| **UNITED                STATES**                                                                       |
|--------------------------------------------------------------------------------------------------------|
| **SECURITIES                AND EXCHANGE COMMISSION**                                                  |
| **Washington,                D.C.  20549**                                                   |
|                                                                                                   |
| **FORM                10-Q**                                                                           |
|                                                                                                   |   |   |
| [X]                                                                                                    | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) |
| OF                THE                SECURITIES EXCHANGE ACT OF 1934                                   |
|                                                                                                   |
| For                the                quarterly period ended **September 30****,                2007** |
|                                                                                                   |
| OR                                                                                                     |
|                                                                                                   |   |
| [  ]                                                                                         | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) |
| OF                THE                SECURITIES EXCHANGE ACT OF 1934                                   |
|                                                                                                   |
| For                the                transition period from ________ to                ________       |

| CommissionFile                Number | Registrant;                State of Incorporation;Address;                and                Telephone Number | IRS                EmployerIdentification                No. |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|
|                                 |                                                                                                          |                                                         |
| 2-26983                              | THE                PEOPLES                GAS LIGHT AND COKE COMPANY                                          | 36-1613900                                                   |
|                                 | (An                Illinois                Corporation)                                                       |                                                         |
|                                 | 130                East                Randolph Drive                                                         |                                                         |
|                                 | 24th                Floor                                                                                     |                                                         |
|                                 | Chicago,                Illinois  60601-6207                                                        |                                                         |
|                                 | (312)                240-4000                                                                                 |                                                         |

| Indicate                by                check mark whether the registrant (1) has filed all reports required                to be                filed by Section 13 or 15(d) of the Securities Exchange Act of 1934                during                the preceding 12 months (or for such shorter period that the registrant                was required to file such reports), and (2) has been subject to such                filing requirements for the past 90                days.  Yes [X]   No [  ]                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate                by a                check mark whether the registrant is a large accelerated filer, an                accelerated filer, or a non-accelerated filer.  See definition                of “accelerated filer" and "large accelerated filer” in Rule 12b-2 of the                Exchange Act.  (Check One):                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Large                accelerated filer                [  ]                                                      Accelerated                filer                [  ]                                                   Non-accelerated                filer [X] |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate                by                check mark whether the registrant is a shell company (as defined                in Rule                12b-2 of the Exchange                Act).  Yes [  ]  No [X]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Indicate                the                number of shares outstanding of each of the issuer's classes of common                stock as of the latest practicable date: 25,357,566 shares of common                stock, without par value, outstanding at November 2, 2007, all of                which were held, beneficially and of record, by Peoples Energy                Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                            |

----

**THE      PEOPLES      GAS LIGHT AND COKE COMPANY**

**FORM      10-Q      FOR THE QUARTER ENDED SEPTEMBER 30, 2007**

**CONTENTS**

|                        |                                                                                                                      | Page   |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                        |                                                                                                                      |   |
|                        | **Forward-Looking                Statements**                                                                             |   |
|                        |                                                                                                                      |   |
| **PART                I.**  | **FINANCIAL                INFORMATION**                                                                                  | 4      |
|                        |                                                                                                                      |   |
| Item                1.      | Financial                Statements (Unaudited)                                                                           |   |
|                        | Condensed                Consolidated Statements of Income                                                                | 5      |
|                        | Condensed                Consolidated Balance Sheets                                                                      | 6      |
|                        | Condensed                Consolidated Statements of Capitalization                                                        | 7      |
|                        | Condensed                Consolidated Statements of Cash Flows                                                            | 8      |
|                        |                                                                                                                      |   |
|                        | CONDENSED                NOTES TO FINANCIAL STATEMENTS                                                                    | 9      |
|                        |                                                                                                                      |   |
| Item                2.      | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 25     |
|                        |                                                                                                                      |   |
| Item                3.      | Quantitative                and Qualitative Disclosures About Market Risk                                                 | 35     |
|                        |                                                                                                                      |   |
| Item                4.      | Controls                and                Procedures                                                                     | 37     |
|                        |                                                                                                                      |   |
| **PART                II.** | **OTHER                INFORMATION**                                                                                      |   |
|                        |                                                                                                                      |   |
| Item                1.      | Legal                Proceedings                                                                                          | 38     |
|                        |                                                                                                                      |   |
| Item                1A.     | Risk                Factors                                                                                               | 38     |
|                        |                                                                                                                      |   |
| Item                6.      | Exhibits                                                                                                                  | 38     |
|                        |                                                                                                                      |   |
| Signature                   |                                                                                                                      | 39     |

| **EXHIBIT                INDEX** |                                                                                                                                                                                                                                                                        | 40     |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                             |                                                                                                                                                                                                                                                                        |   |
| 12                               | The                Peoples                Gas Light and Coke Company Ratio of Earnings to Fixed                Charges                                                                                                                                                      |   |
|                             |                                                                                                                                                                                                                                                                        |   |
| 31.1                             | Certification                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |   |
|                             |                                                                                                                                                                                                                                                                        |   |
| 31.2                             | Certification                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |   |
|                             |                                                                                                                                                                                                                                                                        |   |
| 32                               | Written                Statement of the Chief Executive Officer and Chief Financial Officer                Pursuant to 18 U.S.C. Section 1350 for The Peoples Gas Light and                Coke                Company                                                      |   |

----

**Commonly      Used Acronyms**

| AG       | Illinois                Attorney General                                                                                                                  |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| CERCLA   | The                Comprehensive Environmental Response, Compensation and Liability                Act of                1980, as amended                 |
| EPA      | United                States                Environmental Protection Agency                                                                               |
| FASB     | Financial                Accounting Standards Board                                                                                                       |
| FERC     | Federal                Energy Regulatory Commission                                                                                                       |
| FIN      | FASB                Interpretation No.                                                                                                                    |
| ICC      | Illinois                Commerce Commission                                                                                                               |
| IEPA     | Illinois                Environmental Protection Agency                                                                                                   |
| IRS      | Internal                Revenue Service                                                                                                                   |
| LIFO     | Last-in,                first-out                                                                                                                         |
| MD&A | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                       |
| MGUC     | Michigan                Gas                Utilities Corporation (a wholly-owned subsidiary of Integrys Energy                Group,                Inc.) |
| MPSC     | Michigan                Public Service Commission                                                                                                         |
| MPUC     | Minnesota                Public Utilities Commission                                                                                                      |
| MTM      | Mark-to-market                                                                                                                                            |
| NSG      | North                Shore                Gas Company                                                                                                     |
| NYMEX    | New                York                Mercantile Exchange                                                                                                |
| PCB      | Polychlorinated                biphenyl                                                                                                                   |
| PEC      | Peoples                Energy Corporation                                                                                                                 |
| PGL      | The                Peoples                Gas Light and Coke Company                                                                                      |
| PSCW     | Public                Service Commission of Wisconsin                                                                                                     |
| RCRA     | Resource                Conservation and Recovery Act                                                                                                     |
| SEC      | Securities                and Exchange Commission                                                                                                         |
| SFAS     | Statement                of                Financial Accounting Standards                                                                                 |
| WPSC     | Wisconsin                Public Service Company (a wholly-owned subsidiary of Integrys Energy                Group, Inc.)                                 |

