| **UNITED                STATES**                                     |
|----------------------------------------------------------------------|
| **SECURITIES                AND EXCHANGE COMMISSION**                |
| **Washington,                D.C. 20549**                            |
|                                                                 |   |
| **FORM                10-Q**                                         |
|                                                                 |   |
| (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, 2006** |
| OR                                                                   |
| [                  ]                                       | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) |
| OF                THE SECURITIES EXCHANGE ACT OF 1934                |

|                       | Exact                Name of Registrant as                        |                                 |
|----------------------------|-------------------------------------------------------------------|--------------------------------------|
|                       | Specified                in Charter, State of                     |                                 |
|                       | Incorporation,                Address of                          |                                 |
| Commission                 | Principal                Executive                                | IRS                Employer          |
| File                Number | Office                and Telephone Number                        | Identification                Number |
| 1-5540                     | **PEOPLES                ENERGY CORPORATION**                     | 36-2642766                           |
| 2-26983                    | **THE                PEOPLES GAS LIGHT AND COKE COMPANY**         | 36-1613900                           |
| 2-35965                    | **NORTH                SHORE GAS COMPANY**                        | 36-1558720                           |
|                       |                                                              |                                 |
|                       | (Illinois                Corporations)                            |                                 |
|                       | 130                East Randolph Drive, 24th                Floor |                                 |
|                       | Chicago,                Illinois 60601-6207                       |                                 |
|                       | Telephone                (312) 240-4000                           |                                 |

| Indicate                by check mark whether the registrants (1) have 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                registrants were required to file such reports), and (2) have 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):                                                                                                                                                              |
| Peoples                Energy Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Large                accelerated filer [X] Accelerated filer [  ] Non-accelerated filer [                 ] |
| The                Peoples Gas Light and Coke Company                                                                                                                                                                                                                                                                                                                                                                                                                                                | Large                accelerated filer [   ] Accelerated filer [  ]                Non-accelerated filer [X] |
| North                Shore Gas Company                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 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).                                                                                                                                                                                                                                                                                                                                        |
| Peoples                Energy Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Yes                [  ] No [ X ] |
| The                Peoples Gas Light and Coke Company                                                                                                                                                                                                                                                                                                                                                                                                                                                | Yes                [  ] No [ X ] |
| North                Shore Gas Company                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 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 (July 31,                2006):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| Peoples                Energy Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Common                Stock, no par value, 38,471,441 shares outstanding |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| The                Peoples Gas Light and Coke Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Common                Stock, no par value, 25,141,566 shares outstanding (all of which                are owned                beneficially and of record by Peoples Energy                Corporation) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| North                Shore Gas Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Common                Stock, no par value, 3,625,887 shares outstanding (all of which are                owned                beneficially and of record by Peoples Energy                Corporation) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
| This                combined Form 10-Q is separately filed by Peoples Energy Corporation,                The                Peoples Gas Light and Coke Company, and North Shore Gas Company.                Information contained herein relating to any individual company is                filed                by such company on its own behalf. Each company makes no representation                as                to information relating to the other companies. **The                Peoples Gas Light and Coke Company and North Shore Gas Company meet                the                conditions set forth in General Instruction H(1)(a) and (b) of Form                10-Q                and are therefore filing this Form 10-Q with the reduced disclosure                format                permitted by General Instruction H(2) of Form                10-Q.** |

