FORM 10-Q

                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C.  20549

(Mark One)

  [ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934

            For the Quarterly Period Ended June 30, 1997

                                 OR

 [    ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                   Commission File Number 1-5540


                    PEOPLES ENERGY CORPORATION
      (Exact name of registrant as specified in its charter)



                  Illinois                  36-2642766
       (State or other jurisdiction of    (IRS Employer
       incorporation or organization)     Identification No.)


24th Floor, 130 East Randolph Drive, Chicago, Illinois        60601-6207
     (Address of principal executive offices)                 (Zip Code)


                          (312) 240-4000
       (Registrant's telephone number, including area code)



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 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
35,061,580 shares of Common Stock, without par value, outstanding
at July 31, 1997.




<TABLE>
                        PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements
                          Peoples Energy Corporation
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)
<CAPTION>
                                        Three                  Nine                    Twelve
                                     Months Ended           Months Ended            Months Ended
                                       June 30,               June 30,                June 30,    
                                  ------------------  ----------------------  ----------------------
                                    1997      1996        1997        1996        1997        1996
                                  --------  --------  ----------  ----------  ----------  ----------   
                                               (Thousands, except per-share amounts)
<S>                               <C>       <C>       <C>         <C>         <C>         <C>
OPERATING REVENUES:
  Gas sales                       $173,380  $216,654  $1,025,505  $  944,118  $1,138,156  $1,036,893
  Transportation                    25,104    28,330     118,496     110,735     136,636     129,649
  Other                              3,950     3,516      13,566       9,809      16,769      12,826
                                  --------  --------  ----------  ----------  ----------  ----------
   Total Operating Revenues        202,434   248,500   1,157,567   1,064,662   1,291,561   1,179,368
                                  --------  --------  ----------  ----------  ----------  ----------
OPERATING EXPENSES:
  Gas costs                         72,651   110,346     581,313     484,249     626,938     515,882
  Operation                         45,940    54,659     149,667     171,251     198,714     222,735
  Maintenance                       12,748    11,381      34,210      32,543      47,309      43,563
  Depreciation & amortization       18,649    18,095      55,492      52,627      73,500      69,556
  Taxes - Income                     6,515     5,557      66,448      64,188      58,880      53,102
        - State & local revenue     20,282    23,479     116,166     109,124     128,214     120,856
        - Other                      5,220     5,509      15,609      16,389      21,221      21,844
                                  --------  --------  ----------  ----------  ----------  ---------- 
   Total Operating Expenses        182,005   229,026   1,018,905     930,371   1,154,776   1,047,538
                                  --------  --------  ----------  ----------  ----------  ----------
OPERATING INCOME                    20,429    19,474     138,662     134,291     136,785     131,830
                                  --------  --------  ----------  ----------  ----------  ----------
OTHER INCOME
  AND (DEDUCTIONS):
  Interest income                    1,311     1,156       3,889       4,318       4,968       7,742
  Allowance for funds used
    during construction                 82        10         144          10         157          10
  Interest on long-term debt
    of subsidiaries                 (8,930)   (8,936)    (26,792)    (28,891)    (35,728)    (40,437)
  Other interest expense              (387)     (830)     (2,160)     (4,492)     (2,782)     (6,310)
  Income taxes                        (442)   (2,614)     (1,309)     (4,349)     (2,798)     (5,557)
  Miscellaneous - net                 (328)    5,987          50      11,491       2,942      11,745
                                  --------  --------  ----------  ----------  ----------  ----------   
      Total Other Income
        and Deductions              (8,694)   (5,227)    (26,178)    (21,913)    (33,241)    (32,807)
                                  --------  --------  ----------  ----------  ----------  ----------
NET INCOME                        $ 11,735  $ 14,247  $  112,484  $  112,378  $  103,544  $   99,023
                                  ========  ========  ==========  ==========  ==========  ==========
Average Shares of Common Stock
  Outstanding                       34,988    34,946      34,980      34,938      34,975      34,932

Earnings Per Share
  of Common Stock                 $    .34  $    .41  $     3.22  $     3.22  $     2.96  $     2.83
                                  ========  ========  ==========  ==========  ==========  ==========
Dividends Declared Per Share      $    .47  $    .46  $     1.40  $     1.37  $     1.86  $     1.82
                                  ========  ========  ==========  ==========  ==========  ==========
                                                                               
                         
<FN>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>




<TABLE>
                        Peoples Energy Corporation

                        CONSOLIDATED BALANCE SHEETS



<CAPTION>
                                                 June 30,                   June 30,
                                                   1997     September 30,     1996
                                                (Unaudited)      1996      (Unaudited)
                                                 ----------   ----------   ----------
                                                        (Thousands of Dollars)
<S>                                                     <C>       <C>          <C>

PROPERTIES AND OTHER ASSETS

CAPITAL INVESTMENTS:
Property, plant and equipment,
   at original cost                              $2,088,570   $2,046,156   $2,024,574
     Less - Accumulated depreciation                705,020      665,077      656,589
                                                 ----------   ----------   ----------
       Net property, plant and equipment          1,383,550    1,381,079    1,367,985
Other investments                                    13,671       12,348        9,904
                                                 ----------   ----------   ----------
     TOTAL CAPITAL INVESTMENTS - NET              1,397,221    1,393,427    1,377,889
                                                 ----------   ----------   ----------
CURRENT ASSETS:
Cash                                                  6,388        4,684        4,328
Cash equivalents                                     93,653       33,086       77,655
Temporary cash investments                           15,900          900          900
Receivables -
   Customers, net of allowance for
     uncollectible accounts of $32,425,
       $26,211, and $26,581, respectively           127,212       68,675      120,718
   Other                                             30,939       32,399       42,539
Accrued unbilled revenues                            20,547       29,314       20,586
Materials and supplies, at average cost              17,361       16,128       16,377
Gas in storage, at last-in, first-out cost           46,865       65,502       45,494
Gas costs recoverable through rate adjustments          353       19,920       24,650
Prepayments                                          36,829       12,287        5,132
Other                                                   425           --           --
                                                 ----------   ----------   ---------- 
     TOTAL CURRENT ASSETS                           396,472      282,895      358,379
                                                 ----------   ----------   ----------
OTHER ASSETS:

Regulatory assets of subsidiaries                    62,736       91,498       73,653
Deferred charges                                     20,015       15,930       14,582
                                                 ----------   ----------   ----------
     TOTAL OTHER ASSETS                              82,751      107,428       88,235
                                                 ----------   ----------   ----------
       TOTAL PROPERTIES AND OTHER ASSETS         $1,876,444   $1,783,750   $1,824,503
                                                 ==========   ==========   ==========


<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>



<TABLE>
                        Peoples Energy Corporation

                        CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                               June 30,                   June 30,
                                                 1997     September 30,    1996
                                              (Unaudited)      1996     (Unaudited)
                                               ----------   ----------   ----------
                                                      (Thousands of Dollars)
<S>                                            <C>          <C>          <C>

CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
Common Stockholders' Equity:
   Common stock, without par value
       Authorized - 60,000,000 shares
       Outstanding - 34,996,835, 34,960,399,
         and 34,951,938 shares, respectively   $  278,926   $  277,881   $  277,959
   Retained earnings                              466,810      403,304      429,087
                                               ----------   ----------   ----------
       Total Common Stockholders' Equity          745,736      681,185      707,046
Long-term debt of subsidiaries,
   exclusive of sinking fund payments
   and maturities due within one year             527,039      527,064      527,104
                                               ----------   ----------   ----------  
       TOTAL CAPITALIZATION                     1,272,775    1,208,249    1,234,150
                                               ----------   ----------   ----------
CURRENT LIABILITIES:
Interim loans of subsidiaries                          --        2,625        4,000
Accounts payable                                  129,282      147,972      120,481
Dividends payable on common stock                  16,446       16,082       16,078
Customer gas service and credit deposits           20,211       42,390       18,803
Accrued taxes                                      62,575       32,821       87,066
Gas sales revenue refundable through
   rate adjustments                                15,247       13,921        9,407
Accrued interest                                    7,408       10,796        7,444
Temporary LIFO liquidation credit                  29,777           --       40,209
                                               ----------   ----------   ----------    
       TOTAL CURRENT LIABILITIES                  280,946      266,607      303,488
                                               ----------   ----------   ----------
DEFERRED CREDITS AND OTHER LIABILITIES:

Deferred income taxes - primarily
   accelerated depreciation                       244,374      230,948      213,053
Investment tax credits being amortized
   over the average lives of related property      34,264       35,439       35,858
Other                                              44,085       42,507       37,954
                                               ----------   ----------   ----------   
       TOTAL DEFERRED CREDITS AND
           OTHER LIABILITIES                      322,723      308,894      286,865
                                               ----------   ----------   ----------
       TOTAL CAPITALIZATION AND LIABILITIES    $1,876,444   $1,783,750   $1,824,503
                                               ==========   ==========   ==========
                                                                           
            
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
    


<TABLE>
                    Peoples Energy Corporation

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Unaudited)
<CAPTION>

                                                              Nine Months Ended
                                                                    June 30,  
                                                             -------------------
                                                               1997       1996  
                                                             --------   --------
                                                            (Thousands of Dollars)
<S>                                                          <C>        <C>

OPERATING ACTIVITIES:
  Net Income                                                 $112,484   $112,378
  Adjustments to reconcile net income to net cash:
    Depreciation and amortization                              55,492     52,627
    Deferred income taxes and investment tax credits - net      9,259         10
    Change in deferred credits and other liabilities            4,570     11,955
    Change in other assets                                     20,467    (36,256)
    Other                                                          --         63
    Change in current assets and liabilities:
     Receivables - net                                        (57,077)  (103,950)
     Accrued unbilled revenues                                  8,767        581
     Materials and supplies                                    (1,233)        89
     Gas in storage                                            18,637     55,052
     Gas costs recoverable                                     19,567    (18,445)
     Accounts payable                                         (18,690)    18,104
     Customer gas service and credit deposits                 (22,179)   (21,774)
     Accrued taxes                                             29,754     58,906
     Gas sales revenue refundable                               1,326    (70,095)
     Accrued interest                                          (3,388)    (5,353)
     Temporary LIFO liquidation credit                         29,777     40,209
     Prepayments                                              (24,542)    (2,831)
     Other                                                       (425)        --
                                                             --------   -------- 
  NET CASH PROVIDED BY OPERATING ACTIVITIES                   182,566     91,270
                                                             --------   --------
INVESTING ACTIVITIES:
  Capital expenditures of subsidiaries - construction         (53,102)   (56,204)
  Other assets                                                    128     12,170
  Other capital investments                                    (2,102)       600
  Other temporary cash investments                            (15,000)        --
                                                             --------   --------
  NET CASH USED IN INVESTING ACTIVITIES                       (70,076)   (43,434)
                                                             --------   --------
FINANCING ACTIVITIES:
  Interim loans of subsidiaries - net                          (2,625)     3,100
  Trust fund, bond redemption                                      --        237
  Retirement of long-term debt of subsidiaries                    (25)   (98,770)
  Dividends paid on common stock                              (48,614)   (47,505)
  Proceeds from issuance of common stock                        1,045        846
                                                             --------   --------
  NET CASH USED IN FINANCING ACTIVITIES                       (50,219)  (142,092)
                                                             --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           62,271    (94,256)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD               37,770    176,239
                                                             --------   --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $100,041   $ 81,983
                                                             ========   ======== 
       
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>



                    Peoples Energy Corporation

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)


1.  BASIS OF PRESENTATION

   The accompanying consolidated financial statements include the
accounts of Peoples Energy Corporation (Company) and its wholly
owned subsidiaries, The Peoples Gas Light and Coke Company
(Peoples Gas), North Shore Gas Company (North Shore Gas), Peoples
District Energy Corporation (Peoples District Energy), Peoples
Energy Services Corporation, Peoples Energy Resources Corp., and
Peoples NGV Corp., and comprise the assets, liabilities, revenues,
expenses, and underlying common stockholder's equity of these
companies.  Income is principally derived from the Company's
utility subsidiaries, Peoples Gas and North Shore Gas.  The
statements have been prepared by the Company in conformity with
the rules and regulations of the Securities and Exchange
Commission (SEC) and reflect all adjustments that are, in the
opinion of management, necessary to present fairly the results for
the interim periods herein and to prevent the information from
being misleading.