----

**Forward-Looking      Statements**

| ·   | Revenues                or                expenses, |
|--------------------|-----------------------------------------------------|

| ·   | Capital                expenditure projections, and |
|--------------------|-----------------------------------------------------|

| ·   | Financing                sources. |
|--------------------|-----------------------------------|

| ·   | The                successful combination of the operations of PEC and its subsidiaries,                including PGL, within Integrys Energy Group, Inc. ("Integrys") (Integrys                was formerly known as WPS Resources                Corporation); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unexpected                costs and/or unexpected liabilities related to the merger between                a                subsidiary of Integrys and PEC; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                combined                company of Integrys and PEC may be unable to achieve the forecasted                synergies or it may take longer or cost more than expected to achieve                these synergies; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Resolution                of                pending and future rate cases and negotiations (including the recovery                of                deferred costs) and other regulatory decisions impacting                PGL; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                impact of                recent and future federal, state and local regulatory change, including                legislative and regulatory initiatives regarding deregulation and                restructuring of the natural gas utility industry, changes in                environmental, tax and other laws and regulations to which PGL and                its                subsidiaries are subject, as well as changes in application of existing                laws and regulations; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Current                and                future litigation, regulatory investigations, proceedings or inquiries,                including but not limited to, manufactured gas plant site cleanup,                proceedings concerning the prudence review of PGL’s gas purchases and                costs actually incurred; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                credit                ratings of PGL could change in the                future; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Resolution                of                audits or other tax disputes with the IRS, Illinois state revenue                agencies                or other taxing authorities; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                effects,                extent and timing of additional competition or regulation in the                markets                in which PGL operates; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                impact of                fluctuations in commodity prices, interest rates and customer                demand; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                effectiveness of PGL’s derivative instruments and hedging activities and                their impact on its future results of                operations; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Available                sources and costs of natural gas; |
|--------------------|------------------------------------------------------------|

| ·   | Investment                performance of employee benefit plan                assets; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Advances                in                technology; |
|--------------------|-------------------------------------------------------|

| ·   | Effects                of                and changes in political, legal and economic conditions and developments                in the United States and Illinois; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                direct or                indirect effects of terrorist incidents, natural disasters or responses                to                such events; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Financial                market conditions and the results of financing efforts, including                risks                associated with commodity prices (particularly natural gas), interest                rates and counter-party credit; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Weather                and                other natural phenomena, in particular the effect of weather on natural                gas sales; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                effect of                accounting pronouncements issued periodically by standard-setting                bodies;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                factors                discussed elsewhere herein and in other reports filed by PGL and/or                Integrys from time to time with the                SEC. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Forward-looking      statements are subject to assumptions and uncertainties, therefore actual      results may differ materially from those expressed or implied by such      forward-looking statements.**

----

**PART      I -      FINANCIAL INFORMATION**

**Item      1.      Financial Statements**

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                                                  |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                  |   |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)**                                 |   | **Three                  Months Ended** |   |   | **Nine                  Months Ended** |   |
|                                                                                                         |   | **September                  30,** |   |   | **September                  30,** |   |
| (Millions)                                                                                                   |   | **2007** |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| **Gas                  operating revenues**                                                                  |   | **$** | **112.9** |   |   | $ | 111.1 |   |   | **$** | **961.4** |   |   | $ | 913.8 |   |
| **Operating                  expenses**                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  purchased                  for resale                                                   |   | ** ** | **51.9** |   |   |   | 48.9 |   |   | ** ** | **648.0** |   |   |   | 625.5 |   |
| Operating                  and                  maintenance expenses                                         |   | ** ** | **73.2** |   |   |   | 63.0 |   |   | ** ** | **240.1** |   |   |   | 207.9 |   |
| Gas                  charge                  settlement                                                      |   | ** ** | **-** |   |   |   | - |   |   | ** ** | **23.0** |   |   |   | 28.4 |   |
| Depreciation                  and amortization                                                               |   | ** ** | **16.4** |   |   |   | 14.6 |   |   | ** ** | **46.3** |   |   |   | 43.1 |   |
| Taxes,                  other                  than income taxes                                             |   | ** ** | **4.2** |   |   |   | 4.1 |   |   | ** ** | **13.9** |   |   |   | 13.2 |   |
| **Operating                  income (loss)**                                                                 |   | ** ** | **(32.8** | **)** |   |   | (19.5 | ) |   | ** ** | **(9.9** | **)** |   |   | (4.3 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Miscellaneous                  income                                                                        |   | ** ** | **1.0** |   |   |   | 1.7 |   |   | ** ** | **3.1** |   |   |   | 4.6 |   |
| Interest                  expense                                                                            |   | ** ** | **(8.5** | **)** |   |   | (6.9 | ) |   | ** ** | **(22.9** | **)** |   |   | (20.7 | ) |
| **Other                  (expense) income**                                                                  |   | ** ** | **(7.5** | **)** |   |   | (5.2 | ) |   | ** ** | **(19.8** | **)** |   |   | (16.1 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss)                  before taxes                                                 |   | ** ** | **(40.3** | **)** |   |   | (24.7 | ) |   | ** ** | **(29.7** | **)** |   |   | (20.4 | ) |
| Income                  tax                  expense (benefit)                                               |   | ** ** | **(13.0** | **)** |   |   | (9.3 | ) |   | ** ** | **(11.1** | **)** |   |   | (9.2 | ) |
| **Net                  Income (Loss)**                                                                       |   | **$** | **(27.3** | **)** |   | $ | (15.4 | ) |   | **$** | **(18.6** | **)** |   | $ | (11.2 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements. |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                       |   |
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS (Unaudited)**                                                                             |   | **September                  30,** |   |   | December                  31, |   |   | September                  30, |   |
| (Millions)                                                                                                                                         |   | **2007** |   |   | 2006 |   |   | 2006 |   |
| **Assets**                                                                                                 |   |
| **Current                  assets**                                                                                                                |   |   |   |   |   |   |   |   |   |
| Cash                  and cash                  equivalents                                                                                        |   | **$** | **-** |   |   | $ | - |   |   | $ | 30.8 |   |
| Customer                  and                  other receivables, net of reserves of $36.9, $29.1 and                  $39.2                       |   |   |   |   |   |   |   |   |   |
| at                  September                  30, 2007,  December 31, 2006 and September 30, 2006,                  respectively        |   | ** ** | **109.0** |   |   |   | 169.1 |   |   |   | 75.6 |   |
| Receivables                  from related parties                                                                                                  |   | ** ** | **10.3** |   |   |   | 5.1 |   |   |   | 6.3 |   |
| Accrued                  unbilled revenues                                                                                                         |   | ** ** | **25.1** |   |   |   | 97.7 |   |   |   | 29.7 |   |
| Natural                  gas                  in storage, at last-in, first-out cost                                                               |   | ** ** | **157.8** |   |   |   | 89.4 |   |   |   | 127.7 |   |
| Materials                  and                  supplies, at average cost                                                                          |   | ** ** | **8.9** |   |   |   | 9.0 |   |   |   | 8.6 |   |
| Regulatory                  assets                                                                                                                 |   | ** ** | **98.9** |   |   |   | 153.2 |   |   |   | 167.6 |   |
| Assets                  from                  risk management activities                                                                           |   | ** ** | **4.4** |   |   |   | 1.6 |   |   |   | 1.5 |   |
| Deferred                  income taxes                                                                                                             |   | ** ** | **23.8** |   |   |   | 22.6 |   |   |   | 24.4 |   |
| Prepayments                  and other                                                                                                             |   | ** ** | **4.7** |   |   |   | 5.3 |   |   |   | 6.2 |   |
| **Total                  current assets**                                                                                                          |   | ** ** | **442.9** |   |   |   | 553.0 |   |   |   | 478.4 |   |
| Property,                  plant, and equipment, net of accumulated depreciation of $988.1,                  $958.1,                  and          |   |   |   |   |   |
| $946.2                  at                  September 30, 2007,  December 31, 2006 and September 30, 2006,                  respectively |   | ** ** | **1,432.6** |   |   |   | 1,421.3 |   |   |   | 1,412.2 |   |
| Noncurrent                  regulatory assets                                                                                                      |   | ** ** | **700.6** |   |   |   | 464.2 |   |   |   | 317.9 |   |
| Investments                  and other assets                                                                                                      |   | ** ** | **20.2** |   |   |   | 16.9 |   |   |   | 18.8 |   |
| Prepaid                  pension costs                                                                                                             |   | ** ** | **80.0** |   |   |   | 78.2 |   |   |   | 184.7 |   |
| Long-term                  assets from risk management activities                                                                                  |   | ** ** | **0.3** |   |   |   | 0.1 |   |   |   | - |   |
| **Total                  assets**                                                                                                                  |   | **$** | **2,676.6** |   |   | $ | 2,533.7 |   |   | $ | 2,412.0 |   |
|                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Capitalization**                                         |   |
| **Current                  liabilities**                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  portion of long-term debt                                                                                                 |   | **$** | **50.0** |   |   | $ | - |   |   | $ | - |   |
| Short-term                  debt                                                                                                                   |   | ** ** | **56.2** |   |   |   | 80.3 |   |   |   | - |   |
| Accounts                  payable                                                                                                                  |   | ** ** | **134.4** |   |   |   | 193.6 |   |   |   | 164.6 |   |
| Payables                  to                  related parties                                                                                      |   | ** ** | **95.4** |   |   |   | 94.4 |   |   |   | 167.4 |   |
| Current                  liabilities from risk management activities                                                                               |   | ** ** | **40.2** |   |   |   | 31.9 |   |   |   | - |   |
| Gas                  costs                  refundable through rate adjustments                                                                    |   | ** ** | **33.4** |   |   |   | 13.5 |   |   |   | 49.7 |   |
| Customer                  deposits                                                                                                                 |   | ** ** | **31.2** |   |   |   | 33.4 |   |   |   | 32.1 |   |
| Customer                  credit balances                                                                                                          |   | ** ** | **45.5** |   |   |   | 69.6 |   |   |   | 76.4 |   |
| Gas                  charge                  reconciliation liability                                                                              |   | ** ** | **22.4** |   |   |   | 11.2 |   |   |   | 11.3 |   |
| Accrued                  interest and taxes                                                                                                        |   | ** ** | **36.8** |   |   |   | 65.0 |   |   |   | 23.4 |   |
| Temporary                  LIFO liquidation credit                                                                                                 |   | ** ** | **-** |   |   |   | - |   |   |   | - |   |
| Other                                                                                                                                              |   | ** ** | **18.4** |   |   |   | 14.6 |   |   |   | 15.1 |   |
| **Total                  current liabilities**                                                                                                     |   | ** ** | **563.9** |   |   |   | 607.5 |   |   |   | 540.0 |   |
| **Long-term                  liabilities and deferred credits**                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                  income taxes                                                                                                             |   | ** ** | **323.4** |   |   |   | 346.1 |   |   |   | 353.2 |   |
| Deferred                  investment tax credits                                                                                                   |   | ** ** | **22.9** |   |   |   | 23.2 |   |   |   | 23.3 |   |
| Noncurrent                  regulatory liabilities                                                                                                 |   | ** ** | **0.9** |   |   |   | 0.9 |   |   |   | - |   |
| Environmental                  remediation liability                                                                                               |   | ** ** | **433.7** |   |   |   | 193.6 |   |   |   | 201.3 |   |
| Pension                  and                  postretirement benefit obligations                                                                   |   | ** ** | **123.1** |   |   |   | 111.5 |   |   |   | 59.1 |   |
| Long-term                  liabilities from risk management activities                                                                             |   | ** ** | **0.6** |   |   |   | 0.2 |   |   |   | - |   |
| Asset                  retirement obligations                                                                                                      |   | ** ** | **96.4** |   |   |   | 92.4 |   |   |   | 91.1 |   |
| Other                                                                                                                                              |   | ** ** | **32.9** |   |   |   | 7.3 |   |   |   | 6.7 |   |
| **Total                  long-term liabilities and deferred credits**                                                                              |   | ** ** | **1,033.9** |   |   |   | 775.2 |   |   |   | 734.7 |   |
| **Commitments                  and contingencies**                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| **Capitalization**                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock                  equity                                                                                              |   | ** ** | **627.5** |   |   |   | 649.8 |   |   |   | 636.1 |   |
| Long-term                  debt                                                                                                                    |   | ** ** | **451.3** |   |   |   | 501.2 |   |   |   | 501.2 |   |
| **Total                  capitalization**                                                                                                          |   | ** ** | **1,078.8** |   |   |   | 1,151.0 |   |   |   | 1,137.3 |   |
| **Total                  liabilities and capitalization**                                                                                          |   | **$** | **2,676.6** |   |   | $ | 2,533.7 |   |   | $ | 2,412.0 |   |
|                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements.                                       |   |   |   |   |   |   |   |   |   |