----

**Part      I - Financial Information**

**Item      I. Financial Statements**

| **Peoples                  Energy Corporation**                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF OPERATIONS**                                                                                    |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |  Three                  Months Ended | Nine                  Months Ended |
|                                                                                                                                               |   |  June                  30, | June                  30, |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands, Except Per-Share Amounts)*                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Revenues**                                                                                                                                  |   | $ | 400,445 |   | $ | 455,931 |   | $ | 2,632,859 |   | $ | 2,220,248 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses:**                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of energy sold                                                                                                          |   |   | 256,817 |   |   | 303,886 |   |   | 1,939,884 |   |   | 1,540,493 |   |
| Gas                  charge settlement                                                                                                        |   |   | - |   |   | - |   |   | 107,330 |   |   | - |   |
| Operation                  and maintenance, excluding merger,                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| restructuring                  and environmental costs                                                                                        |   |   | 83,196 |   |   | 73,131 |   |   | 264,008 |   |   | 242,163 |   |
| Merger                  costs                                                                                                                 |   |   | 1,856 |   |   | - |   |   | 1,856 |   |   | - |   |
| Restructuring                  costs                                                                                                          |   |   | - |   |   | 52 |   |   | - |   |   | 13,216 |   |
| Environmental                  costs                                                                                                          |   |   | 4,920 |   |   | 4,599 |   |   | 30,249 |   |   | 27,727 |   |
| Depreciation,                  depletion and amortization                                                                                     |   |   | 30,120 |   |   | 24,031 |   |   | 88,637 |   |   | 83,324 |   |
| Taxes,                  other than income taxes                                                                                               |   |   | 30,022 |   |   | 31,643 |   |   | 178,211 |   |   | 160,504 |   |
| Gains                  on property sales                                                                                                      |   |   | (127 | ) |   | (960 | ) |   | (196 | ) |   | (888 | ) |
| **Total                  Operating Expenses**                                                                                                 |   |   | 406,804 |   |   | 436,382 |   |   | 2,609,979 |   |   | 2,066,539 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                  investment income                                                                                                     |   |   | - |   |   | 309 |   |   | 7,677 |   |   | 2,054 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income (Loss)**                                                                                                  |   |   | (6,359 | ) |   | 19,858 |   |   | 30,557 |   |   | 155,763 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income                                                                                                                 |   |   | 2,980 |   |   | 1,837 |   |   | 5,850 |   |   | 3,844 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  expense                                                                                                                |   |   | 631 |   |   | 156 |   |   | 822 |   |   | 284 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                             |   |   | 15,382 |   |   | 12,586 |   |   | 43,788 |   |   | 37,940 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  (Loss) from Continuing Operations Before Income                  Taxes**                                            |   |   | (19,392 | ) |   | 8,953 |   |   | (8,203 | ) |   | 121,383 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax expense (benefit)                                                                                                 |   |   | (5,678 | ) |   | 4,119 |   |   | (9,752 | ) |   | 43,655 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  (Loss) from Continuing Operations**                                                                                 |   |   | (13,714 | ) |   | 4,834 |   |   | 1,549 |   |   | 77,728 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  from Discontinued Operations,**                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **net                  of income tax expense of $2,377,**                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **$1,296,                  $1,338 and $1,794, respectively**                                                                                  |   |   | 3,603 |   |   | 1,965 |   |   | 2,029 |   |   | 2,719 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income (Loss)**                                                                                                        |   | $ | (10,111 | ) | $ | 6,799 |   | $ | 3,578 |   | $ | 80,447 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Average                  Shares of Common Stock Outstanding**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                         |   |   | 38,404 |   |   | 38,030 |   |   | 38,330 |   |   | 37,926 |   |
| Diluted                                                                                                                                       |   |   | 38,571 |   |   | 38,185 |   |   | 38,493 |   |   | 38,091 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Earnings                  (Loss) Per Share of Common Stock**                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic,                  continuing operations                                                                                                 |   | $ | (0.35 | ) | $ | 0.13 |   | $ | 0.04 |   | $ | 2.05 |   |
| Basic,                  discontinued operations                                                                                               |   |   | 0.09 |   |   | 0.05 |   |   | 0.05 |   |   | 0.07 |   |
| Total                  - basic earnings per share                                                                                             |   | $ | (0.26 | ) | $ | 0.18 |   | $ | 0.09 |   | $ | 2.12 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted,                  continuing operations                                                                                               |   | $ | (0.35 | ) | $ | 0.13 |   | $ | 0.04 |   | $ | 2.04 |   |
| Diluted,                  discontinued operations                                                                                             |   |   | 0.09 |   |   | 0.05 |   |   | 0.05 |   |   | 0.07 |   |
| Total                  - diluted earnings per share                                                                                           |   | $ | (0.26 | ) | $ | 0.18 |   | $ | 0.09 |   | $ | 2.11 |   |
|                                                                                                                                          |
| **Dividends                  Declared Per Share**                                                                                             |   | $ | 0.545 |   | $ | 0.545 |   | $ | 1.635 |   | $ | 1.630 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **Peoples                  Energy Corporation**                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   | June                  30,  |   |   | September                  30, |   |   | June                  30, |   |
| *(In                  Thousands)*                                                                                                             |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| **ASSETS**                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **CAPITAL                  INVESTMENTS:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Property,                  plant and equipment                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Utility                  plant                                                                                                                |   | $ | 2,681,978 |   | $ | 2,634,629 |   | $ | 2,655,328 |   |
| Oil                  and gas                                                                                                                  |   |   | 764,874 |   |   | 555,365 |   |   | 539,924 |   |
| Other                                                                                                                                         |   |   | 24,252 |   |   | 22,740 |   |   | 20,916 |   |
| Total                  property, plant and equipment                                                                                          |   |   | 3,471,104 |   |   | 3,212,734 |   |   | 3,216,168 |   |
| Less                  - Accumulated depreciation, depletion and amortization                                                                  |   |   | 1,342,664 |   |   | 1,266,351 |   |   | 1,288,202 |   |
| Net                  property, plant and equipment                                                                                            |   |   | 2,128,440 |   |   | 1,946,383 |   |   | 1,927,966 |   |
| Investment                  in equity investees                                                                                               |   |   | 250 |   |   | 20,851 |   |   | 13,627 |   |
| Other                  investments                                                                                                            |   |   | 12,818 |   |   | 13,796 |   |   | 12,613 |   |
| **Total                  Capital Investments - Net**                                                                                          |   |   | 2,141,508 |   |   | 1,981,030 |   |   | 1,954,206 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  ASSETS:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                    |   |   | 116,472 |   |   | 18,186 |   |   | 64,439 |   |
| Short-term                  investments                                                                                                       |   |   | - |   |   | - |   |   | 35,625 |   |
| Deposits                  with broker or trustee                                                                                              |   |   | 40,536 |   |   | 25,327 |   |   | 17,499 |   |
| Receivables                  -                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Customers,                  net of reserve for uncollectible accounts                                                                         |   |   |   |   |   |   |   |   |   |   |
| of                  $49,303, $34,954, and $36,898, respectively                                                                               |   |   | 271,523 |   |   | 246,393 |   |   | 288,963 |   |
| Other                                                                                                                                         |   |   | 1,472 |   |   | 4,092 |   |   | 2,263 |   |
| Derivative                  assets, at fair value - current                                                                                   |   |   | 32,552 |   |   | 247,612 |   |   | 16,690 |   |
| Materials                  and supplies, at average cost                                                                                      |   |   | 10,383 |   |   | 10,468 |   |   | 10,290 |   |
| Gas                  in storage                                                                                                               |   |   | 152,249 |   |   | 236,995 |   |   | 126,397 |   |
| Gas                  costs recoverable through rate adjustments                                                                               |   |   | 694 |   |   | 8,608 |   |   | 3,767 |   |
| Regulatory                  assets of utility subsidiaries                                                                                    |   |   | 101,003 |   |   | 30,062 |   |   | 24,691 |   |
| Prepayments                  and other                                                                                                        |   |   | 70,970 |   |   | 70,887 |   |   | 19,255 |   |
| Assets                  of discontinued operations                                                                                            |   |   | 74,295 |   |   | 128,319 |   |   | 114,535 |   |
| **Total                  Current Assets**                                                                                                     |   |   | 872,149 |   |   | 1,026,949 |   |   | 724,414 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **OTHER                  ASSETS:**                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Prepaid                  pension costs                                                                                                        |   |   | 151,967 |   |   | 152,720 |   |   | 184,386 |   |
| Noncurrent                  regulatory assets of utility subsidiaries                                                                         |   |   | 324,336 |   |   | 322,163 |   |   | 287,935 |   |
| Derivative                  assets, at fair value - noncurrent                                                                                |   |   | 7,671 |   |   | 7,021 |   |   | 1,860 |   |
| Deferred                  charges and other                                                                                                   |   |   | 46,107 |   |   | 47,908 |   |   | 49,219 |   |
| **Total                  Other Assets**                                                                                                       |   |   | 530,081 |   |   | 529,812 |   |   | 523,400 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                             |   | $ | 3,543,738 |   | $ | 3,537,791 |   | $ | 3,202,020 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **Peoples                  Energy Corporation**                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   |  June                  30,  |   |   | September                  30, |   |   | June                  30, |   |
| *(In                  Thousands, Except Shares)*                                                                                              |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION:**                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Common                  Stockholders' Equity:                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Common                  stock, no par value -                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Authorized                  60,000,000 shares                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Issued                  38,669,574, 38,400,318 and                                                                                            |   |   |   |   |   |   |   |   |   |   |
| 38,341,662                  shares, respectively                                                                                              |   | $ | 418,677 |   | $ | 409,060 |   | $ | 402,269 |   |
| Treasury                  stock - 243,100 shares                                                                                              |   |   | (6,677 | ) |   | (6,677 | ) |   | (6,677 | ) |
| Retained                  earnings                                                                                                            |   |   | 486,769 |   |   | 546,237 |   |   | 573,470 |   |
| Accumulated                  other comprehensive loss                                                                                         |   |   | (67,973 | ) |   | (148,466 | ) |   | (89,344 | ) |
| **Total                  Common Stockholders' Equity**                                                                                        |   |   | 830,796 |   |   | 800,154 |   |   | 879,718 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Long-term                  debt                                                                                                               |   |   | 893,605 |   |   | 895,583 |   |   | 897,114 |   |
| **Total                  Capitalization**                                                                                                     |   |   | 1,724,401 |   |   | 1,695,737 |   |   | 1,776,832 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  LIABILITIES:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Commercial                  paper                                                                                                             |   |   | 171,399 |   |   | 8,148 |   |   | 15,200 |   |
| Accounts                  payable                                                                                                             |   |   | 198,517 |   |   | 236,212 |   |   | 163,539 |   |