   Certain footnote disclosures and other information, normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted from these interim financial statements, pursuant to SEC
rules and regulations.  Therefore, the statements should be read
in conjunction with the consolidated financial statements and
related notes contained in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1996.  Certain items
previously reported for the prior periods have been reclassified
to conform with the presentation in the current periods.

   The business of the Company's utility subsidiaries is
influenced by seasonal weather conditions because a large element
of the utilities' customer load consists of gas used for space
heating.  Weather-related deliveries can, therefore, have a
significant positive or negative impact on net income. 
Accordingly, the results of operations for the interim periods
presented are not indicative of the results to be expected for all
or any part of the balance of the current fiscal year.

2.  SIGNIFICANT ACCOUNTING POLICIES

2A     Use of Estimates

  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results
could differ from those estimates.

2B    Revenue Recognition

  Gas sales revenues are recorded on the accrual basis for all gas
delivered during the month, including an estimate for gas
delivered but unbilled at the end of each month.

2C Regulated Operations

   The utility operations of Peoples Gas and North Shore Gas are
subject to regulation by the Illinois Commerce Commission
(Commission).  Regulated operations are accounted for in
accordance with Statement of Financial Accounting Standards (SFAS)
No. 71, "Accounting for the Effects of Certain Types of
Regulation."  This standard controls the application of generally
accepted accounting principles for companies whose rates are
determined by an independent regulator such as the Commission. 
Regulatory assets represent certain costs that are expected to be
recovered from customers through the ratemaking process.  When
incurred, such costs are deferred as assets in the balance sheet
and subsequently recorded as expenses when those same amounts are
reflected in revenues.

2D Income Taxes

   The Company follows the liability method of accounting for
deferred income taxes.  Under the liability method, deferred
income taxes have been recorded using currently enacted tax rates
for the differences between the tax basis of assets and
liabilities and the basis reported in the financial statements. 
Due to the effects of regulation on Peoples Gas and North Shore
Gas, certain adjustments made to deferred income taxes are, in
turn, debited or credited to regulatory assets or liabilities.

2E Statement of Cash Flows

   For purposes of the balance sheet and the statement of cash
flows, the Company considers all short-term liquid investments
with maturities of three months or less to be cash equivalents.

<TABLE>
      Income taxes and interest paid (excluding capitalized
   interest) were as follows:

<CAPTION>

         For the nine months
         ended June 30,             1997          1996  
         ----------------------------------------------
                                         (Thousands)
         <S>                       <C>           <C>
         Income taxes paid         $37,708       $27,168
         Interest paid              31,311        35,604

</TABLE>

2F Recovery of Gas Costs, Including Charges for Transition Costs

   Under the tariffs of Peoples Gas and North Shore Gas, the
difference for any month between costs recoverable through the Gas
Charge and revenues billed to customers under the Gas Charge is
refunded to or recovered from customers.  Consistent with these
tariff provisions, such difference for any month is recorded
either as a current liability or as a current asset (with a contra
entry to Gas Costs).

   The Commission conducts annual proceedings regarding, for each
gas utility, the reconciliation of revenues from the Gas Charge
and related costs incurred for gas.  In such proceedings, costs
recovered by a utility through the Gas Charge are subject to
challenge.  Such proceedings regarding Peoples Gas and North Shore
Gas for fiscal years 1995 through 1997 are currently pending
before the Commission.

   Pursuant to Federal Energy Regulatory Commission (FERC) Order
636 and successor orders, pipelines are allowed to recover from
their customers so-called transition costs.  These costs arise
from the restructuring of pipeline service obligations required by
the 636 Orders.  The utilities are currently recovering pipeline
charges for transition costs through the Gas Charge.  (See Notes
3A and 3B.)

2G Recovery of Costs of Environmental Activities Relating to
Former Manufactured Gas Operations

   Peoples Gas and North Shore Gas are recovering the costs of
environmental activities relating to the utilities' former
manufactured gas operations, including carrying charges on the
unrecovered balances, under rate mechanisms approved by the
Commission.  The Commission conducts annual proceedings regarding,
for each utility with such a rate mechanism, the reconciliation of
revenues from the rate mechanism and related costs.  In such
proceedings, costs recovered by a utility through the rate
mechanism are subject to challenge.  Such proceedings regarding
Peoples Gas and North Shore Gas for fiscal years 1994, 1995 and
1996 are currently pending before the Commission.  (See Note 4A.)

3.  RATES AND REGULATION

3A Utility Rate Proceedings

Peoples Gas' Rate Order.  On November 8, 1995, the Commission
issued an order approving changes in rates of Peoples Gas that were
designed to increase annual revenues by approximately $30.8
million, exclusive of additional charges for revenue taxes. 
Peoples Gas was allowed a rate of return on original-cost rate base
of 9.19 per cent, which reflected an 11.10 per cent cost of common
equity.  The new rates were implemented on November 14, 1995.  A
group of industrial transportation customers appealed the
Commission's order to the Illinois Appellate Court, but on June 27,
1997, the Appellate Court affirmed the Commission's order.  All
proceedings regarding this case have concluded.

North Shore Gas' Rate Order.  On November 8, 1995, the Commission
issued an order approving changes in rates of North Shore Gas that
were designed to increase annual revenues by approximately $5.6
million, exclusive of additional charges for revenue taxes.  North
Shore Gas was allowed a rate of return on original-cost rate base
of 9.75 per cent, which reflected an 11.30 per cent cost of common
equity.  The new rates were implemented on November 14, 1995.  A
group of industrial transportation customers appealed the
Commission's order to the Illinois Appellate Court, but  on June
27, 1997, the Appellate Court affirmed the Commission's order.  All
proceedings regarding this case have concluded.

FERC Order 636 Cost Recovery.  In 1994, the Commission issued
orders providing for the full recovery of pipeline charges for FERC
Order 636 transition costs from gas service customers of Peoples
Gas and North Shore Gas.  The Commission directed that gas supply
realignment (GSR) costs (one of the four categories of transition
costs) be recovered on a uniform volumetric basis from all
transportation and sales customers.  A group of industrial
transportation customers has filed a petition with the Illinois
Supreme Court appealing the Commission's orders.  If the Illinois
Supreme Court accepts the appeal, any changes made by it to the
Commission's orders would have a prospective effect only.  (See
Notes 2F and 3B.)

