the case, such person
      is
      fairly and reasonably entitled to indemnity for such expenses which such court
      shall deem proper.




II-1




Article
      XI of our bylaws provides as follows:




Section
      1.  Power
      to Indemnify in Actions, Suits or Proceedings Other Than Those by or in the
      Right of the Company .
      Subject
      to Section 3 of this Article XI, the Company shall indemnify, to the fullest
      extent permitted by the DGCL, as now or hereafter in effect, any person who
      was
      or is a party or is threatened to be made a party to any threatened, pending
      or
      completed action, suit or proceeding, whether civil, criminal, administrative
      or
      investigative (other than an action by or in the right of the Company) by reason
      of the fact that such person (or the legal representative of such person) is
      or
      was a director or officer of the Company or any predecessor of the Company,
      or
      is or was a director or officer of the Company serving at the request of the
      Company as a director or officer, employee or agent of another company,
      partnership, joint venture, trust, employee benefit plan or other enterprise,
      against expenses (including attorneys’ fees), judgments, fines and amounts paid
      in settlement actually and reasonably incurred by such person in connection
      with
      such action, suit or proceeding if such person acted in good faith and in a
      manner such person reasonably believed to be in or not opposed to the best
      interests of the Company, and, with respect to any criminal action or
      proceeding, had no reasonable cause to believe such person’s conduct was
      unlawful. The termination of any action, suit or proceeding by judgment, order,
      settlement, conviction, or upon a plea of *nolo
      contendere* or its
      equivalent, shall not, of itself, create a presumption that the person did
      not
      act in good faith and in a manner which such person reasonably believed to
      be in
      or not opposed to the best interests of the Company, and, with respect to any
      criminal action or proceeding, had reasonable cause to believe that such
      person’s conduct was unlawful.




Section
      2.  Power
      to Indemnify in Actions, Suits or Proceedings by or in the Right of the
      Company .
      Subject
      to Section 3 of this Article XI, the Company shall indemnify, to the fullest
      extent permitted by the DGCL, as now or hereafter in effect, any person who
      was
      or is a party or is threatened to be made a party to any threatened, pending
      or
      completed action or suit by or in the right of the Company to procure a judgment
      in its favor by reason of the fact that such person (or the legal representative
      of such person) is or was a director or officer of the Company or any
      predecessor of the Company, or is or was a director or officer of the Company
      serving at the request of the Company as a director, officer, employee or agent
      of another company, partnership, joint venture, trust, employee benefit plan
      or
      other enterprise against expenses (including attorneys’ fees) actually and
      reasonably incurred by such person in connection with the defense or settlement
      of such action or suit if such person acted in good faith and in a manner such
      person reasonably believed to be in or not opposed to the best interests of
      the
      Company; except that no indemnification shall be made in respect of any claim,
      issue or matter as to which such person shall have been adjudged to be liable
      to
      the Company unless and only to the extent that the Court of Chancery or the
      court in which such action or suit was brought shall determine upon application
      that, despite the adjudication of liability but in view of all the circumstances
      of the case, such person is fairly and reasonably entitled to indemnity for
      such
      expenses which the Court of Chancery or such other court shall deem proper.




Section
      3.  Authorization
      of Indemnification .
      Any
      indemnification under this Article XI (unless ordered by a court) shall be
      made
      by the Company only as authorized in the specific case upon a determination
      that
      indemnification of the director or officer is proper in the circumstances
      because such person has met the applicable standard of conduct set forth in
      Section 1 or Section 2 of this Article XI, as the case may be. Such
      determination shall be made, with respect to a person who is a director or
      officer at the time of such determination, (i) by a majority vote of the
      directors who are not parties to such action, suit or proceeding, even though
      less than a quorum, or (ii) by a committee of such directors designated by
      a
      majority vote of such directors, even though less than a quorum, or (iii) if
      there are no such directors, or if such directors so direct, by independent
      legal counsel in a written opinion or (iv) by the stockholders (but only if
      a
      majority of the directors who are not parties to such action, suit or
      proceeding, if they constitute a quorum of the board of directors, presents
      the
      issue of entitlement to indemnification to the stockholders for their
      determination). Such determination shall be made, with respect to former
      directors and officers, by any person or persons authorized by the Board to
      act
      on the matter on behalf of the Company. To the extent, however, that a present
      or former director or officer of the Company has been successful on the merits
      or otherwise in




II-2
 
  defense of any action, suit or proceeding described above, or in defense
        of any
        claim, issue or matter therein, such person shall be indemnified against
        expenses (including attorneys’ fees) actually and reasonably
 incurred by such person in connection therewith, without the necessity
        of authorization in the specific case.