| Regulatory                  liabilities of utility subsidiaries                                                                               |   |   | - |   |   | 198,550 |   |   | 5,705 |   |
| Dividends                  payable                                                                                                            |   |   | 20,943 |   |   | 20,791 |   |   | 20,764 |   |
| Customer                  deposits                                                                                                            |   |   | 36,634 |   |   | 29,803 |   |   | 30,103 |   |
| Customer                  credit balances                                                                                                     |   |   | 54,366 |   |   | 59,635 |   |   | 26,259 |   |
| Accrued                  taxes                                                                                                                |   |   | 10,599 |   |   | 26,096 |   |   | 65,399 |   |
| Gas                  deliverable to customers                                                                                                 |   |   | 64,950 |   |   | 56,129 |   |   | 46,286 |   |
| Derivative                  liabilities, at fair value - current                                                                              |   |   | 151,552 |   |   | 186,854 |   |   | 68,850 |   |
| Other                  accrued liabilities                                                                                                    |   |   | 34,124 |   |   | 54,370 |   |   | 42,491 |   |
| Gas                  charge settlement                                                                                                        |   |   | 10,969 |   |   | 13,332 |   |   | - |   |
| Gas                  costs refundable through rate adjustments                                                                                |   |   | 56,670 |   |   | 293 |   |   | 2,303 |   |
| Accrued                  interest                                                                                                             |   |   | 16,505 |   |   | 11,474 |   |   | 15,604 |   |
| Temporary                  LIFO liquidation credit                                                                                            |   |   | 68,538 |   |   | - |   |   | 68,563 |   |
| Deferred                  credit related to discontinued operations                                                                           |   |   | - |   |   | 2,201 |   |   | 2,201 |   |
| **Total                  Current Liabilities**                                                                                                |   |   | 895,766 |   |   | 903,888 |   |   | 573,267 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **DEFERRED                  CREDITS AND LONG-TERM LIABILITIES:**                                                                              |   |   |   |   |   |   |   |   |   |   |
| Deferred                  income taxes                                                                                                        |   |   | 464,878 |   |   | 446,382 |   |   | 399,691 |   |
| Investment                  tax credits                                                                                                       |   |   | 26,040 |   |   | 26,373 |   |   | 26,131 |   |
| Derivative                  liabilities, at fair value - noncurrent                                                                           |   |   | 30,257 |   |   | 68,895 |   |   | 47,797 |   |
| Environmental                                                                                                                                 |   |   | 284,100 |   |   | 282,411 |   |   | 246,998 |   |
| Pension                                                                                                                                       |   |   | 36,175 |   |   | 42,593 |   |   | 66,360 |   |
| Other                                                                                                                                         |   |   | 82,121 |   |   | 71,512 |   |   | 64,944 |   |
| **Total                  Deferred Credits and Other Liabilities**                                                                             |   |   | 923,571 |   |   | 938,166 |   |   | 851,921 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Capitalization and Liabilities**                                                                                     |   | $ | 3,543,738 |   | $ | 3,537,791 |   | $ | 3,202,020 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **Peoples                  Energy Corporation**                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                    |
| **(Unaudited)**                                                                                                                               |
|                                                                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                               |   | Nine                  Months Ended  |
|                                                                                                                                               |   | June                  30, |
| *(In                  Thousands)*                                                                                                             |   |   | 2006 |   |   | 2005 |   |
| **Operating                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Net                  income                                                                                                                   |   | $ | 3,578 |   | $ | 80,447 |   |
| Adjustments                  to reconcile net income to cash provided by operations:                                                          |   |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization                                                                                     |   |   | 92,737 |   |   | 87,594 |   |
| Deferred                  income taxes and investment tax credits—net                                                                   |   |   | (2,394 | ) |   | 17,921 |   |
| Change                  in undistributed earnings from equity investments                                                                     |   |   | 17,449 |   |   | 11,613 |   |
| Mark-to-market                  (gain) loss included in net income                                                                            |   |   | (2,504 | ) |   | 699 |   |
| Pension                  funding greater than expense                                                                                         |   |   | (5,665 | ) |   | (5,083 | ) |
| Other                  adjustments                                                                                                            |   |   | 8,624 |   |   | 24,407 |   |
| Net                  changes in:                                                                                                              |   |   |   |   |   |   |   |
| Receivables—net                                                                                                                         |   |   | (22,510 | ) |   | (97,696 | ) |
| Gas                  in storage                                                                                                               |   |   | 78,963 |   |   | 64,655 |   |
| Gas                  costs recoverable/refundable through rate adjustments                                                                    |   |   | 64,291 |   |   | 19,119 |   |
| Accounts                  payable                                                                                                             |   |   | (41,598 | ) |   | 17,979 |   |
| Gas                  deliverable to customers                                                                                                 |   |   | 8,821 |   |   | 10,363 |   |
| Other                  accrued liabilities                                                                                                    |   |   | (20,246 | ) |   | (18,972 | ) |
| Gas                  charge settlement                                                                                                        |   |   | (2,363 | ) |   | - |   |
| Accrued                  interest                                                                                                             |   |   | 5,031 |   |   | 4,297 |   |
| Accrued                  taxes                                                                                                                |   |   | (15,497 | ) |   | 39,342 |   |
| Temporary                  LIFO liquidation                                                                                                   |   |   | 68,538 |   |   | 68,563 |   |
| Prepayments                  and other                                                                                                        |   |   | (32,055 | ) |   | (47,284 | ) |
| **Net                  Cash Provided by Operating Activities**                                                                                |   |   | 203,200 |   |   | 277,964 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Investing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Capital                  spending                                                                                                             |   |   | (277,936 | ) |   | (113,371 | ) |
| Return                  of capital investments                                                                                                |   |   | 56,883 |   |   | 8,713 |   |
| Proceeds                  from sale of assets                                                                                                 |   |   | 2,564 |   |   | 1,191 |   |
| Short-term                  investments                                                                                                       |   |   | - |   |   | (35,625 | ) |
| Other                                                                                                                                         |   |   | 4,007 |   |   | 6,311 |   |
| **Net                  Cash Used in Investing Activities**                                                                                    |   |   | (214,482 | ) |   | (132,781 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Financing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Proceeds                  from overdraft facility                                                                                             |   |   | 3,903 |   |   | 3,563 |   |
| Issuance                  of commercial paper                                                                                                 |   |   | 163,251 |   |   | - |   |
| Retirement                  of commercial paper                                                                                               |   |   | - |   |   | (40,425 | ) |
| Issuance                  of long-term debt                                                                                                   |   |   | - |   |   | 48,047 |   |
| Retirement                  of long-term debt                                                                                                 |   |   | (1,978 | ) |   | (50,263 | ) |
| Proceeds                  from issuance of common stock                                                                                       |   |   | 7,286 |   |   | 12,615 |   |
| Dividends                  paid on common stock                                                                                               |   |   | (62,571 | ) |   | (61,509 | ) |
| Other                                                                                                                                         |   |   | (323 | ) |   | - |   |
| **Net                  Cash Provided by (Used in) Financing Activities**                                                                      |   |   | 109,568 |   |   | (87,972 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Net                  Increase in Cash and Cash Equivalents**                                                                                |   |   | 98,286 |   |   | 57,211 |   |
| **Cash                  and Cash Equivalents at Beginning of Period**                                                                         |   |   | 18,186 |   |   | 7,228 |   |
| **Cash                  and Cash Equivalents at End of Period**                                                                               |   | $ | 116,472 |   | $ | 64,439 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Supplemental                  information:**                                                                                                |   |   |   |   |   |   |   |
| Income                  taxes paid, net of refunds                                                                                            |   | $ | 35,772 |   | $ | 20,726 |   |
| Interest                  paid, net of amounts capitalized                                                                                    |   | $ | 37,166 |   | $ | 32,495 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **The                  Peoples Gas Light and Coke Company**                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF OPERATIONS**                                                                                    |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   | Three                  Months Ended  | Nine                  Months Ended |
|                                                                                                                                               |   | June                  30,  | June                  30, |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Revenues**                                                                                                                                  |   | $ | 190,587 |   | $ | 219,275 |   | $ | 1,498,275 |   | $ | 1,285,612 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses:**                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  costs                                                                                                                    |   |   | 91,416 |   |   | 114,628 |   |   | 1,003,470 |   |   | 790,783 |   |
| Gas                  charge settlement                                                                                                        |   |   | - |   |   | - |   |   | 103,030 |   |   | - |   |
| Operation                  and maintenance, excluding                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| restructuring                  and environmental costs                                                                                        |   |   | 58,257 |   |   | 52,900 |   |   | 192,353 |   |   | 176,749 |   |
| Restructuring                  costs                                                                                                          |   |   | - |   |   | (172 | ) |   | - |   |   | 8,295 |   |
| Environmental                  costs                                                                                                          |   |   | 4,719 |   |   | 4,161 |   |   | 28,345 |   |   | 26,105 |   |
| Depreciation                  and amortization                                                                                                |   |   | 14,570 |   |   | 11,414 |   |   | 42,233 |   |   | 42,073 |   |
| Taxes,                  other than income taxes                                                                                               |   |   | 23,131 |   |   | 25,266 |   |   | 149,767 |   |   | 135,249 |   |
| Losses                  (gains) on property sales                                                                                             |   |   | (135 | ) |   | 41 |   |   | (306 | ) |   | 163 |   |
| **Total                  Operating Expenses**                                                                                                 |   |   | 191,958 |   |   | 208,238 |   |   | 1,518,892 |   |   | 1,179,417 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income (Loss)**                                                                                                  |   |   | (1,371 | ) |   | 11,037 |   |   | (20,617 | ) |   | 106,195 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income                                                                                                                 |   |   | 1,954 |   |   | 1,379 |   |   | 3,950 |   |   | 2,989 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  expense                                                                                                                |   |   | 348 |   |   | 28 |   |   | 571 |   |   | 87 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                             |   |   | 6,298 |   |   | 5,990 |   |   | 19,568 |   |   | 18,053 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  (Loss) Before Income Taxes**                                                                                        |   |   | (6,063 | ) |   | 6,398 |   |   | (36,806 | ) |   | 91,044 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax expense (benefit)                                                                                                 |   |   | (2,689 | ) |   | 2,451 |   |   | (16,800 | ) |   | 34,189 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income (Loss)**                                                                                                        |   | $ | (3,374 | ) | $ | 3,947 |   | $ | (20,006 | ) | $ | 56,855 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **The                  Peoples Gas Light and Coke Company**                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   |  June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |    |