----

| **THE                    PEOPLES GAS LIGHT AND COKE COMPANY**                                                    |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| **CONDENSED                    CONSOLIDATED STATEMENTS OF CAPITALIZATION                    (Unaudited)**        | **September                    30,** | December                    31, | September                    30, |
| (Millions,                    except share amounts)                                                              |   | **2007** | 2006 | 2006 |
|                                                                                                             |   |   |   |   |   |   |   |   |
| **Long-term                    debt**                                                                            |   |   |   |   |   |   |
|                                                                                                             | First                    and                    refunding mortgage bonds |   |   |   |
|                                                                                                             |   | Series |   | Year                    Due |   |   |   |   |
|                                                                                                             |   | HH | 4.75% | 2030 |   | **$50.0** | $50.0 | $50.0 |
|                                                                                                             |   | KK | 5.00% | 2033 |   | **                    50.0** |                     50.0 |                     50.0 |
|                                                                                                             |   | LL | 3.05% | 2033 |   | **                    50.0** |                     50.0 |                     50.0 |
|                                                                                                             |   | MM-2 | 4.00% | 2010 |   | **                    50.0** |                     50.0 |                     50.0 |
|                                                                                                             |   | NN-2 | 4.625% | 2013 |   | **                    75.0** |                     75.0 |                     75.0 |
|                                                                                                             |   | QQ | 4.875% | 2038 |   | **                    75.0** |                     75.0 |                     75.0 |
|                                                                                                             |   | RR | 4.30% | 2035 |   | **                    50.0** |                     50.0 |                     50.0 |
|                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                             | Adjustable                    rate refunding mortgage bonds |   |   |   |
|                                                                                                             |   | Series |   | Year                    Due |   |   |   |   |
|                                                                                                             |   | OO |   | 2037 |   | **                    51.0** |                     51.0 |                     51.0 |
|                                                                                                             |   | PP |   | 2037 |   | **                    51.0** |                     51.0 |                     51.0 |
| Total                    first                    and refunding mortgage bonds                                   | **                  502.0** |                   502.0 |                   502.0 |
| Unamortized                    discount on long-term debt, net                                                   | **                    (0.7)** |                     (0.8) |                     (0.8) |
| Total                                                                                                            |   |   |   |   |   | **                  501.3** |                   501.2 |                   501.2 |
| Current                    portion                                                                               |   |   |   | **                  (50.0)** |                        - |                        - |
| **Total                    long-term debt**                                                                      |   |   | **                  451.3** |                   501.2 |                   501.2 |
|                                                                                                             |   |   |   |   |   |   |   |   |
| **Common                    stock equity**                                                                       |   |   |   |   |   |
| Common                    stock,                    without par value—                                     |   |   |   |   |
| Authorized                    40,000,000 shares                                                             |   |   |   |   |
| Outstanding 25,357,566                    shares                                                            |   | **                  219.2** |                   219.2 |                   219.2 |
| Accumulated                    other comprehensive loss                                                          | **                    (0.6)** |                     (1.2) |                     (1.4) |
| Retained                    earnings                                                                             |   |   | **                  408.9** |                   431.8 |                   418.3 |
| **Total                    common stock equity**                                                                 |   |   | **                  627.5** |                   649.8 |                   636.1 |
| **Total                    capitalization**                                                                      |   |   | **$1,078.8** | $1,151.0 | $1,137.3 |
|                                                                                                             |   |   |   |   |   |   |   |   |
| The                    accompanying condensed notes are an integral part of these                    statements. |   |   |   |