Section
      4.  Good
      Faith Defined .
      For
      purposes of any determination under Section 3 of this Article XI, to the fullest
      extent permitted by applicable law, a person shall be deemed to have acted
      in
      good faith and in a manner such person reasonably believed to be in or not
      opposed to the best interests of the Company, or, with respect to any criminal
      action or proceeding, to have had no reasonable cause to believe such person’s
      conduct was unlawful, if such person’s action is based on the records or books
      of account of the Company or another enterprise, or on information supplied
      to
      such person by the officers of the Company or another enterprise in the course
      of their duties, or on the advice of legal counsel for the Company or another
      enterprise or on information or records given or reports made to the Company
      or
      another enterprise by an independent certified public accountant or by an
      appraiser or other expert selected with reasonable care by the Company or
      another enterprise. The term “another enterprise” as used in this Section 4
      shall mean any other Company or any partnership, joint venture, trust, employee
      benefit plan or other enterprise of which such person is or was serving at
      the
      request of the Company as a director, officer, employee or agent. The provisions
      of this Section 4 shall not be deemed to be exclusive or to limit in any way
      the
      circumstances in which a person may be deemed to have met the applicable
      standard of conduct set forth in Section 1 or 2 of this Article XI, as the
      case
      may be.




Section
      5.  Indemnification
      by a Court .
      Notwithstanding any contrary determination in the specific case under Section
      3
      of this Article XI, and notwithstanding the absence of any determination
      thereunder, any director or officer may apply to the Court of Chancery in the
      State of Delaware for indemnification to the extent otherwise permissible under
      Sections 1 and 2 of this Article XI. The basis of such indemnification by a
      court shall be a determination by such court that indemnification of the
      director or officer is proper in the circumstances because such person has
      met
      the applicable standards of conduct set forth in Section 1 or 2 of this Article
      XI, as the case may be. Neither a contrary determination in the specific case
      under Section 3 of this Article XI nor the absence of any determination
      thereunder shall be a defense to such application or create a presumption that
      the director or officer seeking indemnification has not met any applicable
      standard of conduct. Notice of any application for indemnification pursuant
      to
      this Section 5 shall be given to the Company promptly upon the filing of such
      application. If successful, in whole or in part, the director or officer seeking
      indemnification shall also be entitled to be paid the expense of prosecuting
      such application.




Section
      6.  Expenses
      Payable in Advance .
      To the
      fullest extent not prohibited by the DGCL, or by any other applicable law,
      expenses incurred by a person who is or was a director in defending any civil,
      criminal, administrative or investigative action, suit or proceeding shall
      be
      paid by the Company in advance of the final disposition of such action, suit
      or
      proceeding; provided, however, that if the DGCL requires, an advance of expenses
      incurred by any person in his or her capacity as a director or officer (and
      not
      in any other capacity) shall be made only upon receipt of an undertaking by
      or
      on behalf of such person to repay such amount if it shall ultimately be
      determined that such person is not entitled to be indemnified by the Company
      as
      authorized in this Article XI.




Section
      7.  Nonexclusitivity
      of Indemnification .
      The
      indemnification provided by or granted pursuant to this Article XI shall not
      be
      deemed exclusive of any other rights to which those seeking indemnification
      may
      be entitled under the Certificate of Incorporation, any bylaw, agreement, vote
      of stockholders or disinterested directors or otherwise, both as to action
      in
      such person’s official capacity and as to action in another capacity while
      holding such office, it being the policy of the Company that indemnification
      of
      the persons specified in Sections 1 and 2 of this Article XI shall be made
      to
      the fullest extent permitted by law. The provisions of this Article XI shall
      not
      be deemed to preclude the indemnification of any person who is not specified
      in
      Section 1 or 2 of this Article XI but whom the Company has the power or
      obligation to indemnify under the provisions of the DGCL, or otherwise. The
      Company is specifically authorized to enter into individual contracts with
      any
      or all of its directors, officers, employees or agents respecting
      indemnification and advances, to the fullest extent not prohibited by the DGCL,
      or by any other applicable law.