| **ASSETS**                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **CAPITAL                  INVESTMENTS:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Property,                  plant and equipment                                                                                                |   | $ | 2,313,750 |   | $ | 2,271,716 |   | $ | 2,294,310 |   |
| Less                  - Accumulated depreciation and amortization                                                                             |   |   | 936,494 |   |   | 904,200 |   |   | 934,718 |   |
| Net                  property, plant and equipment                                                                                            |   |   | 1,377,256 |   |   | 1,367,516 |   |   | 1,359,592 |   |
| Other                  investments                                                                                                            |   |   | 1,395 |   |   | 1,548 |   |   | 1,588 |   |
| **Total                  Capital Investments - Net**                                                                                          |   |   | 1,378,651 |   |   | 1,369,064 |   |   | 1,361,180 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  ASSETS:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                    |   |   | 75,270 |   |   | - |   |   | 46,250 |   |
| Short-term                  investments                                                                                                       |   |   | - |   |   | - |   |   | 19,875 |   |
| Deposits                  with broker or trustee                                                                                              |   |   | 3,021 |   |   | 38 |   |   | - |   |
| Receivables                  -                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Customers,                  net of reserve for uncollectible accounts                                                                         |   |   |   |   |   |   |   |   |   |   |
| of                  $45,556, $31,947 and $33,712, respectively                                                                                |   |   | 160,311 |   |   | 113,946 |   |   | 177,897 |   |
| Intercompany                  receivables                                                                                                     |   |   | 3,568 |   |   | 189,794 |   |   | 9,701 |   |
| Other                                                                                                                                         |   |   | 57 |   |   | 2 |   |   | 42 |   |
| Materials                  and supplies, at average cost                                                                                      |   |   | 9,238 |   |   | 9,238 |   |   | 9,086 |   |
| Gas                  in storage, at last-in, first-out cost                                                                                   |   |   | 58,086 |   |   | 106,242 |   |   | 41,602 |   |
| Gas                  costs recoverable through rate adjustments                                                                               |   |   | - |   |   | 6,889 |   |   | 3,559 |   |
| Regulatory                  assets                                                                                                            |   |   | 88,496 |   |   | 28,061 |   |   | 21,855 |   |
| Other                                                                                                                                         |   |   | 15,591 |   |   | 9,127 |   |   | 7,451 |   |
| **Total                  Current Assets**                                                                                                     |   |   | 413,638 |   |   | 463,337 |   |   | 337,318 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **OTHER                  ASSETS:**                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Prepaid                  pension costs                                                                                                        |   |   | 154,030 |   |   | 153,110 |   |   | 180,052 |   |
| Noncurrent                  regulatory assets                                                                                                 |   |   | 254,148 |   |   | 256,180 |   |   | 222,731 |   |
| Deferred                  charges and other                                                                                                   |   |   | 34,963 |   |   | 35,490 |   |   | 36,093 |   |
| **Total                  Other Assets**                                                                                                       |   |   | 443,141 |   |   | 444,780 |   |   | 438,876 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                             |   | $ | 2,235,430 |   | $ | 2,277,181 |   | $ | 2,137,374 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **The                  Peoples Gas Light and Coke Company**                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   |  June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| *(In                  Thousands, Except Shares)*                                                                                              |   |    |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION:**                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Common                  Stockholder's Equity:                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Common                  stock, without par value -                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Authorized                  40,000,000 shares                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Outstanding                  25,033,566, 24,817,566 and                                                                                       |   |   |   |   |   |   |   |   |   |   |
| 24,817,566                  shares, respectively                                                                                              |   | $ | 186,842 |   | $ | 165,307 |   | $ | 165,307 |   |
| Retained                  earnings                                                                                                            |   |   | 433,906 |   |   | 469,447 |   |   | 492,584 |   |
| Accumulated                  other comprehensive loss                                                                                         |   |   | (22,388 | ) |   | (21,482 | ) |   | (19,244 | ) |
| **Total                  Common Stockholder's Equity**                                                                                        |   |   | 598,360 |   |   | 613,272 |   |   | 638,647 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Long-term                  debt                                                                                                               |   |   | 502,000 |   |   | 502,000 |   |   | 502,000 |   |
| **Total                  Capitalization**                                                                                                     |   |   | 1,100,360 |   |   | 1,115,272 |   |   | 1,140,647 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  LIABILITIES:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Other                  short-term debt - intercompany                                                                                         |   |   | - |   |   | 360 |   |   | - |   |
| Accounts                  payable                                                                                                             |   |   | 92,269 |   |   | 98,069 |   |   | 79,921 |   |
| Intercompany                  payables                                                                                                        |   |   | 74,116 |   |   | 22,573 |   |   | 11,001 |   |
| Regulatory                  liabilities                                                                                                       |   |   | - |   |   | 166,745 |   |   | 4,475 |   |
| Customer                  deposits                                                                                                            |   |   | 33,495 |   |   | 27,314 |   |   | 27,697 |   |
| Customer                  credit balances                                                                                                     |   |   | 48,145 |   |   | 49,873 |   |   | 21,069 |   |
| Accrued                  taxes                                                                                                                |   |   | 24,873 |   |   | 24,089 |   |   | 48,854 |   |
| Gas                  deliverable to customers                                                                                                 |   |   | 60,074 |   |   | 51,456 |   |   | 42,530 |   |
| Other                  accrued liabilities                                                                                                    |   |   | 16,809 |   |   | 17,315 |   |   | 27,289 |   |
| Gas                  charge settlement                                                                                                        |   |   | 10,969 |   |   | 13,332 |   |   | - |   |
| Gas                  costs refundable through rate adjustments                                                                                |   |   | 47,704 |   |   | 29 |   |   | 908 |   |
| Accrued                  interest                                                                                                             |   |   | 5,669 |   |   | 5,559 |   |   | 5,232 |   |
| Dividends                  payable                                                                                                            |   |   | - |   |   | - |   |   | 9,900 |   |
| Temporary                  LIFO liquidation credit                                                                                            |   |   | 49,089 |   |   | - |   |   | 48,731 |   |
| **Total                  Current Liabilities**                                                                                                |   |   | 463,212 |   |   | 476,714 |   |   | 327,607 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **DEFERRED                  CREDITS AND LONG-TERM LIABILITIES:**                                                                              |   |   |   |   |   |   |
| Deferred                  income taxes                                                                                                        |   |   | 352,536 |   |   | 365,016 |   |   | 364,357 |   |
| Investment                  tax credits                                                                                                       |   |   | 23,200 |   |   | 23,514 |   |   | 23,306 |   |
| Environmental                                                                                                                                 |   |   | 215,900 |   |   | 217,611 |   |   | 182,698 |   |
| Pension                                                                                                                                       |   |   | 19,686 |   |   | 26,342 |   |   | 50,493 |   |
| Other                                                                                                                                         |   |   | 60,536 |   |   | 52,712 |   |   | 48,266 |   |
| **Total                  Deferred Credits and Other Liabilities**                                                                             |   |   | 671,858 |   |   | 685,195 |   |   | 669,120 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Capitalization and Liabilities**                                                                                     |   | $ | 2,235,430 |   | $ | 2,277,181 |   | $ | 2,137,374 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **The                  Peoples Gas Light and Coke Company**                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                    |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                               |   | Nine                  Months Ended |
|                                                                                                                                               |   | June                  30, |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |   |   |   |   |   |   |
| **Operating                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Net                  income (loss)                                                                                                            |   | $ | (20,006 | ) | $ | 56,855 |   |
| Adjustments                  to reconcile net income to cash provided by operations:                                                          |   |   |   |
| Depreciation                  and amortization                                                                                                |   |   | 45,608 |   |   | 45,669 |   |
| Deferred                  income taxes and investment tax credits—net                                                                   |   |   | (14,303 | ) |   | (5,632 | ) |
| Pension                  funding greater than expense                                                                                         |   |   | (7,576 | ) |   | (2,465 | ) |
| Other                  adjustments                                                                                                            |   |   | 10,442 |   |   | 25,782 |   |
| Net                  changes in:                                                                                                              |   |   |   |   |   |   |   |
| Receivables—net                                                                                                                         |   |   | (46,420 | ) |   | (65,421 | ) |
| Intercompany                  receivables                                                                                                     |   |   | 13,019 |   |   | (4,594 | ) |
| Gas                  in storage                                                                                                               |   |   | 48,156 |   |   | 65,673 |   |
| Gas                  costs recoverable/refundable through rate adjustments                                                                    |   |   | 54,564 |   |   | 15,270 |   |
| Accounts                  payable                                                                                                             |   |   | (10,633 | ) |   | 30,593 |   |
| Intercompany                  payables                                                                                                        |   |   | (12,350 | ) |   | (21,200 | ) |
| Gas                  deliverable to customers                                                                                                 |   |   | 8,618 |   |   | 10,066 |   |
| Other                  accrued liabilities                                                                                                    |   |   | (506 | ) |   | (36,361 | ) |
| Gas                  charge settlement                                                                                                        |   |   | (2,363 | ) |   | - |   |
| Accrued                  interest                                                                                                             |   |   | 110 |   |   | (300 | ) |
| Accrued                  taxes                                                                                                                |   |   | 784 |   |   | 26,311 |   |
| Temporary                  LIFO liquidation                                                                                                   |   |   | 49,089 |   |   | 48,731 |   |
| Other                                                                                                                                         |   |   | 3,601 |   |   | (22,867 | ) |
| **Net                  Cash Provided by Operating Activities**                                                                                |   |   | 119,834 |   |   | 166,110 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Investing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Capital                  spending                                                                                                             |   |   | (56,330 | ) |   | (48,819 | ) |
| Short-term                  investments                                                                                                       |   |   | - |   |   | (19,875 | ) |
| Proceeds                  from sale of assets                                                                                                 |   |   | 1,350 |   |   | - |   |
| Other                                                                                                                                         |   |   | (56 | ) |   | 2,800 |   |
| **Net                  Cash Used in Investing Activities**                                                                                    |   |   | (55,036 | ) |   | (65,894 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Financing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Proceeds                  from overdraft facility                                                                                             |   |   | 4,833 |   |   | 4,781 |   |