3B FERC Orders 636, 636-A, and 636-B

   FERC Order 636 and successor orders require pipelines to make
separate rate filings to recover transition costs.  The utilities
are subject to charges for transition cost recovery by Natural Gas
Pipeline Company of America (Natural).  Under a Stipulation and
Agreement filed by Natural and approved by FERC, Natural's charges
to the utilities for GSR transition costs (the largest category of
such costs for Peoples Gas and North Shore Gas) are subject to a
cap of approximately $103 million for Peoples Gas and $25 million
for North Shore Gas.  Peoples Gas and North Shore Gas are currently
recovering transition costs through the Gas Charge.  At June 30,
1997, Peoples Gas and North Shore Gas had made payments of $89.6
million and $22.0 million and had accrued an additional $13.4
million and $3.0 million, respectively, toward the caps.

   The 636 Orders are not expected to have a material effect on
financial position or results of operations of the Company or its
subsidiaries.  (See Notes 2F and 3A.)

4.  ENVIRONMENTAL MATTERS

4A Former Manufactured Gas Plant Operations

   The Company's utility subsidiaries, their predecessors, and
certain former affiliates operated facilities in the past at
multiple sites for the purpose of manufacturing gas and storing
manufactured gas (Manufactured Gas Sites).  In connection with
manufacturing and storing gas, various by-products and waste
materials were produced, some of which might have been disposed of
rather than sold.  Under certain laws and regulations relating to
the protection of the environment, the subsidiaries might be
required to undertake remedial action with respect to some of these
materials.  Three of the Manufactured Gas Sites are discussed in
more detail below.  Peoples Gas and North Shore Gas, under the
supervision of the Illinois Environmental Protection Agency (IEPA),
are conducting investigations of an additional 29 Manufactured Gas
Sites.  These investigations may require the utility subsidiaries
to perform additional investigation and remediation.  The
investigations are in a preliminary stage and are expected to occur
over an extended period of time.

   In 1990, North Shore Gas entered into an Administrative Order on
Consent (AOC) with the United States Environmental Protection
Agency (EPA) and the IEPA to implement and conduct a remedial
investigation/feasibility study (RI/FS) of a Manufactured Gas Site
located in Waukegan, Illinois, where manufactured gas and coking
operations were formerly conducted (Waukegan Site).  The RI/FS is
comprised of an investigation to determine the nature and extent of
contamination at the Waukegan Site and a feasibility study to
develop and evaluate possible remedial actions.  North Shore Gas
entered into the AOC after being notified by the EPA that North
Shore Gas, General Motors Corporation (GMC) and Outboard Marine
Corporation were each a potentially responsible party (PRP) under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (CERCLA), with respect to the
Waukegan Site.  A PRP is potentially liable for the cost of any
investigative and/or remedial work that the EPA determines is
necessary.  Other parties identified as PRPs did not enter into the
AOC.

   Under the terms of the AOC, North Shore Gas is responsible for
the cost of the RI/FS.  North Shore Gas believes, however, that it
will recover a significant portion of the costs of the RI/FS from
other entities.  GMC has agreed to share equally with North Shore
Gas in funding of the RI/FS cost, without prejudice to GMC's or
North Shore Gas' right to seek a lesser cost responsibility at a
later date.

   Peoples Gas has observed what appear to be gas purification
wastes on a Manufactured Gas Site in Chicago, formerly called the
110th Street Station, and property contiguous thereto (110th Street
Station Site).  Peoples Gas has fenced the 110th Street Station
Site and is conducting a study under the supervision of the IEPA to
determine the feasibility of a limited removal action.

   The current owner of a site in Chicago, formerly called Pitney
Court Station, filed suit against Peoples Gas in federal district
court under CERCLA.  The suit seeks recovery of the past and future
costs of investigating and remediating the site and an order
directing Peoples Gas to remediate the site.  Peoples Gas is
contesting this suit.

   The utility subsidiaries are accruing and deferring the costs
they incur in connection with all of the Manufactured Gas Sites,
including related legal expenses, pending recovery through rates or
from insurance carriers or other entities.  At June 30, 1997, the
total of the costs deferred by the subsidiaries, net 
of recoveries and amounts billed to other entities, was $16.8
million.  This amount includes an estimate of the costs of
completing the studies required by the EPA at the Waukegan Site and
the investigations being conducted under the supervision of the
IEPA referred to above.  The amount also includes an estimate of
the costs of remediation at the Waukegan Site and at the 110th
Street Station Site in Chicago, at the minimum amount of the
current estimated range of such costs.  The costs of remediation at
the other sites cannot be determined at this time.  While each
subsidiary intends to seek contributions from other entities for
the costs incurred at the sites, the full extent of such
contributions cannot be determined at this time.

  Peoples Gas and North Shore Gas have filed suit against a number
of insurance carriers for the recovery of environmental costs
relating to the utilities' former manufactured gas operations.  The
suit asks the court to declare that the insurers are liable under
policies in effect between 1937 and 1986 for costs incurred or to
be incurred by the utilities in connection with five of their
Manufactured Gas Sites in Chicago and Waukegan.  The utilities are
also asking the court to award damages stemming from the insurers'
breach of their contractual obligation to defend and indemnify the
utilities against these costs.  At this time, management cannot
determine the timing and extent of the subsidiaries' recovery of
costs from their insurance carriers.  Accordingly, the costs
deferred at June 30, 1997, have not been reduced to reflect
recoveries from insurance carriers.

  The Company believes that the costs incurred by Peoples Gas and
North Shore Gas for environmental activities relating to former
manufactured gas operations are recoverable from insurance carriers
or other entities or through rates for utility service. 
Accordingly, management believes that the costs incurred by the
subsidiaries in connection with former manufactured gas operations
will not have a material adverse effect on financial position or
results of operations of the subsidiaries.  Peoples Gas and North
Shore Gas are recovering the costs of environmental activities
relating to the utilities' former manufactured gas operations,
including carrying charges on the unrecovered balances, under rate
mechanisms approved by the Commission.  At June 30, 1997, the
subsidiaries had recovered $11.9 million of such costs through
rates.  (See Note 2G.)