II-3




Section
      8.  Insurance .
      To the
      fullest extent permitted by the DGCL or any other applicable law, the Company
      shall undertake its best efforts to purchase and maintain insurance on behalf
      of
      any person who is or was a director, officer, employee or agent of the Company,
      or is or was a director, officer, employee or agent of the Company serving
      at
      the request of the Company as a director, officer, employee or agent of another
      company, partnership, joint venture, trust, employee benefit plan or other
      enterprise against any liability asserted against such person and incurred
      by
      such person in any such capacity, or arising out of such person’s status as
      such, whether or not the Company would have the power or the obligation to
      indemnify such person against such liability under the provisions of this
      Article XI. Such insurance shall be in such coverage amounts, and on such terms,
      as from time to time approved by a majority of the directors.




Section
      9.  Certain
      Definitions .
      For
      purposes of this Article XI, references to “the Company” shall include, in
      addition to the resulting company, any constituent company (including any
      constituent of a constituent) absorbed in a consolidation or merger which,
      if
      its separate existence had continued, would have had power and authority to
      indemnify its directors or officers, so that any person who is or was a director
      or officer of such constituent company, or is or was a director or officer
      of
      such constituent company serving at the request of such constituent company
      as a
      director, officer, employee or agent of another company, partnership, joint
      venture, trust, employee benefit plan or other enterprise, shall stand in the
      same position under the provisions of this Article XI with respect to the
      resulting or surviving company as such person would have with respect to such
      constituent company if its separate existence had continued. For purposes of
      this Article XI, references to “fines” shall include any excise taxes assessed
      on a person with respect to an employee benefit plan; and references to “serving
      at the request of the Company” shall include any service as a director, officer,
      employee or agent of the Company which imposes duties on, or involves services
      by, such director or officer with respect to an employee benefit plan, its
      participants or beneficiaries; and a person who acted in good faith and in
      a
      manner such person reasonably believed to be in the interest of the participants
      and beneficiaries of an employee benefit plan shall be deemed to have acted
      in a
      manner “not opposed to the best interests of the Company” as referred to in this
      Article XI.




Section
      10.  Survival
      of Indemnification .
      The
      rights to indemnification conferred by this Article XI shall continue as to
      a
      person who has ceased to be a director or officer and shall inure to the benefit
      of the heirs, executors, administrators and other personal and legal
      representatives of such a person.




Section
      11.  Limitation
      on Indemnification .
      Notwithstanding anything contained in this Article XI to the contrary, except
      for proceedings to enforce rights to indemnification (which shall be governed
      by
      Section 5 hereof), the Company shall not be obligated to indemnify any director
      or officer in connection with a proceeding (or part thereof) initiated by such
      person unless such proceeding (or part thereof) was authorized or consented
      to
      by the Board of Directors of the Company.




Section
      12.  Indemnification
      of Employees and Agents .
      The
      Company may, to the extent authorized from time to time by the Board of
      Directors, provide rights to indemnification to employees and agents of the
      Company similar to those conferred in this Article XI to directors and officers
      of the Company.




Section
      13.  Effect
      of Amendment or Repeal .
      Neither
      any amendment or repeal of any Section of this Article XI, nor the adoption
      of
      any provision of the Certificate or the bylaws inconsistent with this Article
      X *I* ,
      shall
      adversely affect any right or protection of any director, officer, employee
      or
      other agent established pursuant to this Article XI existing at the time of
      such
      amendment, repeal or adoption of an inconsistent provision, including without
      limitation by eliminating or reducing the effect of this Article XI, for or
      in
      respect of any act, omission or other matter occurring, or any action or
      proceeding accruing or arising (or that, but for this Article XI, would accrue
      or arise), prior to such amendment, repeal or adoption of an inconsistent
      provision.




We
      have
      purchased liability insurance policies covering our directors and officers
      to
      provide protection where we cannot legally indemnify a director or officer
      and
      where a claim arises under the Employee Retirement Income Security Act of 1974
      against a director or officer based on an alleged breach of fiduciary duty
      or
      other wrongful act.