| Retirement                  short-term-debt intercompany                                                                                      |   |   | (360 | ) |   | - |   |
| Retirement                  of commercial paper                                                                                               |   |   | - |   |   | (31,000 | ) |
| Issuance                  of long-term debt                                                                                                   |   |   | - |   |   | 48,047 |   |
| Retirement                  of long-term debt                                                                                                 |   |   | - |   |   | (50,000 | ) |
| Dividends                  paid on common stock                                                                                               |   |   | (15,400 | ) |   | (25,800 | ) |
| Proceeds                  from issuance of common stock                                                                                       |   |   | 21,535 |   |   | - |   |
| Other                                                                                                                                         |   |   | (136 | ) |   | - |   |
| **Net                  Cash Provided by (Used in) Financing Activities**                                                                      |   |   | 10,472 |   |   | (53,972 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Net                  Increase in Cash and Cash Equivalents**                                                                                |   |   | 75,270 |   |   | 46,244 |   |
| **Cash                  and Cash Equivalents at Beginning of Period**                                                                         |   |   | - |   |   | 6 |   |
| **Cash                  and Cash Equivalents at End of Period**                                                                               |   | $ | 75,270 |   | $ | 46,250 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Supplemental                  information:**                                                                                                |   |   |   |   |   |   |   |
| Income                  taxes paid, net of refunds                                                                                            |   | $ | 2,944 |   | $ | 21,512 |   |
| Interest                  paid, net of amounts capitalized                                                                                    |   | $ | 18,020 |   | $ | 17,153 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **North                  Shore Gas Company**                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF OPERATIONS**                                                                                    |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |  Three                  Months Ended | Nine                  Months Ended |
|                                                                                                                                          |   | June                  30, | June                  30, |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Revenues**                                                                                                                                  |   | $ | 33,239 |   | $ | 38,957 |   | $ | 275,897 |   | $ | 234,201 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses:**                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  costs                                                                                                                    |   |   | 19,466 |   |   | 24,200 |   |   | 208,058 |   |   | 165,825 |   |
| Gas                  charge settlement                                                                                                        |   |   | - |   |   | - |   |   | 4,300 |   |   | - |   |
| Operation                  and maintenance, excluding                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| restructuring                  and environmental costs                                                                                        |   |   | 9,223 |   |   | 8,092 |   |   | 27,922 |   |   | 25,170 |   |
| Restructuring                  costs                                                                                                          |   |   | - |   |   | 6 |   |   | - |   |   | 568 |   |
| Environmental                  costs                                                                                                          |   |   | 201 |   |   | 438 |   |   | 1,904 |   |   | 1,622 |   |
| Depreciation                                                                                                                                  |   |   | 1,441 |   |   | 816 |   |   | 4,247 |   |   | 4,266 |   |
| Taxes,                  other than income taxes                                                                                               |   |   | 2,444 |   |   | 2,804 |   |   | 14,517 |   |   | 14,449 |   |
| **Total                  Operating Expenses**                                                                                                 |   |   | 32,775 |   |   | 36,356 |   |   | 260,948 |   |   | 211,900 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income**                                                                                                         |   |   | 464 |   |   | 2,601 |   |   | 14,949 |   |   | 22,301 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income                                                                                                                 |   |   | 596 |   |   | 385 |   |   | 847 |   |   | 594 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  expense                                                                                                                |   |   | 65 |   |   | 24 |   |   | 123 |   |   | 91 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                             |   |   | 944 |   |   | 912 |   |   | 2,894 |   |   | 2,785 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  Before Income Taxes**                                                                                               |   |   | 51 |   |   | 2,050 |   |   | 12,779 |   |   | 20,019 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                                                                                                           |   |   | 71 |   |   | 855 |   |   | 4,628 |   |   | 7,606 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income (Loss)**                                                                                                        |   | $ | (20 | ) | $ | 1,195 |   | $ | 8,151 |   | $ | 12,413 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **North                  Shore Gas Company**                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   |  June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| **ASSETS**                                                                                                                                    |   |    |
| **CAPITAL                  INVESTMENTS:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Property,                  plant and equipment                                                                                                |   | $ | 368,228 |   | $ | 362,912 |   | $ | 361,018 |   |
| Less                  - Accumulated depreciation                                                                                              |   |   | 147,700 |   |   | 144,504 |   |   | 145,113 |   |
| **Net                  property, plant and equipment**                                                                                        |   |   | 220,528 |   |   | 218,408 |   |   | 215,905 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  ASSETS:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                    |   |   | 34,470 |   |   | 10,545 |   |   | 15,635 |   |
| Deposits                  with broker or trustee                                                                                              |   |   | 655 |   |   | - |   |   | - |   |
| Short-term                  investments                                                                                                       |   |   | - |   |   | - |   |   | 15,750 |   |
| Receivables                  -                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Customers,                  net of reserve for uncollectible                                                                                  |   |   |   |   |   |   |   |   |   |   |
| accounts                  of $2,463, $1,455 and $1,533, respectively                                                                          |   |   | 18,202 |   |   | 14,209 |   |   | 19,974 |   |
| Intercompany                  receivables                                                                                                     |   |   | 193 |   |   | 39,815 |   |   | 1,900 |   |
| Materials                  and supplies, at average cost                                                                                      |   |   | 1,145 |   |   | 1,230 |   |   | 1,204 |   |
| Gas                  in storage, at last-in, first-out cost                                                                                   |   |   | 6,583 |   |   | 14,231 |   |   | 5,495 |   |
| Gas                  costs recoverable through rate adjustments                                                                               |   |   | 694 |   |   | 1,719 |   |   | 208 |   |
| Regulatory                  assets                                                                                                            |   |   | 12,507 |   |   | 2,001 |   |   | 2,836 |   |
| Other                                                                                                                                         |   |   | 541 |   |   | 371 |   |   | 572 |   |
| **Total                  Current Assets**                                                                                                     |   |   | 74,990 |   |   | 84,121 |   |   | 63,574 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **OTHER                  ASSETS:**                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Prepaid                  pension costs                                                                                                        |   |   | - |   |   | - |   |   | 2,148 |   |
| Noncurrent                  regulatory assets                                                                                                 |   |   | 70,189 |   |   | 65,983 |   |   | 65,204 |   |
| Deferred                  charges and other                                                                                                   |   |   | 2,631 |   |   | 2,677 |   |   | 2,800 |   |
| **Total                  Other Assets**                                                                                                       |   |   | 72,820 |   |   | 68,660 |   |   | 70,152 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                             |   | $ | 368,338 |   | $ | 371,189 |   | $ | 349,631 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **North                  Shore Gas Company**                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                              |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   | June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| *(In                  Thousands, Except Shares)*                                                                                              |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                           |   |   |   |   |   |   |   |   |   |   |
| **CAPITALIZATION:**                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Common                  Stockholder's Equity:                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Common                  stock, without par value -                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Authorized                  5,000,000 shares                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| Outstanding                  3,625,887 shares                                                                                                 |   | $ | 24,757 |   | $ | 24,757 |   | $ | 24,757 |   |
| Retained                  earnings                                                                                                            |   |   | 77,706 |   |   | 80,555 |   |   | 84,271 |   |
| Accumulated                  other comprehensive loss                                                                                         |   |   | (2,359 | ) |   | (2,376 | ) |   | (2,027 | ) |
| **Total                  Common Stockholder's Equity**                                                                                        |   |   | 100,104 |   |   | 102,936 |   |   | 107,001 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Long-term                  debt                                                                                                               |   |   | 69,250 |   |   | 69,250 |   |   | 69,250 |   |
| **Total                  Capitalization**                                                                                                     |   |   | 169,354 |   |   | 172,186 |   |   | 176,251 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **CURRENT                  LIABILITIES:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Accounts                  payable                                                                                                             |   |   | 13,737 |   |   | 21,879 |   |   | 13,661 |   |
| Intercompany                  payables                                                                                                        |   |   | 16,011 |   |   | 2,722 |   |   | 2,333 |   |
| Regulatory                  liabilities                                                                                                       |   |   | - |   |   | 32,485 |   |   | 1,231 |   |
| Customer                  deposits                                                                                                            |   |   | 2,946 |   |   | 2,489 |   |   | 2,406 |   |
| Customer                  credit balances                                                                                                     |   |   | 5,923 |   |   | 8,761 |   |   | 4,106 |   |
| Accrued                  taxes                                                                                                                |   |   | 993 |   |   | 2,904 |   |   | 2,649 |   |
| Gas                  deliverable to customers                                                                                                 |   |   | 4,876 |   |   | 4,673 |   |   | 3,756 |   |
| Other                  accrued liabilities                                                                                                    |   |   | 2,908 |   |   | 3,504 |   |   | 1,335 |   |
| Gas                  costs refundable through rate adjustments                                                                                |   |   | 8,965 |   |   | 264 |   |   | 1,395 |   |
| Accrued                  interest                                                                                                             |   |   | 487 |   |   | 1,284 |   |   | 452 |   |
| Dividends                  payable                                                                                                            |   |   | - |   |   | - |   |   | 2,600 |   |
| Temporary                  LIFO liquidation credit                                                                                            |   |   | 19,449 |   |   | - |   |   | 19,831 |   |
| **Total                  Current Liabilities**                                                                                                |   |   | 76,295 |   |   | 80,965 |   |   | 55,755 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **DEFERRED                  CREDITS AND LONG-TERM LIABILITIES:**                                                                              |   |   |   |   |   |   |
| Deferred                  income taxes                                                                                                        |   |   | 39,209 |   |   | 39,061 |   |   | 38,696 |   |
| Investment                  tax credits                                                                                                       |   |   | 2,839 |   |   | 2,859 |   |   | 2,824 |   |
| Environmental                                                                                                                                 |   |   | 68,200 |   |   | 64,800 |   |   | 64,300 |   |
| Pension                                                                                                                                       |   |   | 3,949 |   |   | 3,293 |   |   | 4,207 |   |
| Other                                                                                                                                         |   |   | 8,492 |   |   | 8,025 |   |   | 7,598 |   |
| **Total                  Deferred Credits and Other Liabilities**                                                                             |   |   | 122,689 |   |   | 118,038 |   |   | 117,625 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Total                  Capitalization and Liabilities**                                                                                     |   | $ | 368,338 |   | $ | 371,189 |   | $ | 349,631 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