4B Former Mineral Processing Site in Denver, Colorado

   In 1994, North Shore Gas received a demand from the S.W.
Shattuck Chemical Company, Inc. (Shattuck), a responsible party
under CERCLA, for reimbursement, indemnification and contribution
for response costs incurred at a former mineral processing site in
Denver, Colorado.  Shattuck is a wholly owned subsidiary of
Salomon, Inc. (Salomon).  The demand alleged that North Shore Gas
was a successor-in-interest to certain companies that were
allegedly responsible during the period 1934-1941 for the disposal
of mineral processing wastes containing radium and other hazardous
substances at the site.  The cost of the remedy at the site has
been estimated by Shattuck to be approximately $31 million. 
Salomon has provided financial assurance for the performance of the
remediation at the site.

     North Shore Gas filed a declaratory judgment action against
Salomon in the District Court for the Northern District of
Illinois.  The suit asked the court to declare that North Shore Gas
is not liable for response costs incurred or to be incurred at the
Denver site.  Salomon filed a counterclaim for costs to be incurred
by Salomon and Shattuck with respect to the site.  On March 7,
1997, the District Court granted North Shore Gas' motion for
summary judgment, declaring that North Shore Gas is not liable for
any response costs in connection with the Denver site.  Salomon has
appealed the ruling of the District Court to the United States
Court of Appeals, Seventh Circuit.

   North Shore Gas does not believe that it has liability for the
response costs, but cannot determine the matter with certainty.  At
this time, North Shore Gas cannot reasonably estimate what range of
loss, if any, may occur.  In the event that North Shore Gas
incurred liability, it would pursue reimbursement from insurance
carriers, other responsible parties, if any, and through its rates
for utility service.
4C Gasoline Release in Wheeling, Illinois

   In June 1995, North Shore Gas received a letter from the IEPA
informing North Shore Gas that it was not in compliance with
certain provisions of the Illinois Environmental Protection Act
which prohibit water pollution within the State of Illinois.  On
November 14, 1995, the Illinois Attorney General filed a complaint
in the Circuit Court of Cook County naming North Shore Gas and four
other parties as defendants.  The complaint alleges that the
violations are the result of a gasoline release that occurred in
Wheeling, Illinois in June 1992 when a contractor who was
installing a pipeline for North Shore Gas accidentally struck a
gasoline pipeline owned by West Shore Pipeline Company.  North
Shore Gas is contesting this suit.  Management does not believe the
outcome of this suit will have a material adverse effect on
financial position or results of operations of the Company or North
Shore Gas.

5.  COVENANTS REGARDING RETAINED EARNINGS

   North Shore Gas' indenture relating to its first mortgage bonds
contains provisions and covenants restricting the payment of cash
dividends and the purchase or redemption of capital stock.  At June
30, 1997, such restrictions amounted to $11.6 million out of North
Shore Gas' total retained earnings of $75.4 million.

6.  EXPIRATION OF GAS STORAGE CONTRACTS

   Peoples Gas and North Shore Gas had certain natural gas storage
contracts with Natural that expired on or before December 1, 1995. 
Associated with the expiration of the contracts, the utilities
realized a gain, after income taxes, of approximately $1.8 million
for the 12-months ended June 30, 1997.

7.  TAX MATTERS

   On September 30, 1993, the Company received notification from
the Internal Revenue Service (IRS) that settlement of past income
tax returns had been reached for fiscal years 1978 through 1990. 
The IRS settlement resulted in payments of principal and interest
to the Company in 1994 in total amount of approximately $28
million, or $21.6 million after income taxes.  Both Peoples Gas and
North Shore Gas received regulatory authorization to defer the
recognition of the settlement amount in income for fiscal year
1993, and to recognize their respective portions of the settlement
amount in income for fiscal years 1994 and 1995.  Each utility
represented to the Commission that, having received this accounting
authorization, it would not file a request for an increase in base
rates before December 1994.

   As a result of the Commission's accounting authorization,
Peoples Gas and North Shore Gas amortized to operation expense
approximately $1.3 million, or $952,000 after income taxes, for the
12-months ended June 30, 1996.  The effect was to offset increases
in costs that the utilities incurred during the period.

8.  LONG-TERM DEBT

8A Interest-Rate Adjustments

   The rate of interest on the City of  Joliet 1984 Series C Bonds,
which are secured by Peoples Gas' Adjustable-Rate First Mortgage
Bonds, Series W, is subject to adjustment annually on October 1. 
Owners of the Series C Bonds have the right to tender such bonds at
par during a limited period prior to that date.  Peoples Gas is
obligated to purchase any such bonds tendered if they cannot be
remarketed.  All Series C Bonds that were tendered prior to October
1, 1996, have been remarketed.  The interest rate on such bonds is
3.95 per cent for the period October 1, 1996, through September 30,
1997.

   The rate of interest on the City of Chicago 1993 Series B Bonds,
which are secured by Peoples Gas' Adjustable-Rate First Mortgage
Bonds, Series EE, is subject to adjustment annually on December 1. 
Owners of the Series B Bonds have the right to tender such bonds at
par during a limited period prior to that date.  Peoples Gas is
obligated to purchase any such bonds tendered if they cannot be
remarketed.  All Series B Bonds that were tendered prior to
December 1, 1996, have been remarketed.  The interest rate on such
bonds is 3.70 per cent for the period December 1, 1996, through
November 30, 1997.

   Peoples Gas classifies these adjustable-rate bonds as long-term
liabilities, since it would refinance them on a long-term basis if
they could not be remarketed.  In order to ensure its ability to do
so, on February 1, 1994, Peoples Gas established a $37.4 million
three year line of credit with The Northern Trust Company, which
has since been extended to January 31, 1999.

8B Bonds Redeemed

   On December 29, 1995, Peoples Gas redeemed, from general
corporate funds, approximately $87 million aggregate principal
amount of the City of Joliet's 1984 Gas Supply Revenue Bonds,
Series A and B, which were secured by Peoples Gas' Series U and V
First and Refunding Mortgage Bonds.