II-4


**Item
      16. Exhibits.**




**Exhibit
      No.**   **Description**




1.1  Form
      of
      Underwriting Agreement for debt securities.*


1.2  Form
      of
      Underwriting Agreement for common stock.*


1.3  Form
      of
      Underwriting Agreement for preferred stock.*


1.4  Form
      of
      Underwriting Agreement for warrants.*


1.5  Form
      of
      Underwriting Agreement for securities purchase contracts.*


1.6  Form
      of
      Underwriting Agreement for securities purchase units.*


1.7  Form
      of
      Underwriting Agreement for depositary shares.*


3.1  Amended
      and Restated Certificate of Incorporation of the Registrant. Filed as Exhibit
      3(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended
      December 31, 2005.


3.2  Amended
      and Restated Bylaws of the Registrant. Filed as Exhibit 3(b) to the Registrant’s
      Annual Report on Form 10-K for the fiscal year ended December 31,
      2005.


4.1
            Senior
                Debt Securities Indenture between Southern Union Company and JP Morgan
                Chase Bank (as successor to the Chase Manhattan Bank, N.A.), as Trustee.
                (Filed as Exhibit 4.1 to Southern Union’s Current Report on Form 8-K dated
                February 15, 1994 and incorporated herein by
                reference.)


4.2
            Supplemental
                Indenture No. 1 to Senior Debt Securities Indenture between Southern
                Union
                Company and JP Morgan Chase Bank, dated as of June 11, 2003. (Filed
                as
                Exhibit 4.5 to Southern Union’s Current Report on Form 8-K/ dated June 20,
                2003 and incorporated herein by
                reference.)


4.3
            Supplemental
                Indenture No. 2 to Senior Debt Securities Indenture between Southern
                Union
                Company and JP Morgan Chase Bank, dated as of February 11, 2005.
                (Filed as
                Exhibit 4.4 to Southern Union’s Report on Form 8-A/A dated February 22,
                2005 and incorporated herein by
                reference.)


4.4
            Subordinated
                Debt Securities Indenture between Southern Union Company and JP Morgan
                Chase Bank (as


successor
      to The Chase Manhattan Bank, N.A.), as Trustee. (Filed as Exhibit 4-G to
      Southern Union’s Registration Statement on Form S-3 (No. 33-58297) and
      incorporated herein by reference.)


4.5
            Form
                of Senior Debt Security.*


4.6
            Form
                of Subordinated Debt Security.*


4.7
            Form
                of Warrant Agreement.*


4.8
            Form
                of Warrant Certificate.*


4.9
            Form
                of Deposit Agreement.*


4.10
            Form
                of Depositary Receipt.*


4.11
            Form
                of Purchase Contract.*


4.12
            Form
                of Purchase Unit.*


5.1
            Opinion
                of Fleischman and Walsh, L.L.P., including the consent of such
                firm.


8.1
            Opinion
                of special tax counsel to Southern Union Company as to certain federal
                income taxation matters, including the consent of such
                firm.*


12.1
            Computation
                of Ratio of Earnings to Fixed Charges of Southern Union
                Company.


23.1
            Consent
                of PricewaterhouseCoopers LLP


23.2  Consent
      of PricewaterhouseCoopers LLP


23.3  Consent
      of PricewaterhouseCoopers LLP


23.4  Consent
      of KPMG LLP


23.5  Consent
      of KPMG LLP


23.6  Consent
      of Fleischman and Walsh, L.L.P. (contained in the opinion of counsel filed
      as
      Exhibit 5.1).


23.7  Consent
      of special tax counsel to Southern Union Company (will be contained in the
      opinion of counsel filed as Exhibit 8.1).*


24.1
            Power
                of Attorney.


25.1
            Statement
                of Eligibility under the Trust Indenture Act of 1939, as amended,
                of JP
                Morgan Chase Bank, as Trustee under the Senior Debt Securities Indenture
                (previously filed as Exhibit 25 to Southern Union’s Registration Statement
                on Form S-3 (No. 033-51461) Amendment No. 1 and incorporated herein
                by
                reference).


25.2
            Statement
                of Eligibility under the Trust Indenture Act of 1939, as amended,
                of JP
                Morgan Chase Bank, as Trustee under the Subordinated Debt Securities
                Indenture (previously filed as Exhibit 25.1 to Southern Union’s
                Registration Statement on Form S-3 (No. 333-102388) Amendment No.
                1 and
                incorporated herein by reference).