| **North                  Shore Gas Company**                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                    |
| (Unaudited)                                                                                                                                   |
|                                                                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                               |   | Nine                  Months Ended |
|                                                                                                                                               |   | June                  30, |
|                                                                                                                                          |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands)*                                                                                                             |   |   |   |   |   |   |   |
| **Operating                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Net                  income                                                                                                                   |   | $ | 8,151 |   | $ | 12,413 |   |
| Adjustments                  to reconcile net income to cash provided by operations:                                                          |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                  |   |   | 4,916 |   |   | 4,916 |   |
| Deferred                  income taxes and investment tax credits—net                                                                   |   |   | (390 | ) |   | 5,363 |   |
| Pension                  funding less (greater) than expense                                                                                  |   |   | 656 |   |   | (7,664 | ) |
| Other                  adjustments                                                                                                            |   |   | 1,386 |   |   | (1,532 | ) |
| Net                  changes in:                                                                                                              |   |   |   |   |   |   |   |
| Receivables—net                                                                                                                         |   |   | (3,993 | ) |   | (6,370 | ) |
| Intercompany                  receivables                                                                                                     |   |   | 5,508 |   |   | 14,239 |   |
| Gas                  in storage                                                                                                               |   |   | 7,648 |   |   | 9,426 |   |
| Gas                  costs recoverable/refundable through rate adjustments                                                                    |   |   | 9,726 |   |   | 3,848 |   |
| Accounts                  payable                                                                                                             |   |   | (8,349 | ) |   | 4,916 |   |
| Intercompany                  payables                                                                                                        |   |   | 2,277 |   |   | (3,888 | ) |
| Gas                  deliverable to customers                                                                                                 |   |   | 203 |   |   | 296 |   |
| Other                  accrued liabilities                                                                                                    |   |   | (596 | ) |   | (4,804 | ) |
| Accrued                  interest                                                                                                             |   |   | (797 | ) |   | (818 | ) |
| Accrued                  taxes                                                                                                                |   |   | (1,911 | ) |   | 970 |   |
| Temporary                  LIFO liquidations                                                                                                  |   |   | 19,449 |   |   | 19,831 |   |
| Other                                                                                                                                         |   |   | (1,982 | ) |   | (4,323 | ) |
| **Net                  Cash Provided by Operating Activities**                                                                                |   |   | 41,902 |   |   | 46,819 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Investing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Capital                  spending                                                                                                             |   |   | (7,034 | ) |   | (5,680 | ) |
| Short-term                  investments                                                                                                       |   |   | 360 |   |   | (15,750 | ) |
| Other                                                                                                                                         |   |   | (510 | ) |   | (2 | ) |
| **Net                  Cash Used in Investing Activities**                                                                                    |   |   | (7,184 | ) |   | (21,432 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Financing                  Activities:**                                                                                                    |   |   |   |   |   |   |   |
| Proceeds                  from (payment of) overdraft facility                                                                                |   |   | 207 |   |   | (64 | ) |
| Retirement                  short-term debt- intercompany                                                                                     |   |   | - |   |   | (3,810 | ) |
| Retirement                  of long-term debt                                                                                                 |   |   | - |   |   | (80 | ) |
| Dividends                  paid on common stock                                                                                               |   |   | (11,000 | ) |   | (5,800 | ) |
| **Net                  Cash Used in Financing Activities**                                                                                    |   |   | (10,793 | ) |   | (9,754 | ) |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Net                  Increase in Cash and Cash Equivalents**                                                                                |   |   | 23,925 |   |   | 15,633 |   |
| **Cash                  and Cash Equivalents at Beginning of Period**                                                                         |   |   | 10,545 |   |   | 2 |   |
| **Cash                  and Cash Equivalents at End of Period**                                                                               |   | $ | 34,470 |   | $ | 15,635 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| **Supplemental                  information:**                                                                                                |   |   |   |   |   |   |   |
| Income                  taxes paid, net of refunds                                                                                            |   | $ | 5,101 |   | $ | 3,536 |   |
| Interest                  paid, net of amounts capitalized                                                                                    |   | $ | 3,509 |   | $ | 3,503 |   |
|                                                                                                                                          |
| *The                  Notes to Consolidated Financial Statements are an integral part                  of these                  statements.* |