   On February 1, 1996, North Shore Gas redeemed $8 million
aggregate principal amount of its Series I First Mortgage Bonds
using the proceeds of a short-term bank loan as well as other
monies of North Shore Gas.  The final payment on the short-term
bank loan was made by North Shore Gas on August 1, 1996.


9.  PENSION EXPENSE

   Pension expense for the Company decreased $7.8 million, $19
million, and $26.4 million for the three-, nine-, and 12-month
periods, respectively.  The decrease in pension expense was caused
by settlement accounting attributed to an increase in the number of
employees choosing early retirement and changes in actuarial
assumptions.


Item 2.  Management's Discussion and Analysis of Results of
      Operations and Financial Condition

RESULTS OF OPERATIONS

Net Income

   Net income decreased $2.5 million, to $11.7 million, for the
three-months ended June 30, 1997, resulting from decreased gas
deliveries due to conservation and the prior period's gain
associated with the expiration of gas storage contracts.  (See Note
6 of the Notes to Consolidated Financial Statements.)  These
effects were partially offset by decreased pension expense caused
by settlement accounting attributed to an increase in the number of
employees choosing early retirement and changes in actuarial
assumptions.  (See Note 9 of the Notes to Consolidated Financial
Statements.)

   Net income increased $106,000, to $112.5 million, and $4.5
million, to $103.5 million for the current nine- and 12-months
ended June 30, 1997, respectively, due to the aforementioned
decrease in pension costs, and a tax accrual adjustment.  In
addition, net income in the nine- and 12-month periods benefited
from  the full effect of the utilities' rate increases that went
into effect on November 14, 1995 (see Note 3A of the Notes to
Consolidated Financial Statements).  These positive impacts were
partially offset by reduced gas deliveries due to conservation and
warmer weather and last year's gain associated with the expiration
of certain natural gas storage contracts.  (See Note 6 of the Notes
to Consolidated Financial Statements.)

<TABLE>

   A summary of variations affecting income between periods is
presented below, with explanations of significant differences
following:

<CAPTION>

                           Three Months Ended   Nine Months Ended     12 Months Ended
                             June 30, 1997        June 30,1997         June 30, 1997
                          Increase/(Decrease)   Increase/(Decrease)  Increase/(Decrease)
                            from Prior Period   from Prior Period     from Prior Period  
(Thousands of dollars)       Amount      %       Amount       %       Amount     %  
-------------------------------------------------------------------------------------
<S>                         <C>        <C>     <C>          <C>     <C>       <C>
Net operating  revenues (a) $(5,174)   (4.5)   $(11,201)    (2.4)   $(6,221)  (1.1)
Operation and 
    maintenance expenses     (7,352)  (11.1)    (19,917)    (9.8)   (20,275)  (7.6)
Depreciation and
    amortization expense        554     3.1       2,865      5.4      3,944    5.7
Income taxes                    958    17.2       2,260      3.5      5,778   10.9
Other income and deductions  (3,467)  (66.3)     (4,265)   (19.5)      (434)  (1.3)
Net Income                   (2,512)  (17.6)        106      0.1      4,521    4.6
                                                                   
                                                                   
                                                                   
                                       
<FN>
(a) Operating revenues, net of gas costs and revenue taxes.
</TABLE>

Net Operating Revenues

   Gross revenues of Peoples Gas and North Shore Gas are affected
by changes in the unit cost of the subsidiaries' gas purchases and
do not include the cost of gas supplies for customers who purchase
gas directly from producers and marketers rather than from the
subsidiaries.  The direct customer purchases have no effect on net
income because the utilities provide transportation service for
such gas volumes and recover margins similar to those applicable to
conventional gas sales.  Changes in the unit cost of gas do not
significantly affect net income because the utilities' tariffs
provide for dollar-for-dollar recovery of gas costs.  (See Note 2F
of the Notes to Consolidated Financial Statements.)  The utilities'
tariffs also provide for dollar-for-dollar recovery of the cost of
revenue taxes imposed by the State and various municipalities.

   Since income is not significantly affected by changes in revenue
from customers' gas purchases from producers or marketers rather
than from the subsidiaries, changes in gas costs, or changes in
revenue taxes, the discussion below pertains to "net operating
revenues" (operating revenues, net of gas costs and revenue taxes).
The Company considers net operating revenues to be a more pertinent
measure of operating results than gross revenues.

   Net operating revenues decreased $5.2 million, to $109.5
million, $11.2 million, to $460.1 million, and $6.2 million, to
$536.4 million, for the current three-, nine-, and 12-month
periods, respectively, reflecting decreased gas deliveries, mainly
caused by conservation and warmer weather.  However, the effects of
these factors on the nine- and 12-month periods were partially
offset by the full effect of the utilities' rate increases.

   See Other Matters - Operating Statistics for details of selected
financial and operating information by customer classification.

Operation and Maintenance Expenses

   Operation and maintenance expenses decreased $7.4 million, to
$58.7 million, for the current three-month period, due mainly to a
$7.8 million decrease in pension expense caused by settlement
accounting attributed to an increase in the number of employees
choosing early retirement and by changes in actuarial assumptions. 
(See Note 9 of the Notes to Consolidated Financial Statements.) 
Also, the provision for uncollectible accounts decreased $1.8
million.  These decreases in costs were partially offset by an
increase in payments for outside services and higher administrative
and general expenses.

   Operation and maintenance expenses decreased $19.9 million, to
$183.9 million, for the current nine-month period, due primarily to
a $19.0 million decrease in the aforementioned pension expense, and
a reduction in the costs associated with injuries and damages ($1.9
million).  These items were partially offset by an increase in
amounts paid for outside services of $1.0 million.

   Operation and maintenance expenses decreased $20.3 million, to
$246.0 million, for the current 12-month period, due largely to a
$26.4 million decrease in pension expense.  The decrease in pension
expense was partially offset by increases in payments for outside
services ($1.9 million), an increase in the cost of operating and
maintaining the utilities' distribution systems ($1.5 million), the
prior period's recognition of an IRS settlement (see Note 7 of the
Notes to Consolidated Financial Statements), which reduced expenses
by $1.3 million and an increase in environmental costs recovered
through rates ($1.1 million).

Depreciation and Amortization Expense

   Depreciation and amortization expense increased $554,000, to
$18.6 million, for the current three-month period, due primarily to
net property additions.