__________


*
            To
                be filed by amendment or by Issuer as part of a current report on
                Form
                8-K.







II-5


**Item
      17. Undertakings.**




(a)  Each
      undersigned Registrant hereby undertakes as follows:




(1)
            To
                file, during any period in which offers or sales are being made,
                a
                post-effective amendment to this registration statement:




(i)
            To
                include any prospectus required by Section 10(a)(3) of the Securities
                Act
                of 1933;




(ii)  To
      reflect in the prospectus any facts or event arising after the effective date
      of
      the registration statement (or the most recent post-effective amendment thereof)
      which, individually or in the aggregate, represent a fundamental change in
      the
      information set forth in the registration statement. Notwithstanding the
      foregoing, any increase or decrease in volume of securities offered (if the
      total dollar value of securities offered would not exceed that which was
      registered) and any deviation from the low or high end of the estimated maximum
      offering range may be reflected in the form of prospectus filed with the
      Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
      and price represent no more than a 20 percent change in the maximum aggregate
      offering price set forth in the “Calculation of Registration Fee” table in the
      effective registration statement; and




(iii)  To
      include any material information with respect to the plan of distribution not
      previously disclosed in the registration statement or any material change to
      such information in the registration statement;




*provided,
      however* ,
      that
      paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
      apply if the registration statement is on Form S-3 or Form F-3 and the
      information required to be included in a post-effective amendment by those
      paragraphs is contained in reports filed with or furnished to the Securities
      and
      Exchange Commission by the Registrant pursuant to Section 13 or
      Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
      by reference in the Registration Statement, or is contained in a form of
      prospectus filed pursuant to Rule 424(b) that is part of the registration
      statement; and




(2)
            That,
                for the purpose of determining any liability under the Securities
                Act of
                1933, each such post-effective amendment shall be deemed to be a
                new
                registration statement relating to the securities offered therein,
                and the
                offering of such securities at that time shall be deemed to be the
                initial
                bona fide offering thereof;




(3)
            To
                remove from registration by means of a post-effective amendment any
                of the
                securities being registered which remain unsold at the termination
                of the
                offering;




(4)
            That,
                for the purpose of determining liability under the Securities Act
                of 1933
                to any purchaser:




(A)  Each
      prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be
      deemed to be part of the registration statement as of the date the filed
      prospectus was deemed part of and included in the registration
      statement; and




(B)
            Each
                prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5),
                or (b)(7) as part of a registration statement in reliance on
                Rule 430B relating to an offering made pursuant to
                Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the
                information required by Section 10(a) of the Securities Act of 1933
                shall be deemed to be part of and included in the registration statement
                as of the earlier of the date such form of prospectus is first used
                after
                effectiveness or the date of the first contract of sale of securities
                in
                the offering described in the prospectus. As provided in Rule 430B,
                for liability purposes of the issuer and any person that is at that
                date
                an underwriter, such date shall be deemed to be a new effective date
                of
                the registration statement relating to the securities in the registration
                statement to which that prospectus relates, and the offering of such
                securities at that time shall be deemed to be the initial bona fide
                offering thereof. Provided, however, that no statement made in a
                registration statement or prospectus that is a part of the registration
                statement or made in a document incorporated or deemed incorporated
                by
                reference into the registration statement or prospectus that is a
                part of
                the registration statement will, as to a purchaser with a time of
                contract
                of sale prior to such effective date, supersede or modify any statement
                that was made in the registration statement or prospectus that was
                part of
                the registration statement or made in any such document immediately
                prior
                to such effective date; or




II-6


(5)
            That,
                for the purpose of determining liability of any of the Registrant
                under
                the Securities Act of 1933 to any purchaser in the initial distribution
                of
                the securities:




The
      undersigned Registrants undertake that in a primary offering of securities
      of
      the undersigned Registrants pursuant to this registration statement, regardless
      of the underwriting method used to sell the securities to the purchaser, if
      the
      securities are offered or sold to such purchaser by means of any of the
      following communications, the undersigned Registrants will be sellers to the
      purchaser and will be considered to offer or sell such securities to such
      purchaser:




(i)  any
      preliminary prospectus or prospectus of the undersigned Registrants relating
      to
      the offering required to be filed pursuant to Rule 424;




(ii)  any
      free
      writing prospectus relating to the offering prepared by or on behalf of the
      undersigned Registrant or used or referred to by the undersigned Registrants;




(iii)  the
      portion of any other free writing prospectus relating to the offering containing
      material information about the undersigned Registrants or their securities
      provided by or on behalf of the undersigned Registrants; and




(iv)  any
      other
      communication that is an offer in the offering made by the undersigned
      Registrants to the purchaser.