----

**1:      SUBSEQUENT EVENT - MERGER**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**2:      BASIS OF PRESENTATION**

**General**

**Discontinued      Operations**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                                           |   |   | June                  30,  |   |   | September                  30, |   |   | June                  30, |   |
|-----------------------------------------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------|--------|--------|---------------------------|--------|
|                                                      |   |   | 2006                            |   |   | 2005                           |   |   | 2005                      |   |
| *(In                  Thousands)*                         |   |   |                            |   |   |                           |   |   |                      |   |
| Investments                  in unconsolidated affiliates |   | $      | 63,870                          |   | $      | 115,168                        |   | $      | 102,274                   |   |
| Other                  investments                        |   |   | 10,388                          |   |   | 12,245                         |   |   | 11,355                    |   |
| Property,                  plant and equipment, net       |   |   | 37                              |   |   | 906                            |   |   | 906                       |   |
| Total                  assets                             |   | $      | 74,295                          |   | $      | 128,319                        |   | $      | 114,535                   |   |
|                                                      |   |   |                            |   |   |                           |   |   |                      |   |
| Deferred                  credit                          |   | $      | -                               |   | $      | 2,201                          |   | $      | 2,201                     |   |

|                                                       |   | Three                  Months Ended  | Nine                  Months Ended |
|-------------------------------------------------------|--------|-------------------------------------------|------------------------------------|
|                                                       |   | June                  30,            | June                  30,          |
|                                                  |   |                                      | 2006                               |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| *(In                  Thousands)*                     |   |                                      |                               |   |   |   |   |   |   |   |   |   |   |
| Operation                  and maintenance            |   | $                                         | (1,579                             | ) | $ | (457 | ) | $ | (2,997 | ) | $ | (1,482 | ) |
| Taxes,                  other than income taxes       |   |                                      | (35                                | ) |   | (26 | ) |   | (43 | ) |   | (37 | ) |
| Gains                  (Losses) on property sales     |   |                                      | 4,139                              |   |   | - |   |   | 2,000 |   |   | (143 | ) |
| Equity                  investment income             |   |                                      | 3,455                              |   |   | 3,744 |   |   | 4,407 |   |   | 6,175 |   |
| Income                  Before Income Taxes           |   |                                      | 5,980                              |   |   | 3,261 |   |   | 3,367 |   |   | 4,513 |   |
| Income                  tax expense                   |   |                                      | 2,377                              |   |   | 1,296 |   |   | 1,338 |   |   | 1,794 |   |
| Income                  from Discontinued Operations, |   |                                      |                               |   |   |   |   |   |   |   |   |   |   |
| net                  of taxes                         |   | $                                         | 3,603                              |   | $ | 1,965 |   | $ | 2,029 |   | $ | 2,719 |   |

**Change      In Segment Reporting**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                                                |   |  **Fiscal                    2006** | **Fiscal                    2005** |
|----------------------------------------------------------------|--------|------------------------------------------|------------------------------------|
| *(In                    Thousands, except per share amounts)*  |   |                                     | Jun.                    30,        |   |   | Mar.                    31, |   |   | Dec.                    31, |   |   | Sep.                    30, |   |   | Jun.                    30, |   |   | Mar.                    31, |   |   | Dec.                    31, |   |
| For                    the Quarter Ended                       |   |                                     | 2006                               |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |   | 2005 |   |   | 2005 |   |   | 2004 |   |
| Operating                    Income (Loss):                    |   |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                    Distribution                            |   | $                                        | 2,298                              |   | $ | 42,921 |   | $ | (40,954 | ) | $ | (6,778 | ) | $ | 17,251 |   | $ | 77,187 |   | $ | 49,674 |   |
| Oil                    and Gas Production                      |   |                                     | 5,691                              |   |   | 8,801 |   |   | 11,394 |   |   | (2,769 | ) |   | 5,854 |   |   | 5,177 |   |   | 8,591 |   |
| Energy                    Marketing                            |   |                                     | (7,823                             | ) |   | 10,324 |   |   | 9,764 |   |   | (77 | ) |   | 1,329 |   |   | 9,857 |   |   | 2,364 |   |
| Energy                    Assets                               |   |                                     | (164                               | ) |   | 1,450 |   |   | 1,692 |   |   | 502 |   |   | (311 | ) |   | 566 |   |   | 972 |   |
| Corporate                    and Other                         |   |                                     | (6,361                             | ) |   | (4,064 | ) |   | (4,408 | ) |   | 2,775 |   |   | (4,265 | ) |   | (4,267 | ) |   | (14,215 | ) |
| Total                    Operating Income (Loss)               |   | $                                        | (6,359                             | ) | $ | 59,432 |   | $ | (22,512 | ) | $ | (6,347 | ) | $ | 19,858 |   | $ | 88,520 |   | $ | 47,386 |   |
|                                                           |   |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                    (loss) from continuing operations    |   |                                     | (13,714                            | ) |   | 33,591 |   |   | (18,325 | ) |   | (10,880 | ) |   | 4,834 |   |   | 49,831 |   |   | 23,062 |   |
| Income                    (loss) from discontinued operations, |   |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                    of taxes                                |   |                                     | 3,603                              |   |   | (421 | ) |   | (1,156 | ) |   | 8,566 |   |   | 1,965 |   |   | 1,341 |   |   | (586 | ) |
| Net                    Income (Loss)                           |   | $                                        | (10,111                            | ) | $ | 33,170 |   | $ | (19,481 | ) | $ | (2,314 | ) | $ | 6,799 |   | $ | 51,172 |   | $ | 22,476 |   |
|                                                           |   |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                    Diluted Share:                          |   |                                     |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                    (loss) from continuing operations    |   | $                                        | (0.35                              | ) | $ | 0.87 |   | $ | (0.48 | ) | $ | (0.28 | ) | $ | 0.13 |   | $ | 1.31 |   | $ | 0.61 |   |
| Income                    (loss) from discontinued operations  |   |                                     | 0.09                               |   |   | (0.01 | ) |   | (0.03 | ) |   | 0.22 |   |   | 0.05 |   |   | 0.03 |   |   | (0.02 | ) |
| Net                    Income (Loss)                           |   | $                                        | (0.26                              | ) | $ | 0.86 |   | $ | (0.51 | ) | $ | (0.06 | ) | $ | 0.18 |   | $ | 1.34 |   | $ | 0.59 |   |

**3:      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Gas      Charge Settlement**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                                                                                                                                             |   |   | Total   |   |   | Peoples                  Gas |   |   | North                  Shore Gas |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|------------------------------|--------|--------|----------------------------------|--------|
| *(Dollars                  in Thousands)*                                                                                                                   |   |   |    |   |   |                         |   |   |                             |   |
| Refund                                                                                                                                                      |   | $      | 100,000 |   | $      | 96,000                       |   | $      | 4,000                            |   |
| Payment                  to Illinois Attorney General and City of Chicago                                                                                   |   |   | 5,000   |   |   | 4,800                        |   |   | 200                              |   |
| Hub                  fiscal 2005 revenues                                                                                                                   |   |   | 10,662  |   |   | 10,662                       |   |   | -                                |   |
| Bad                  debt expense                                                                                                                           |   |   | 5,000   |   |   | 4,900                        |   |   | 100                              |   |
| Amounts                  recognized prior to fiscal 2006                                                                                                    |   |   | (13,332 | )      |   | (13,332                      | )      |   | -                                |   |
| Gas                  charge settlement per consolidated statements of income                                                                                |   |   |    |   |   |                         |   |   |                             |   |
| for                  the nine months ended June 30, 2006                                                                                                    |   | $      | 107,330 |   | $      | 103,030                      |   | $      | 4,300                            |   |
| Add:                                                                                                                                                        |   |   |    |   |   |                         |   |   |                             |   |
| Amounts                  recognized prior to fiscal 2006                                                                                                    |   |   | 13,332  |   |   | 13,332                       |   |   | -                                |   |
| Interest                  on Hub fiscal 2005 revenues refundable                                                                                            |   |   | 307     |   |   | 307                          |   |   | -                                |   |
| Less:                                                                                                                                                       |   |   |    |   |   |                         |   |   |                             |   |
| Addition                  to reserve for uncollectible accounts                                                                                             |   |   | 5,000   |   |   | 4,900                        |   |   | 100                              |   |
| Less                  payments in third quarter of fiscal 2006:                                                                                             |   |   |    |   |   |                         |   |   |                             |   |
| Refund                  credited to customer accounts                                                                                                       |   |   | 100,000 |   |   | 96,000                       |   |   | 4,000                            |   |
| Payment                  to Illinois Attorney General and City of Chicago                                                                                   |   |   | 5,000   |   |   | 4,800                        |   |   | 200                              |   |
| Gas                  charge settlement liability per consolidated balance                  sheets                                                           |   |   |    |   |   |                         |   |   |                             |   |
| at                  June 30, 2006 (1)                                                                                                                       |   | $      | 10,969  |   | $      | 10,969                       |   | $      | -                                |   |
|                                                                                                                                                        |   |   |    |   |   |                         |   |   |                             |   |
|                                                                                                                                                        |   |   |    |   |   |                         |   |   |                             |   |
| (1)                  Represents 2005 Hub Revenue and related interest that will be refunded                  to                  customers pending close of |
| the                  Commission's review of 2005 gas charge                  reconciliation.                                                                |