   Depreciation and amortization expense increased $2.9 million, to
$55.5 million, and $3.9 million to $73.5 million, for the current
nine- and 12-month periods, due primarily to depreciable property
additions and the amortization of costs associated with the closing
of Peoples Gas' synthetic natural gas-making plant.

Income Taxes

   Income taxes, exclusive of income taxes included in other income
and deductions, increased $958,000, to $6.5 million for the
three-month period due to increased pre-tax income.

   Income taxes, exclusive of income taxes included in other income
and deductions, increased $2.3 million, to $66.4 million and $5.8
million to $58.9 million for the current nine- and 12-month
periods, due primarily to increased pre-tax income.  These
increases were partially offset by a reduction to taxes accrued.

Other Income and Deductions

   Other income and deductions increased $3.5 million for the
current three-month period, due chiefly to the prior year's gain of
$3.3 million, after income taxes, associated with the expiration of
certain natural gas storage contracts.  (See Note 6 of the Notes to
the Consolidated Financial Statements.)  This impact was partially
offset by lower interest expense.

   Other income and deductions increased $4.3 million for the
current nine-month period, due primarily to the prior year's gain
of $7.2 million, after income taxes, associated with the expiration
of certain natural gas storage contracts (see Note 6 of the Notes
to the Consolidated Financial Statements) and to lower other
income.  These effects were partially offset by lower interest
expense.

   Other income and deductions increased $434,000 for the current
12-month period, due primarily to the prior period's gain
associated with the expiration of certain natural gas storage
contracts and to lower interest income in the current period. 
These negative factors were partially offset by lower interest
costs.

Other Matters

Effect of Weather.  Weather variations affect the volumes of gas
delivered for heating purposes and, therefore, can have a
significant positive or negative impact on net income, cash
position, and coverage ratios.

Accounting Standards.  In March 1995, the Financial Accounting
Standards Board (FASB) issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of ".  This statement requires recognition of impairment
losses on long-lived assets when an asset's book value may not be
recoverable.  For regulated companies, the statement requires that
regulatory assets be probable of recovery at every balance sheet
date.  This statement requires adoption no later than the Company's
1997 fiscal year.  The Company does not expect the adoption of SFAS
No. 121 to have a material adverse effect on its financial position
or results of operations.

   In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation".  This statement requires companies to
either recognize compensation costs measured at fair value
attributable to employee stock options or similar equity
instruments at the grant date in net income, or, in the
alternative, provide pro forma footnote disclosure on net income
and earnings per share.  This statement requires adoption no later
than the Company's 1997 fiscal year.  The Company anticipates
electing the pro forma footnote disclosure provisions of this
statement in 1997.

FERC Order 636 Costs.  In 1992, the FERC issued Order 636 and
successor orders that required substantial restructuring of the
service obligations of interstate pipelines.  (See Notes 2F, 3A,
and 3B of the Notes to Consolidated Financial Statements.)

   In 1994, the Commission entered orders providing for full
recovery by Peoples Gas and North Shore Gas of FERC Order 636
transition costs from the utilities' respective gas service
customers.  The Commission's orders have been appealed to the
Illinois Supreme Court.  (See Notes 2F, 3A, and 3B of the Notes to
Consolidated Financial Statements.)

Large Volume Gas Service Agreements.  Peoples Gas and North Shore
Gas have entered into gas service contracts with certain large
volume customers under specific rate schedules approved by the
Commission.  These contracts were  negotiated to overcome the
potential threat of bypassing the utilities' distribution systems. 
The contracts will not have a material adverse effect on the
financial position or results of operations of Peoples Gas or North
Shore Gas.

Small Volume Transportation Service.  On June 25, 1997, the
Illinois Commerce Commission approved Riders SVT and AGG for
Peoples Gas which will initiate a two year pilot program designed
to provide transportation service to certain small volume customers
of the utility.  The Commission also ordered a concurrent
investigation of the program to ascertain if program adjustments or
revisions are required.



<TABLE>
Operating Statistics.  The following table represents gas
distribution margin components:

<CAPTION>

                             Three Months Ended    Nine Months Ended   Twelve Months Ended
                                 June 30,               June 30,              June 30,             
                             ------------------    -----------------   -------------------
                              1997       1996       1997      1996        1997        1996
                              -----      -----      -----     -----      -----        ----

<S>                          <C>       <C>       <C>         <C>       <C>        <C>
Operating Revenues (thousands):
  Gas sales
    Residential              $146,519  $182,717  $ 863,153   $787,405  $ 958,848  $868,005
    Commercial                 22,437    26,780    134,730    126,883    149,442   137,229
    Industrial                  4,424     7,157     27,622     29,830     29,866    31,659
                             --------  --------  ---------   --------  --------- ---------
                              173,380   216,654  1,025,505    944,118  1,138,156 1,036,893

  Transportation
    Residential                 7,219     7,661     32,640     32,392     37,381    37,309
    Commercial                  8,888     9,758     42,253     45,335     48,168    52,252
    Industrial                  6,525     9,001     25,522     31,098     30,483    38,178
    Contract Pooling            2,472     1,910     17,675      1,910     20,198     1,910
    Other                          --        --        406         --        406        -- 
                             --------  --------  ---------  ---------  ---------  ---------
                               25,104    28,330    118,496    110,735    136,636    129,649
                             --------  --------  ---------  ---------  ---------  ---------

  Other Revenues                3,950     3,516     13,566      9,809     16,769     12,826
                             --------  --------  ---------  ---------  ---------  ---------