(b)  Each
      undersigned Registrant hereby undertakes that, for purposes of determining
      any
      liability under the Securities Act of 1933, each filing of the Registrant’s
      annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
      Act
      of 1934 that is incorporated by reference in the registration statement shall
      be
      deemed to be a new registration statement relating to the securities offered
      therein, and the offering of such securities at that time shall be deemed to
      be
      the initial bona fide offering thereof.




(c)  Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers and controlling persons of the Registrant
      pursuant to the foregoing provisions, or otherwise, each Registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Act and is,
      therefore, unenforceable. In the event that a claim for indemnification against
      such liabilities (other than the payment by the Registrant of expenses incurred
      or paid by a director, officer or controlling person of the Registrants in
      the
      successful defense of any action, suit or proceeding) is asserted by such
      director, officer or controlling person in connection with the securities being
      registered, the Registrants will, unless in the opinion of its counsel the
      matter has been settled by controlling precedent, submit to a court of
      appropriate jurisdiction the question whether such indemnification by it is
      against public policy as expressed in the Act and will be governed by the final
      adjudication of such issue.




(d)  Each
      undersigned Registrant hereby undertakes to file an application for the purpose
      of determining the eligibility of the trustee to act under subsection (a) of
      section 310 of the Trust Indenture Act (the “Act”) in accordance with the rules
      and regulations prescribed by the Securities and Exchange Commission under
      section 305(b)(2) of the Act.







**SIGNATURES**





Pursuant
      to the requirements of the Securities Act of 1933, Southern Union Company
      certifies that it has reasonable grounds to believe that it meets the
      requirements for filing on Form S-3 and has duly caused this Registration
      Statement to be signed on its behalf by the undersigned, thereunto duly
      authorized, in the City of Houston, State of Texas, on October 13,
      2006.





SOUTHERN
      UNION COMPANY





/s/
      George L. Lindemann    Chairman
      of the Board, President and


George
      L.
      Lindemann Chief
      Executive Officer (Principal Executive Officer)




Pursuant
      to the requirements of the Securities Act of 1933, Registration Statement on
      Form S-3 has been signed by the following persons in the capacities indicated
      on
      October 13, 2006.




Signature/Name   Title





/s/
      George
      L. Lindemann    Chairman
      of the Board, President and


George
      L.
      Lindemann Chief
      Executive Officer


(Principal
      Executive Officer)




/s/
      Julie
      H. Edwards Senior Vice President and Chief Financial Officer


Julie
      H.
      Edwards                                                
(Principal
      Financial Officer)




/s/
      George
      E. Aldrich Vice President and Controller


George
      E.
      Aldrich (Chief
      Accounting Officer)





/s/
      David
      Brodsky  Director


David Brodsky





/s/ Frank W. Denius                              
D irector


Frank W. Denius





/s/ Kurt A. Gitter,
      M.D. Director


Kurt A. Gitter, M.D.





/s/
      Herbert H.
      Jacobi Director


Herbert
      H. Jacobi





/s/
      Adam M.
      Lindemann Director


Adam
      M.
      Lindemann





/s/
      Thomas N. McCarter,
      III Director


Thomas
      N.
      McCarter, III





/s/
      George Rountree,
      III Director


George
      Rountree, III





/s/
      Allan
      Scherer Director


Allan
      Scherer




*By: /s/
      Robert M. Kerrigan, III


Robert
      M.
      Kerrigan, III


Vice President, Assistant General Counsel & Secretary





**EXHIBIT
      INDEX**




**Exhibit
      No.**   **Description**




1.1  Form
      of
      Underwriting Agreement for debt securities.*


1.2  Form
      of
      Underwriting Agreement for common stock.*


1.3  Form
      of
      Underwriting Agreement for preferred stock.*


1.4  Form
      of
      Underwriting Agreement for warrants.*


1.5  Form
      of
      Underwriting Agreement for securities purchase contracts.*


1.6  Form
      of
      Underwriting Agreement for securities purchase units.*


1.7  Form
      of
      Underwriting Agreement for depositary shares.*


3.1  Amended
      and Restated Certificate of Incorporation of the Registrant. Filed as Exhibit
      3(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended
      December 31, 2005.