----

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                         |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                                                |   |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)**                             |   | **Nine                  Months Ended** |   |
|                                                                                                         |   | **September                  30,** |   |
| (Millions)                                                                                                   |   | **2007** |   |   | 2006 |   |
|                                                                                                         |   |   |   |   |   |   |
| **Operating                  Activities:**                                                                   |   |   |   |   |   |   |
| Net                  income                  (loss)                                                          |   | **$** | **(18.6** | **)** |   | $ | (11.2 | ) |
| Adjustments                  to reconcile net income to cash provided by operations:                         |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                                                               |   | ** ** | **49.7** |   |   |   | 46.4 |   |
| Deferred                  income taxes and investment tax credits—net                                  |   | ** ** | **(12.8** | **)** |   |   | (14.9 | ) |
| Gas                  charge                  settlement expense                                              |   | ** ** | **23.0** |   |   |   | 10.7 |   |
| Gas                  charge                  reconciliation expense                                          |   | ** ** | **7.2** |   |   |   | - |   |
| Pension                  and                  postretirement expense                                         |   | ** ** | **8.9** |   |   |   | 8.7 |   |
| Pension                  and                  postretirement funding                                         |   | ** ** | **(0.1** | **)** |   |   | (16.2 | ) |
| Other                  adjustments                                                                           |   | ** ** | **(16.7** | **)** |   |   | (19.6 | ) |
| Net                  changes                  in:                                                            |   |   |   |   |   |   |   |   |
| Receivables—net                                                                                        |   | ** ** | **140.1** |   |   |   | 304.5 |   |
| Receivables                  from related parties                                                            |   | ** ** | **(5.2** | **)** |   |   | (0.8 | ) |
| Gas                  in                  storage                                                             |   | ** ** | **(68.3** | **)** |   |   | (31.3 | ) |
| Gas                  costs                  recoverable/refundable through rate adjustments                  |   | ** ** | **17.9** |   |   |   | 52.5 |   |
| Accounts                  payable                                                                            |   | ** ** | **(59.3** | **)** |   |   | (86.5 | ) |
| Payables                  to                  related parties                                                |   | ** ** | **12.1** |   |   |   | 18.7 |   |
| Accrued                  interest                                                                            |   | ** ** | **0.2** |   |   |   | 0.7 |   |
| Accrued                  taxes                                                                               |   | ** ** | **(28.4** | **)** |   |   | (42.0 | ) |
| Temporary                  LIFO liquidation                                                                  |   | ** ** | **-** |   |   |   | (10.6 | ) |
| Customer                  credit balances                                                                    |   | ** ** | **(24.1** | **)** |   |   | 35.3 |   |
| Gas                  charge                  settlement liability                                            |   | ** ** | **-** |   |   |   | (87.4 | ) |
| Other                                                                                                        |   | ** ** | **3.4** |   |   |   | 18.7 |   |
| **Net                  cash provided by (used in) operating activities**                                     |   | ** ** | **29.0** |   |   |   | 175.7 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| **Investing                  Activities:**                                                                   |   |   |   |   |   |   |   |   |
| Capital                  spending                                                                            |   | ** ** | **(67.0** | **)** |   |   | (76.6 | ) |
| Proceeds                  from                  sale of assets                                               |   | ** ** | **-** |   |   |   | 1.4 |   |
| Intercompany                  note receivable                                                                |   | ** ** | **-** |   |   |   | 9.9 |   |
| Other                                                                                                        |   | ** ** | **-** |   |   |   | 1.8 |   |
| **Net                  cash provided by (used in) investing activities**                                     |   | ** ** | **(67.0** | **)** |   |   | (63.5 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
| **Financing                  Activities:**                                                                   |   |   |   |   |   |   |   |   |
| Retirement                  of                  commercial paper                                             |   | ** ** | **(24.1** | **)** |   |   | (119.9 | ) |
| Intercompany                  loan payable                                                                   |   | ** ** | **66.4** |   |   |   | - |   |
| Dividends                  paid on common stock                                                              |   | ** ** | **(4.3** | **)** |   |   | (15.4 | ) |
| Issuance                  of                  common stock                                                   |   | ** ** | **-** |   |   |   | 53.9 |   |
| **Net                  cash provided by (used in) financing activities**                                     |   | ** ** | **38.0** |   |   |   | (81.4 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
| **Net                  increase (decrease) in cash and cash equivalents**                                    |   | ** ** | **-** |   |   |   | 30.8 |   |
| **Cash                  and cash equivalents at beginning of period**                                        |   | ** ** | **-** |   |   |   | - |   |
| **Cash                  and cash equivalents at end of period**                                              |   | **$** | **-** |   |   | $ | 30.8 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements. |   |   |   |   |   |   |   |   |

----

**THE      PEOPLES      GAS LIGHT AND COKE COMPANY**

**CONDENSED      NOTES TO FINANCIAL STATEMENTS**

**September      30, 2007**

**NOTE      1--FINANCIAL INFORMATION**

*Condensed      Consolidated Statements of Income:*

*Condensed      Consolidated Balance Sheets:*

*Condensed      Consolidated Statements of Cash Flows:*

----

**NOTE      2--CASH AND CASH EQUIVALENTS**

|                                                     |   | Nine                Months                Ended September 30, |     |
|----------------------------------------------------------|--------|---------------------------------------------------------------|----------|
| (Millions)                                               |   | **2007**                                                      |     |   | 2006 |   |
| Cash                paid for                interest     |   | **$**                                                         | **20.0** |   |   | $ | 17.7 |   |
| Cash                paid for                income taxes |   | **$**                                                         | **15.4** |   |   | $ | 11.5 |   |

**NOTE      3--REVENUE RECOGNITION**

**NOTE      4--GAS      IN STORAGE**

**NOTE      5--RISK MANAGEMENT ACTIVITIES**

**Derivative      Instruments and Hedging Activities**

----

**Mark-To-Market      Derivative Instruments.  **

**Cash      Flow      Hedges. **

----

**Summary.**

|                                                                |   | Assets       |    |   | Liabilities       |   |
|---------------------------------------------------------------------|--------|--------------------------------------------|---------|--------|-------------------------------------------------|--------|
|                                                                |   | September                  30,             |    |   | December                  31,                   |   |   | September                  30, |   |   | September                  30, |   |   | December                  31, |   |   | September                  30, |   |
| (Millions)                                                          |   | **2007**                                   |    |   | 2006                                            |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |   | 2006 |   |
|                                                                |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity                  contracts                                |   | **$**                                      | **5.0** |   |                                            | $      | (5.4 | ) |   | $ | 6.4 |   |   | **$** | **40.8** |   |   | $ | 109.7 |   |   | $ | 136.7 |   |
|                                                                |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  Sheet Presentation**                     |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                             |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets/liabilities                  from risk management activities |   | **$**                                      | **4.4** |   |                                            | $      | 1.6 |   |   | $ | 1.5 |   |   | **$** | **40.2** |   |   | $ | 31.9 |   |   | $ | - |   |
| Other                  receivables                                  |   | ** **                                 | **0.3** |   |                                            |   | (7.1 | ) |   |   | 4.9 |   |   | ** ** | **-** |   |   |   | - |   |   |   | - |   |
| Payable                  to                  related parties        |   | ** **                                 | **-**   |   |                                            |   | - |   |   |   | - |   |   | ** ** | **-** |   |   |   | 74.5 |   |   |   | 136.7 |   |
| Total                  current                                      |   | **$**                                      | **4.7** |   |                                            | $      | (5.5 | ) |   | $ | 6.4 |   |   | **$** | **40.2** |   |   | $ | 106.4 |   |   | $ | 136.7 |   |
|                                                                |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                                                           |   |                                       |    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets/liabilities                  from risk management activities |   | **$**                                      | **0.3** |   |                                            | $      | 0.1 |   |   | $ | - |   |   | **$** | **0.6** |   |   | $ | 0.2 |   |   | $ | - |   |
| Payable                  to                  related parties        |   | ** **                                 | **-**   |   |                                            |   | - |   |   |   | - |   |   | ** ** | **-** |   |   |   | 3.1 |   |   |   | - |   |
| Total                  long-term                                    |   | ** **                                 | **0.3** |   |                                            |   | 0.1 |   |   |   | - |   |   | ** ** | **0.6** |   |   |   | 3.3 |   |   |   | - |   |
| **Total**                                                           |   | **$**                                      | **5.0** |   |                                            | $      | (5.4 | ) |   | $ | 6.4 |   |   | **$** | **40.8** |   |   | $ | 109.7 |   |   | $ | 136.7 |   |