Total Operating Revenues      202,434   248,500  1,157,567  1,064,662  1,291,561  1,179,368
Less  - Gas Costs              72,651   110,346    581,313    484,249    626,938    515,882
      - Revenues Taxes         20,282    23,479    116,166    109,124    128,214    120,856
                            ---------  --------  ---------  ---------  ---------  ---------
Net Operating Revenues       $109,501  $114,675  $ 460,088   $471,289  $ 536,409  $ 542,630
                            =========  ========  =========  =========  =========  =========
Deliveries (MDth):
  Gas Sales
    Residential                23,313    25,011    134,405    144,192    144,341    154,543
    Commercial                  4,359     4,185     22,923     25,251     25,063     27,114
    Industrial                    966     1,252      5,118      6,366      5,554      6,780
                            ---------  --------  ---------  ---------  ---------  ---------
                               28,638    30,448    162,446    175,809    174,958    188,437
                            ---------  --------  ---------  ---------  ---------  ---------
  Transportation (a)
    Residential                 5,181     5,261     25,696     24,075     28,144     26,361
    Commercial                  7,238     7,708     36,114     38,165     40,409     43,340
    Industrial                  8,537    10,650     31,522     36,563     38,324     45,453
    Other                          --        --        234         --        234         -- 
                            ---------  --------  ---------  ---------  ---------  ----------  
                               20,956    23,619     93,566     98,803    107,111     115,154
                            ---------  --------  ---------  ---------  ---------  ----------
Total Gas Sales
  and Transportation           49,594    54,067    256,012    274,612    282,069     303,591
                            =========  ========  =========  =========  =========  ==========
Margin per Dth
  delivered                     $2.21     $2.12      $1.80      $1.72      $1.90       $1.79

<FN>
(a)Volumes associated with contract pooling revenues are
    included in their respective customer classes.
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

Indenture Restrictions.  North Shore Gas' indenture relating to its
first mortgage bonds contains provisions and covenants restricting
the payment of cash dividends and the purchase or redemption of
capital stock.  At June 30, 1997, such restrictions amounted to
$11.6 million out of North Shore Gas' total retained earnings of
$75.4 million.  (See Note 5 of the Notes to Consolidated Financial
Statements.)

Rate Order.  On November 8, 1995, the Commission issued orders
approving changes in rates of Peoples Gas and North Shore Gas. 
(See Note 3A of the Notes to Consolidated Financial Statements.)

Environmental Matters.  The Company's utility subsidiaries are
conducting environmental investigations and work at certain sites
that were the location of former manufactured gas operations.  (See
Note 4A of the Notes to Consolidated Financial Statements.)

   In 1994, North Shore Gas received a demand from a responsible
party under CERCLA for reimbursement, indemnification and
contribution for response costs incurred at a former mineral
processing site in Denver, Colorado.  North Shore Gas filed a
declaratory judgment action asking the court to declare that North
Shore Gas is not liable for response costs relating to the site. 
Salomon filed a counterclaim for costs to be incurred by Salomon
and Shattuck with respect to the site.  On March 7, 1997, the
District Court granted North Shore Gas' motion for summary
judgment, declaring that North Shore Gas is not liable for any
response costs in connection with the Denver site.  Salomon has
appealed the ruling of the District Court to the United States
Court of Appeals, Seventh Circuit.  (See Note 4B of the Notes to
Consolidated Financial Statements.)

   On November 14, 1995, the Illinois Attorney General filed a
complaint in the Circuit Court of Cook County naming North Shore
Gas and four other parties as defendants.  The complaint alleges
violations arising out of a gasoline release that occurred in
Wheeling, Illinois in June 1992 when a contractor who was
installing a pipeline for North Shore Gas accidentally struck a
gasoline pipeline owned by West Shore Pipeline Company.  North
Shore Gas is currently contesting this suit.  (See Note 4C of the
Notes to Consolidated Financial Statements.)

District Energy.  Peoples District Energy is a 50 per cent
participant in a partnership, Trigen-Peoples District Energy
Company, that provides district energy services to the McCormick
Place Exposition and Convention Center, in Chicago, Illinois.  In
May, 1998 the partnership will begin providing district energy
services to the adjacent Hyatt Regency McCormick Place Hotel. 
Neither the partnership nor its partners are regulated as a public
utility.  The Company and Trigen Energy Corporation have provided a
joint and several limited guarantee to the owner and operator of
McCormick Place and also have certain limited obligations to the
partnership's lender under a Sponsors Support and Equity
Contribution Agreement.

Bonds Redeemed.  On December 29, 1995, Peoples Gas redeemed, from
general corporate funds, approximately $87 million aggregate
principal amount of the City of Joliet's 1984 Gas Supply Revenue
Bonds, Series A and B, which were secured by Peoples Gas' Series U
and V First and Refunding Mortgage Bonds.  (See Note 8B of the
Notes to Consolidated Financial Statements.)

   On February 1, 1996, North Shore Gas redeemed $8 million
aggregate principal amount of its Series I First Mortgage Bonds
using the proceeds of a short-term bank loan as well as other
monies of North Shore Gas.  (See Note 8B of the Notes to
Consolidated Financial Statements.)

Credit Lines.  The utility subsidiaries have lines of credit of
$114.4 million.  At June 30, 1997, the utility subsidiaries had
unused credit available of $114.4 million.

Interest Coverage.  The fixed charges coverage ratios for Peoples
Gas for the 12-months ended June 30, 1997, and for fiscal 1996 and
1995 were 5.27, 4.84, and 2.76, respectively.

   The corresponding coverage ratios for North Shore Gas for the
same periods were 6.06, 5.62, and 2.93, respectively.



                   PART II.   OTHER INFORMATION

Item 1. Legal Proceedings

     See Note 4 of the Notes to Consolidated Financial Statements
for a discussion pertaining to environmental matters.


Item 6. Exhibits and Reports on Form 8-K

        a. Exhibits

               Exhibit
               Number        Description of Document
              ------------------------------------------------------ 

               3(a)    Amendment to the By-Laws of the Registrant
                       dated July 1, 1997.

               3(b)    By-Laws of the Registrant, as amended,
                       dated July 1, 1997.

                 27    Financial Data Schedule.


        b. Reports on Form 8-K filed during the quarter ended June
           30, 1997

           None
















                             SIGNATURE



   Pursuant to the requirements of the Securities Exchange Act of

1934, as amended, the registrant has duly caused this report to be

signed on its behalf by the undersigned thereunto duly authorized.




                                             Peoples Energy Corporation    
                                             --------------------------
                                                    (Registrant)




      August   12  , 1997               By:     /s/    K. S. BALASKOVITS  
     ---------------------              --------------------------------
             (Date)                              K. S.Balaskovits
                                           Vice President and Controller





                                                     (Same as above) 
                                           ------------------------------
                                            Principal Accounting Officer