3.2  Amended
      and Restated Bylaws of the Registrant. Filed as Exhibit 3(b) to the Registrant’s
      Annual Report on Form 10-K for the fiscal year ended December 31,
      2005.


4.1  Senior
      Debt Securities Indenture between Southern Union Company and JP Morgan Chase
      Bank (as successor to the Chase Manhattan Bank, N.A.), as Trustee. (Filed as
      Exhibit 4.1 to Southern Union’s Current Report on Form 8-K dated February 15,
      1994 and incorporated herein by reference.)


4.2  Supplemental
      Indenture No. 1 to Senior Debt Securities Indenture between Southern Union
      Company and JP Morgan Chase Bank, dated as of June 11, 2003. (Filed as Exhibit
      4.5 to Southern Union’s Current Report on Form 8-K/ dated June 20, 2003 and
      incorporated herein by reference.)


4.3  Supplemental
      Indenture No. 2 to Senior Debt Securities Indenture between Southern Union
      Company and JP Morgan Chase Bank, dated as of February 11, 2005. (Filed as
      Exhibit 4.4 to Southern Union’s Report on Form 8-A/A dated February 22, 2005 and
      incorporated herein by reference.)


4.4  Subordinated
      Debt Securities Indenture between Southern Union Company and JP Morgan Chase
      Bank (as


successor
      to The Chase Manhattan Bank, N.A.), as Trustee. (Filed as Exhibit 4-G to
      Southern Union’s Registration Statement on Form S-3 (No. 33-58297) and
      incorporated herein by reference.)


4.5  Form
      of
      Senior Debt Security.*


4.6  Form
      of
      Subordinated Debt Security.*


4.7  Form
      of
      Warrant Agreement.*


4.8  Form
      of
      Warrant Certificate.*


4.9  Form
      of
      Deposit Agreement.*


4.10  Form
      of
      Depositary Receipt.*


4.11  Form
      of
      Purchase Contract.*


4.12  Form
      of
      Purchase Unit.*


5.1  Opinion
      of Fleischman and Walsh, L.L.P., including the consent of such
      firm.


8.1  Opinion
      of special tax counsel to Southern Union Company as to certain federal income
      taxation matters, including the consent of such firm.*


12.1  Computation
      of Ratio of Earnings to Fixed Charges of Southern Union Company.


23.1  Consent
      of PricewaterhouseCoopers LLP


23.2  Consent
      of PricewaterhouseCoopers LLP


23.3  Consent
      of PricewaterhouseCoopers LLP


23.4  Consent
      of KPMG LLP


23.5  Consent
      of KPMG LLP


23.6  Consent
      of Fleischman and Walsh, L.L.P. (contained in the opinion of counsel filed
      as
      Exhibit 5.1).


23.7  Consent
      of special tax counsel to Southern Union Company (will be contained in the
      opinion of counsel filed as Exhibit 8.1).*


24.1  Power
      of
      Attorney.


25.1  Statement
      of Eligibility under the Trust Indenture Act of 1939, as amended, of JP Morgan
      Chase Bank, as Trustee under the Senior Debt Securities Indenture (previously
      filed as Exhibit 25 to Southern Union’s Registration Statement on Form S-3 (No.
      033-51461) Amendment No. 1 and incorporated herein by reference).


25.2  Statement
      of Eligibility under the Trust Indenture Act of 1939, as amended, of JP Morgan
      Chase Bank, as Trustee under the Subordinated Debt Securities Indenture
      (previously filed as Exhibit 25.1 to Southern Union’s Registration Statement on
      Form S-3 (No. 333-102388) Amendment No. 1 and incorporated herein by
      reference).


__________


*  To
      be
      filed by amendment or by Issuer as part of a current report on Form
      8-K.




II-9