**NOTE      6--LONG-TERM DEBT**

**NOTE      7--ASSET RETIREMENT OBLIGATIONS**

| (Millions)                                                            |   |   |     |
|-----------------------------------------------------------------------|--------|--------|----------|
| Asset                retirement obligations at December 31, 2006      |   | $      | 92.4     |   |
| Accretion                                                             |   |   | 4.0      |   |
| **Asset                retirement obligations at September 30, 2007** |   | **$**  | **96.4** |   |

----

**NOTE      8--INCOME TAXES**

| ·   | Illinois                Department of Revenue – PGL has agreed to extensions of the statutes of                limitations for assessing tax for tax years covering 2001-2004. The                extensions for tax years covering 2001-2002 expire March 31, 2008,                and the                extensions for tax years covering 2003-2004 expire December 31,                2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | United                States                IRS – PGL has agreed to extensions of the statutes of limitations for tax                years covering 1999-2004. The extensions for tax years covering 1999-2003                expire September 30, 2008, and the extension covering tax year 2004                expires June 30, 2009. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | United                States                IRS – PGL has partially agreed to an audit report and closing statement                for an IRS examination of the 1999-2003 tax years, but PGL has protested                one issue from the agent's report that has been sent to IRS appeals                for                potential resolution. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | United                States                IRS – PGL has an open examination for the 2004-2005 tax                years. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | Illinois                Department of Revenue – PGL has an open examination for the 2001-2006 tax                years. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

----

**NOTE      9--COMMITMENTS AND CONTINGENCIES**

**Commodity      and Purchase Order Commitments**

**Environmental**

*Former      Manufactured Gas Plant Sites*

----

**Gas      Charge      Reconciliation Proceedings and Related Matters**

----

----

*Class      Action*

----

**Corrosion      Control Inspection Proceeding**

**Builders      Class Action**

----

**Property      Taxes**

**NOTE      10--COMPREHENSIVE INCOME**

|                                                                                                                           |   | Three                Months                EndedSeptember                30, |      |   | Nine                Months                EndedSeptember                30, |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|-----------|--------|-----------------------------------------------------------------------------|--------|
| *(*Millions*)*                                                                                                                 |   | **2007**                                                                     |      |   | 2006                                                                        |   |   | **2007** |   |   | 2006 |   |
| Net                income                (loss)                                                                                |   | **$**                                                                        | **(27.3** | **)**  |                                                                        | $      | (15.4 | ) |   | **$** | **(18.6** | **)** |   | $ | (11.2 | ) |
| Unrealized                hedge gain (loss), net of tax of   $0,                $0.1, $(0.4) and $0.5           |   | ** **                                                                   | **-**     |   |                                                                        |   | (0.2 | ) |   | ** ** | **0.6** |   |   |   | (0.7 | ) |
| Minimum                pension liability adjustment, net of   tax                of $0, $(14.0), $0 and $(14.0) |   | ** **                                                                   | **-**     |   |                                                                        |   | 21.1 |   |   | ** ** | **-** |   |   |   | 21.1 |   |
| **Total                comprehensive income (loss)**                                                                           |   | **$**                                                                        | **(27.3** | **)**  |                                                                        | $      | 5.5 |   |   | **$** | **(18.0** | **)** |   | $ | 9.2 |   |

| (Millions)                                              |   |       |     |
|---------------------------------------------------------|--------|------------|----------|
| December                31,                2006 balance |   | **$**      | **(1.2** | **)** |
| Unrealized                hedge gain (loss)             |   | ** ** | **0.6**  |   |
| **September                30, 2007 balance**           |   | **$**      | **(0.6** | **)** |

----

**NOTE      11--EMPLOYEE BENEFIT PLANS**

|                                                                             |   |                              |      |   |     |   |   | Other                  Postretirement |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------|----------|--------|--------|---------------------------------------|--------|
|                                                                             |   | Pension                  Benefits |      |   | Benefits |   |
| Three                  Months                  Ended September 30, (Millions)    |   | **2007**                          |      |   | 2006     |   |   | **2007**                              |   |   | 2006 |   |
| Service                  cost                                                    |   | **$**                             | **3.3**   |   |     | $      | 3.5    |                                  |   | **$** | **1.9** |   |   | $ | 1.4 |   |
| Interest                  cost                                                   |   | ** **                        | **5.8**   |   |     |   | 5.1    |                                  |   | ** ** | **1.7** |   |   |   | 1.3 |   |
| Expected                  return on plan assets                                  |   | ** **                        | **(8.9**  | **)**  |     |   | (9.1   | )                                     |   | ** ** | **(0.5** | **)** |   |   | (0.6 | ) |
| Amortization                  of:                                                |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
|     Net                  transition (asset)/obligation       |   | ** **                        | **-**     |   |     |   | -      |                                  |   | ** ** | **0.3** |   |   |   | 0.2 |   |
|     Prior                  service cost                      |   | ** **                        | **0.6**   |   |     |   | 0.6    |                                  |   | ** ** | **-** |   |   |   | - |   |
|     Net                  actuarial (gain)/loss               |   | ** **                        | **1.0**   |   |     |   | 1.1    |                                  |   | ** ** | **0.3** |   |   |   | 0.2 |   |
| **Net                  periodic benefit cost**                                   |   | ** **                        | **1.8**   |   |     |   | 1.2    |                                  |   | ** ** | **3.7** |   |   |   | 2.5 |   |
|                                                                             |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
| Effect                  of                  lump sum settlements upon retirement |   | ** **                        | **1.4**   |   |     |   | 1.8    |                                  |   | ** ** | **-** |   |   |   | - |   |
| **Net                  benefit cost**                                            |   | **$**                             | **3.2**   |   |     | $      | 3.0    |                                  |   | **$** | **3.7** |   |   | $ | 2.5 |   |
|                                                                             |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
|                                                                             |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
|                                                                             |   |                              |      |   |     |   |   |                                  |   | Other                  Postretirement |   |
|                                                                             |   | Pension                  Benefits |      |   | Benefits |   |
| Nine                  Months                  Ended September 30, (Millions)     |   | **2007**                          |      |   | 2006     |   |   | **2007**                              |   |   | 2006 |   |
| Service                  cost                                                    |   | **$**                             | **9.8**   |   |     | $      | 10.5   |                                  |   | **$** | **5.6** |   |   | $ | 4.1 |   |
| Interest                  cost                                                   |   | ** **                        | **17.4**  |   |     |   | 15.3   |                                  |   | ** ** | **5.2** |   |   |   | 4.0 |   |
| Expected                  return on plan assets                                  |   | ** **                        | **(26.8** | **)**  |     |   | (27.2  | )                                     |   | ** ** | **(1.4** | **)** |   |   | (1.9 | ) |
| Amortization                  of:                                                |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
|     Net                  transition (asset)/obligation       |   | ** **                        | **-**     |   |     |   | (0.1   | )                                     |   | ** ** | **0.8** |   |   |   | 0.8 |   |
|     Prior                  service cost                      |   | ** **                        | **1.8**   |   |     |   | 1.8    |                                  |   | ** ** | **-** |   |   |   | - |   |
|     Net                  actuarial (gain)/loss               |   | ** **                        | **3.1**   |   |     |   | 3.4    |                                  |   | ** ** | **0.8** |   |   |   | 0.5 |   |
| **Net                  periodic benefit cost**                                   |   | ** **                        | **5.3**   |   |     |   | 3.7    |                                  |   | ** ** | **11.0** |   |   |   | 7.5 |   |
|                                                                             |   |                              |      |   |     |   |   |                                  |   |   |   |   |   |   |   |   |
| Effect                  of                  lump sum settlements upon retirement |   | ** **                        | **3.6**   |   |     |   | 5.0    |                                  |   | ** ** | **-** |   |   |   | - |   |
| **Net                  benefit cost**                                            |   | **$**                             | **8.9**   |   |     | $      | 8.7    |                                  |   | **$** | **11.0** |   |   | $ | 7.5 |   |

----

**NOTE      12--REGULATORY ENVIRONMENT**

**Merger**

| ·   | provide                certain reports, |
|--------------------|-----------------------------------------|

| ·   | perform                studies of the PGL gas system, |
|--------------------|------------------------------------------------------------|

| ·   | promote                and                hire a limited number of union employees in specific                areas, |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | make                no                reorganization-related layoffs or position reductions within the                PGL union                workforce, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | maintain                PGL's operation and maintenance and capital budgets at recent                levels, |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | file                a plan                for formation and implementation of a service                company, |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | accept                certain limits on the merger-related costs that can be recovered                from                ratepayers, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not                seek cost                recovery for any increase in deferred tax assets that may result                from the                tax treatment of the PGL storage gas inventory in connection with                closing                the merger. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Rate      Case**

| ·   | a                "decoupling" mechanism that would allow PGL to adjust rates going                forward                to recover or refund the difference between actual recovered non-gas                cost                revenue and authorized non-gas cost                revenue; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                mechanism                to recover the return on, and return of, capital investment in excess                of                historical capital investment associated with accelerating the replacement                of cast iron main; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                mechanism                to recover the gas cost portion of uncollectible expense based on                current                gas prices; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                mechanism                to recover $6.4 million of energy efficiency costs under a program                to be                approved by the ICC. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**NOTE      13--SEGMENTS OF BUSINESS**

| **Segments                  of Business**                                                                                                                               |   | **Gas**        |      |   |         |       |   | **PGL**          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|--------------|------------|--------|------------------|--------|
| **(Millions)**                                                                                                                                                          |   | **Utility(1)** |      |   | **Other(2)** |       |   | **Consolidated** |   |
| **Three                  Months Ended September 30, 2007**                                                                                                              |   |           |      |   |         |       |   |             |   |
| Revenues                                                                                                                                                                |   | **$**          | **112.9** |   |         | **$**      | **-**  |             |   | **$** | **112.9** |   |
| Operating                  expenses                                                                                                                                     |   | ** **     | **145.7** |   |         | ** ** | **-**  |             |   | ** ** | **145.7** |   |
| Operating                  (loss)                                                                                                                                       |   | ** **     | **(32.8** | **)**  |         | ** ** | **-**  |             |   | ** ** | **(32.8** | **)** |
| Net                  (loss)                                                                                                                                             |   | ** **     | **(27.3** | **)**  |         | ** ** | **-**  |             |   | ** ** | **(27.3** | **)** |
|                                                                                                                                                                    |   |           |      |   |         |       |   |             |   |   |   |   |
| Three                  Months Ended September 30, 2006                                                                                                                  |   |           |      |   |         |       |   |             |   |   |   |   |
| Revenues                                                                                                                                                                |   | $              | 111.1     |   |         | **$**      | **-**  |             |   | $ | 111.1 |   |
| Operating                  expenses                                                                                                                                     |   |           | 130.6     |   |         |       | -      |             |   |   | 130.6 |   |
| Operating                  (loss)                                                                                                                                       |   |           | (19.5     | )      |         |       | -      |             |   |   | (19.5 | ) |
| Net                  income                  (loss)                                                                                                                     |   |           | (15.5     | )      |         |       | 0.1    |             |   |   | (15.4 | ) |
| **Nine                  Months Ended September 30, 2007**                                                                                                               |   |           |      |   |         |       |   |             |   |   |   |   |
| Revenues                                                                                                                                                                |   | **$**          | **961.4** |   |         | **$**      | **-**  |             |   | **$** | **961.4** |   |
| Operating                  expenses                                                                                                                                     |   | ** **     | **971.3** |   |         | ** ** | **-**  |             |   | ** ** | **971.3** |   |
| Operating                  (loss)                                                                                                                                       |   | ** **     | **(9.9**  | **)**  |         | ** ** | **-**  |             |   | ** ** | **(9.9** | **)** |
| Net                  (loss)                                                                                                                                             |   | ** **     | **(18.6** | **)**  |         | ** ** | **-**  |             |   | ** ** | **(18.6** | **)** |
|                                                                                                                                                                    |   |           |      |   |         |       |   |             |   |   |   |   |
| Nine                  Months Ended September 30, 2006                                                                                                                   |   |           |      |   |         |       |   |             |   |   |   |   |
| Revenues                                                                                                                                                                |   | $              | 913.8     |   |         | **$**      | **-**  |             |   | $ | 913.8 |   |
| Operating                  expenses                                                                                                                                     |   |           | 918.1     |   |         |       | -      |             |   |   | 918.1 |   |
| Operating                  (loss)                                                                                                                                       |   |           | (4.3      | )      |         |       | -      |             |   |   | (4.3 | ) |
| Net                  income                  (loss)                                                                                                                     |   |           | (11.4     | )      |         |       | 0.2    |             |   |   | (11.2 | ) |
|                                                                                                                                                                    |   |           |      |   |         |       |   |             |   |   |   |   |
| (1)                  Includes                  only utility operations.                                                                                                 |   |           |      |   |         |       |   |             |   |   |   |   |
| (2)                  Nonutility operations are included in the Other column. Amounts                  for all                  categories other than net income for the |   |
| nine                  months                  ended September 30, 2006, rounded to less than $0.1                  million.                                             |   |           |      |   |         |       |   |             |   |

**NOTE      14--NEW ACCOUNTING PRONOUNCEMENTS**

----

----

| **Item                2.** | **Management’s                Discussion And Analysis Of Financial Condition And Results Of                Operations** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------|

**INTRODUCTION**

**Strategic      Overview**

**Maintain      and Grow a Strong Regulated Utility Base - **

**Integrate      Resources to Provide Operational Excellence -**

**Place      Strong Emphasis on **
**Asset and **
**Risk Management      -**

**Continued      Emphasis on Safe, Reliable, Competitively Priced, and Environmentally Sound      **
**Natural **
**Gas Services - **

**Rate      Case**

----

**RESULTS      OF      OPERATIONS**

**Third      Quarter 2007 Compared with Third Quarter 2006**

**Overview      of      Operations**

----

|                                                    |   | Three                  Months                  Ended September 30, |      |   |   |   |
|---------------------------------------------------------|--------|--------------------------------------------------------------------|-----------|--------|--------|--------|
| **PGL                  Results *(Millions)***           |   | **2007**                                                           |      |   | 2006   |   |   | Change |   |
|                                                    |   |                                                               |      |   |   |   |   |   |   |
| Revenues                                                |   | **$**                                                              | **112.9** |   |   | $      | 111.1 |   |   |   | 1.6 | % |
| Purchased                  gas                  costs   |   | ** **                                                         | **51.9**  |   |   |   | 48.9 |   |   |   | 6.1 | % |
| Margins                                                 |   | **$**                                                              | **61.0**  |   |   | $      | 62.2 |   |   |   | (1.9 | )% |
|                                                    |   |                                                               |      |   |   |   |   |   |   |   |   |   |
| **Throughput                  in therms**               |   |                                                               |      |   |   |   |   |   |   |   |   |   |
| Residential                                             |   | ** **                                                         | **51.2**  |   |   |   | 58.8 |   |   |   | (12.9 | )% |
| Commercial                  and industrial              |   | ** **                                                         | **14.9**  |   |   |   | 16.5 |   |   |   | (9.7 | )% |
| Transport                                               |   | ** **                                                         | **91.7**  |   |   |   | 92.8 |   |   |   | (1.2 | )% |
| Total                  sales                  in therms |   | ** **                                                         | **157.8** |   |   |   | 168.1 |   |   |   | (6.1 | )% |
|                                                    |   |                                                               |      |   |   |   |   |   |   |   |   |   |
| **Weather**                                             |   |                                                               |      |   |   |   |   |   |   |   |   |   |
| Heating                  degree days - actual           |   | ** **                                                         | **55**    |   |   |   | 115 |   |   |   | (52.2 | )% |

**Operating      Expenses**

|                                                             |   | Three                Months                Ended September 30, |     |
|------------------------------------------------------------------|--------|----------------------------------------------------------------|----------|
| PGL's                Operating Expenses *(Millions)*             |   | **2007**                                                       |     |   | 2006 |   | Change |   |
| Operating                and                maintenance expenses |   | **$**                                                          | **73.2** |   |   | $ | 63.0 |   |   | 16.2 | % |
| Depreciation                and amortization                     |   | ** **                                                     | **16.4** |   |   |   | 14.6 |   |   | 12.3 | % |
| Taxes,                other                than income taxes     |   | ** **                                                     | **4.2**  |   |   |   | 4.1 |   |   | 2.4 | % |

*Operating      and      Maintenance Expenses*

| ·   | Increased                maintenance expense of $3.0 million related primarily to the cost of                distribution system inspections and local surface restoration                requirements, including increases in allocated overhead                costs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                injuries and damages expense of $3.0                million |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Increased                utility environmental costs of $1.4 million related to investigation                and                remediation activities at multiple sites that formerly had operations                for                gas manufacturing and the storage of manufactured gas (see Note 9,                “Commitments and Contingencies,” in the Condensed Notes to Financial                Statements for further discussion).  These costs are recovered                through the utility’s environmental rate recovery mechanism and a similar                amount is included in revenues, therefore these costs do not affect                operating income. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Accrued                expenses of $6.6 million (excluding interest) related to the fiscal                2005                Gas Charge reconciliation case as discussed in Note 9, “Commitments and                Contingencies,” in the Condensed Notes to Financial                Statements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Decreased                other operating expenses of $3.7 million, including materials and                supplies                expense, bad debt expense, software and hardware expense, insurance                premiums, restricted stock expense and other gas supply                expenses. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Depreciation      and Amortization*

----

*Taxes      Other      Than Income Taxes*

**Other      (Expense) Income**

|                                                                          |   | Three                Months                Ended September 30, |     |
|-------------------------------------------------------------------------------|--------|----------------------------------------------------------------|----------|
| PGL’s                Other                (Expense) Income *(Millions)* |   | **2007**                                                       |     |   | 2006 |   |   | Change |   |
| Miscellaneous                income                                           |   | **$**                                                          | **1.0**  |   |   | $ | 1.7 |   |   | (41.2 | )% |
| Interest                expense                                               |   | ** **                                                     | **(8.5** | **)** |   |   | (6.9 | ) |   | 23.2 | % |
| Other                (expense) income                                    |   | **$**                                                          | **(7.5** | **)** |   | $ | (5.2 | ) |   | 44.2 | % |

*Miscellaneous      Income*

*Interest      Expense*

**Provision      for Income Taxes**

**Nine      Months      2007 Compared with Nine Months 2006**

**Overview      of      Operations**

----

|                                                    |   | Nine                  Months                  Ended September 30, |        |   |   |   |
|---------------------------------------------------------|--------|-------------------------------------------------------------------|-------------|--------|--------|--------|
| **PGL                  Results *(Millions)***           |   | **2007**                                                          |        |   | 2006   |   |   | Change |   |
|                                                    |   |                                                              |        |   |   |   |   |   |   |
| Revenues                                                |   | **$**                                                             | **961.4**   |   |   | $      | 913.8 |   |   | 5.2 | % |
| Purchased                  gas                  costs   |   | ** **                                                        | **648.0**   |   |   |   | 625.5 |   |   | 3.6 | % |
| Margins                                                 |   | **$**                                                             | **313.4**   |   |   | $      | 288.3 |   |   | 8.7 | % |
|                                                    |   |                                                              |        |   |   |   |   |   |   |   |   |
| **Throughput                  in therms**               |   |                                                              |        |   |   |   |   |   |   |   |   |
| Residential                                             |   | ** **                                                        | **605.0**   |   |   |   | 546.7 |   |   | 10.7 | % |
| Commercial                  and industrial              |   | ** **                                                        | **124.2**   |   |   |   | 114.6 |   |   | 8.4 | % |
| Transport                                               |   | ** **                                                        | **524.9**   |   |   |   | 480.2 |   |   | 9.3 | % |
| Total                  sales                  in therms |   | ** **                                                        | **1,254.1** |   |   |   | 1,141.5 |   |   | 9.9 | % |
|                                                    |   |                                                              |        |   |   |   |   |   |   |   |   |
| **Weather**                                             |   |                                                              |        |   |   |   |   |   |   |   |   |
| Heating                  degree days - actual           |   | ** **                                                        | **3,863**   |   |   |   | 3,473 |   |   | 11.2 | % |

**Operating      Expenses**

|                                                             |   | Nine                Months                Ended September 30, |      |
|------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|
| PGL's                Operating Expenses *(Millions)*             |   | **2007**                                                      |      |   | 2006 |   |   | Change |   |
| Operating                and                maintenance expenses |   | **$**                                                         | **240.1** |   |   | $ | 207.9 |   |   | 15.5 | % |
| Gas                charge                settlement              |   | ** **                                                    | **23.0**  |   |   |   | 28.4 |   |   | (19.0 | )% |
| Depreciation                and amortization                     |   | ** **                                                    | **46.3**  |   |   |   | 43.1 |   |   | 7.4 | % |
| Taxes,                other                than income taxes     |   | ** **                                                    | **13.9**  |   |   |   | 13.2 |   |   | 5.3 | % |

----

*Operating      and      Maintenance Expenses*

| ·   | Increased                utility environmental costs of $13.8 million related to investigation                and                remediation activities at multiple sites that formerly had operations                for                gas manufacturing and the storage of manufactured gas (see Note 9,                "Commitments and Contingencies," in the Condensed Notes to Financial                Statements for further discussion).  These costs are recovered                through the utility’s environmental rate recovery mechanism and a similar                amount is included in revenues, therefore these costs do not affect                operating income. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                maintenance expense of $9.5 million related primarily to the cost                of distribution system inspections and local surface restoration                requirements, including increases in allocated overhead                costs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                injuries and damages expense of $6.4                million. |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Accrued                expenses of $9.9 million (excluding interest) related to the fiscal                2005                Gas Charge reconciliation case, as discussed in Note 9, "Commitments                and                Contingencies,” in the Condensed Notes to the Financial                Statements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Decreased                bad                debt expense of $5.7 million due primarily to improved credit and                collection experience. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

*Gas      Charge      Settlement*

*Depreciation      and Amortization*

*Taxes      Other      Than Income Taxes*

**Other      (Expense) Income**

|                                                                          |   | Nine                Months                Ended September 30, |      |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|
| PGL’s                Other                (Expense) Income *(Millions)* |   | **2007**                                                      |      |   | 2006 |   |   | Change |   |
| Miscellaneous                income                                           |   | **$**                                                         | **3.1**   |   |   | $ | 4.6 |   |   | (32.6 | )% |
| Interest                expense                                               |   | ** **                                                    | **(22.9** | **)** |   |   | (20.7 | ) |   | 10.6 | % |
| Other                (expense) income                                    |   | **$**                                                         | **(19.8** | **)** |   | $ | (16.1 | ) |   | 23.0 | % |

*Miscellaneous      Income*

----

*Interest      Expense*

**Provision      for Income Taxes**

**LIQUIDITY      AND CAPITAL RESOURCES**

**Cash      Flows      Variations**

| (Millions)                                                                        |   | Nine                Months EndedSeptember                30,                2007 |      |   | Nine                Months EndedSeptember                30, 2006 |   |
|-----------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|-----------|--------|-----------------------------------------------------------------------------|--------|
| Net                cash                provided by (used in) operating activities |   | **$**                                                                                 | **29.0**  |   |                                                                        | $      | 175.7 |   |
| Net                cash                provided by (used in) investing activities |   | **$**                                                                                 | **(67.0** | **)**  |                                                                        | $      | (63.5 | ) |
| Net                cash                provided by (used in) financing activities |   | **$**                                                                                 | **38.0**  |   |                                                                        | $      | (81.4 | ) |

*Operating      Cash      Flows*

*Investing      Cash      Flows*

*Financing      Cash      Flows*

----

*Credit      Ratings*

|                               |   | Standard                & Poor's |   | Moody's |
|------------------------------------|--------|--------------------------------------|--------|---------|
|                               |   |                                 |   |    |
| Senior                secured debt |   | A-                                   |   | A1      |
| Commercial                paper    |   | A-2                                  |   | P-1     |

*Balance      Sheet      Variations*

----

**Future      Capital Requirements and Resources**

*Contractual      Obligations*

|                                                 |   | Payments                  Due                  by Period |    |
|------------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                 |   |                                                     |    |   |   |   |   |  2008- |   |   |  2010- |   |   | 2012                  and |   |
| (Millions)                                           |   | Total                                                    |    |   | 2007 |   |   | 2009 |   |   | 2011 |   |   | Thereafter |   |
| Long-term                  debt obligations          |   | $                                                        | 502.0   |   |   | $ | - |   |   | $ | 50.0 |   |   | $ | 50.0 |   |   | $ | 402.0 |   |
| Estimated                  interest payments on debt |   |                                                     | 495.8   |   |   |   | 5.7 |   |   |   | 44.6 |   |   |   | 41.6 |   |   |   | 403.9 |   |
| Operating                  leases obligations        |   |                                                     | 23.1    |   |   |   | 0.8 |   |   |   | 6.5 |   |   |   | 6.9 |   |   |   | 8.9 |   |
| Purchase                  obligations                |   |                                                     | 324.2   |   |   |   | 27.6 |   |   |   | 113.9 |   |   |   | 71.8 |   |   |   | 110.9 |   |
| Minimum                  pension funding             |   |                                                     | 8.1     |   |   |   | - |   |   |   | 8.1 |   |   |   | - |   |   |   | - |   |
| Total                  contractual cash obligations  |   | $                                                        | 1,353.2 |   |   | $ | 34.1 |   |   | $ | 223.1 |   |   | $ | 170.3 |   |   | $ | 925.7 |   |

*Capital      Requirements*

*Capital      Resources*

----

**Other      Future Considerations**

*Gas      Charge      Reconciliation Proceedings and Related Matters*

*Environmental      Matters*

*Proposed      Cook County Illinois Gas Use Tax and Sales Tax*

----

*Service      Company*

**CRITICAL      ACCOUNTING POLICIES**

**Item      3.  Quantitative and Qualitative Disclosures about      Market Risk**

**Commodity      Price Risk**

**Derivative      Summary.**

----

|                                                                                             |   | **Cash                  Flow Hedges** |     |   | **Mark-to                  Market** |   |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|--------|-------------------------------------|--------|
| ***Three-months                  ended (Millions)***                                             |   | **2007**                              |     |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
| Value                  of                  contracts outstanding at July 1                       |   | **$**                                 | **(0.5** | **)**  |                                | $      | (1.6 | ) |   | **$** | **-** |   |   | $ | - |   |
| Plus:                  Loss on                  contracts discontinued as cash flow hedges       |   | ** **                            | **0.1**  |   |                                |   | - |   |   | ** ** | **(0.1** | **)** |   |   | - |   |
| Less:                  Gain                  (loss) on contracts realized or otherwise           |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     settled                  during the period                               |   | ** **                            | **(0.4** | **)**  |                                |   | (0.7 | ) |   | ** ** | **-** |   |   |   | - |   |
| Plus:                  Unrealized gain (loss) on new contracts entered                           |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     into                  during the period and outstanding at end of period |   | ** **                            | **-**    |   |                                |   | (0.1 | ) |   | ** ** | **-** |   |   |   | - |   |
| Plus:                  Other                  unrealized gain (loss), primarily changes          |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     in                  market prices on contracts outstanding at the        |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     beginning                  of the period                                 |   | ** **                            | **(0.5** | **)**  |                                |   | (0.9 | ) |   | ** ** | **-** |   |   |   | - |   |
| **Value                  of contracts outstanding at September 30**                              |   | **$**                                 | **(0.5** | **)**  |                                | $      | (1.9 | ) |   | **$** | **(0.1** | **)** |   | $ | - |   |

|                                                                                             |   | **Cash                  Flow Hedges** |     |   | **Mark-to                  Market** |   |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|--------|-------------------------------------|--------|
| ***Nine-months                  ended (Millions)***                                              |   | **2007**                              |     |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
| Value                  of                  contracts outstanding at January 1                    |   | **$**                                 | **(1.5** | **)**  |                                | $      | (0.6 | ) |   | **$** | **-** |   |   | $ | - |   |
| Plus:                  Loss on                  contracts discontinued as cash flow hedges       |   | ** **                            | **0.1**  |   |                                |   | - |   |   | ** ** | **(0.1** | **)** |   |   | - |   |
| Less:                  Gain                  (loss) on contracts realized or otherwise           |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     settled                  during the period                               |   | ** **                            | **(1.4** | **)**  |                                |   | (2.1 | ) |   | ** ** | **-** |   |   |   | - |   |
| Plus:                  Unrealized gain (loss) on new contracts entered                           |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     into                  during the period and outstanding at end of period |   | ** **                            | **(0.3** | **)**  |                                |   | (0.9 | ) |   | ** ** | **-** |   |   |   | - |   |
| Plus:                  Other                  unrealized gain (loss), primarily changes          |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     in                  market prices on contracts outstanding at the        |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     beginning                  of the period                                 |   | ** **                            | **(0.2** | **)**  |                                |   | (2.5 | ) |   | ** ** | **-** |   |   |   | - |   |
| **Value                  of contracts outstanding at September 30**                              |   | **$**                                 | **(0.5** | **)**  |                                | $      | (1.9 | ) |   | **$** | **(0.1** | **)** |   | $ | - |   |

| *(Fair                Value amounts in thousands)* |   |                         |   |   |
|----------------------------------------------------|--------|------------------------------|--------|--------|
| ***Maturity***                                     |   | ***Volumes******(Mmbtu's)*** |   |   | ***Fair                Value*** |   |
| Less                than 1                Year     |   | **670,000**                  |   |   | $ | (575.7 | ) |
| 1                - 3                Years          |   | **60,000**                   |   |   |   | (6.0 | ) |
|                                               |   | **730,000**                  |   |   | **$** | **(581.7** | **)** |

----

**Item      4.  Controls and Procedures**

**Evaluation      of Disclosure Controls and Procedures**

**Changes      In      Internal Control**

----

**PART      II - OTHER INFORMATION**

**Item      1.  Legal Proceedings**

**Labor      Contracts**

**Item      1A.  Risk Factors**

**Item      6.  Exhibits**

|   | Exhibit |   |                                                                                                                                                                                                                                                                        |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Number  |   | Description                of Document                                                                                                                                                                                                                                      |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 12      |   | The                Peoples                Gas Light and Coke Company Ratio of Earnings to Fixed                Charges                                                                                                                                                      |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 31.1    |   | Certification                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 31.2    |   | Certification                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 32      |   | Written                Statement of the Chief Executive Officer and Chief Financial Officer                Pursuant to 18 U.S.C. Section 1350 for The Peoples Gas Light and                Coke                Company                                                      |

----

**SIGNATURE**

|                                  |   | The                Peoples                Gas Light and Coke Company |
|---------------------------------------|--------|----------------------------------------------------------------------|
|                                  |   |                                                                 |
|                                  |   |                                                                 |
|                                  |   |                                                                 |
| Date:                November 7, 2007 |   | /s/                Diane L.                Ford                      |
|                                  |   | Diane                L.                Ford                          |
|                                  |   | Vice                President and Corporate Controller               |
|                                  |   |                                                                 |
|                                  |   | (Duly                Authorized Officer and                          |
|                                  |   | Chief                Accounting Officer)                             |

----

**THE      PEOPLES      GAS LIGHT AND COKE COMPANY**

**EXHIBIT      INDEX TO FORM 10-Q**

**FOR      THE      QUARTER ENDED SEPTEMBER 30, 2007**

|   | Exhibit |   |                                                                                                                                                                                                                                                                        |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Number  |   | Description                of Document                                                                                                                                                                                                                                      |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 12      |   | The                Peoples                Gas Light and Coke Company Ratio of Earnings to Fixed                Charges                                                                                                                                                      |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 31.1    |   | Certification                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 31.2    |   | Certification                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley                Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                Act of                1934 for The Peoples Gas Light and Coke Company |
|   |    |   |                                                                                                                                                                                                                                                                        |
|   | 32      |   | Written                Statement of the Chief Executive Officer and Chief Financial Officer                Pursuant to 18 U.S.C. Section 1350 for The Peoples Gas Light and                Coke                Company                                                      |

----