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**Gas      in Storage**

**Derivative      Instruments and Hedging Activities**

**Cash      Flow Hedges. **

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                                                             |   |   | Interest                   |   |   |                       |   |   | Partnership  |   |   |    |   |
|-----------------------------------------------------------------------------|--------|--------|----------------------------|--------|--------|----------------------------|--------|--------|--------------|--------|--------|---------|--------|
| **Periods                  ended June 30, 2006**                            |   |   | Commodities                |   |   | Rate                       |   |   | Transactions |   |   | Total   |   |
| *(In                  Thousands)*                                           |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| Portion                  of after-tax gains on hedging instruments          |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| determined                  to be ineffective and included in net income    |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| -                  three months ended                                       |   | $      | 247                        |   | $      | -                          |   |   | N/A          |   | $      | 247     |   |
| -                  nine months ended                                        |   | $      | 3,844                      |   | $      | -                          |   |   | N/A          |   | $      | 3,844   |   |
|                                                                        |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| Accumulated                  other comprehensive income (loss) after tax at |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| June                  30, 2006                                              |   | $      | (38,632                    | )      | $      | (448                       | )      | $      | (3,108       | )      | $      | (42,188 | )      |
|                                                                        |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| Portion                  of accumulated other comprehensive income (loss)   |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| expected                  to be reclassified to earnings during the next    |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| 12                  months based on prices at June 30, 2006                 |   | $      | (27,755                    | )      | $      | (65                        | )      |   | N/A          |   | $      | (27,820 | )      |
| Maximum                  term                                               |   |   | 81                  months |   |   | 82                  months |   |   |         |   |   |    |   |
|                                                                        |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| **Periods                  ended June 30, 2005**                            |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| *(In                  Thousands)*                                           |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| Portion                  of after-tax gains (losses) on hedging instruments |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| determined                  to be ineffective and included in net income    |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| -                  three months ended                                       |   | $      | (659                       | )      | $      | -                          |   |   | N/A          |   | $      | (659    | )      |
| -                  nine months ended                                        |   | $      | (520                       | )      | $      | -                          |   |   | N/A          |   | $      | (520    | )      |
|                                                                        |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| After-tax                  gains (losses) resulting from discontinuance of  |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| cash                  flow hedges                                           |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| -                  three months ended                                       |   | $      | (31                        | )      | $      | -                          |   |   | N/A          |   | $      | (31     | )      |
| -                  nine months ended                                        |   | $      | (31                        | )      | $      | -                          |   |   | N/A          |   | $      | (31     | )      |
|                                                                        |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| Accumulated                  other comprehensive income (loss) after tax at |   |   |                       |   |   |                       |   |   |         |   |   |    |   |
| June                  30, 2005                                              |   | $      | (62,478                    | )      | $      | (513                       | )      | $      | (4,846       | )      | $      | (67,837 | )      |

**Fair      Value Hedges.**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

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

|                                                                   |   |   | June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|-------------------------------------------------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|--------|---------------------------|--------|
| *(In                  Thousands)*                                 |   |   | 2006                      |   |   | 2005                           |   |   | 2005                      |   |
| Peoples                  Gas mark-to-market asset (liability)     |   | $      | (58,895                   | )      | $      | 172,549                        |   | $      | (590                      | )      |
| North                  Shore Gas mark-to-market asset (liability) |   |   | (10,319                   | )      |   | 33,754                         |   |   | 275                       |   |
| Other                  mark-to-market asset (liability)           |   |   | (4,644                    | )      |   | (2,027                         | )      |   | (907                      | )      |
| **Total**                                                         |   | $      | (73,858                   | )      | $      | 204,276                        |   | $      | (1,222                    | )      |

----

**Notes            to Consolidated Financial Statements            (Unaudited)**

**Derivative      Summary.**

|                                                                          |   | Derivative                  Type |
|--------------------------------------------------------------------------|--------|----------------------------------|
|                                                                          |   | Cash                  Flow       | Fair                  Value |   |   |   |   |   |   |
|                                                                          |   | Hedges                           | Hedges | Mark-to-Market |
| Fiscal                  Quarter *(In                  Thousands)*        |   |                             | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Value                  of contracts outstanding at April 1               |   | $                                | (91,501 | ) | $ | (120,980 | ) | $ | (1,243 | ) | $ | (1,005 | ) | $ | (66,427 | ) | $ | 22,016 |   |
| Loss                  on contracts discontinued as cash flow hedges      |   |                             | - |   |   | 590 |   |   | - |   |   | - |   |   | - |   |   | (590 | ) |
| Less:                  Gain (loss) on contracts realized or otherwise    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| settled                  during the period                               |   |                             | (14,084 | ) |   | (12,596 | ) |   | 713 |   |   | (130 | ) |   | (36,908 | ) |   | 1,900 |   |
| Plus:                  Unrealized gain (loss) on new contracts entered   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| into                  during the period and outstanding at end of period | (2,180 | )                                |   | (24 | ) |   | 1,023 |   |   | (4 | ) |   | (11,431 | ) |   | 1,910 |   |
| Plus:                  Other unrealized gain (loss), primarily changes   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in                  market prices on contracts outstanding at the        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| beginning                  of the period                                 |   |                             | 12,547 |   |   | 2,068 |   |   | 895 |   |   | 1,942 |   |   | (32,908 | ) |   | (22,658 | ) |
| **Value                  of contracts outstanding at June 30**           |   | $                                | (67,050 | ) | $ | (105,750 | ) | $ | (38 | ) | $ | 1,063 |   | $ | (73,858 | ) | $ | (1,222 | ) |
|                                                                     |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   | Derivative                  Type |
|                                                                          |   | Cash                  Flow       | Fair                  Value |   |   |   |   |   |   |
|                                                                          |   | Hedges                           | Hedges | Mark-to-Market |
| Fiscal                  Year-to-Date*(In Thousands)*                     |   |                             | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Value                  of contracts outstanding at October 1             |   | $                                | (202,904 | ) | $ | (89,306 | ) | $ | (21,457 | ) | $ | 908 |   | $ | 204,276 |   | $ | 27,678 |   |
| Loss                  on contracts discontinued as cash flow hedges      |   |                             | - |   |   | 590 |   |   | - |   |   | - |   |   | - |   |   | (590 | ) |
| Less:                  Gain (loss) on contracts realized or otherwise    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| settled                  during the period                               |   |                             | (76,734 | ) |   | (34,731 | ) |   | 5,086 |   |   | 260 |   |   | 16,652 |   |   | 296 |   |
| Plus:                  Unrealized gain (loss) on new contracts entered   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| into                  during the period and outstanding at end of period | (3,888 | )                                |   | (6,068 | ) |   | 2,607 |   |   | 199 |   |   | (62,063 | ) |   | 4,232 |   |
| Plus:                  Other unrealized gain (loss), primarily changes   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in                  market prices on contracts outstanding at the        |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| beginning                  of the period                                 |   |                             | 63,008 |   |   | (45,697 | ) |   | 23,898 |   |   | 216 |   |   | (199,419 | ) |   | (32,246 | ) |
| **Value                  of contracts outstanding at June 30**           |   | $                                | (67,050 | ) | $ | (105,750 | ) | $ | (38 | ) | $ | 1,063 |   | $ | (73,858 | ) | $ | (1,222 | ) |

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

| *(Fair                  Value amounts in thousands)*                     |
|--------------------------------------------------------------------------|
| ***Futures/Forwards***                                                   |   |   | ***Maturity*** |   |   | ***Volumes******(Mmbtus*** | ***)*** |   | ***Fair                  Value*** |   |
| *Natural                  Gas*                                           |   |   | Less                  than 1 Year |   |   | 33,596,691 |   | $ | (5,688 | ) |
| *Natural                  Gas*                                           |   |   | 1                  to 3 Years |   |   | 1,748,546 |   |   | (221 | ) |
|                                                                     |   |   |   |   |   | **35,345,237** |   | **$** | **(5,909** | **)** |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Options***                                                            |   |   | ***Maturity*** |   |   | ***Volumes******(Mmbtus*** | ***)*** |   | ***Fair                  Value*** |   |
| *Natural                  Gas*                                           |   |   | Less                  than 1 Year |   |   | 30,134,000 |   | $ | (25,003 | ) |
| *Natural                  Gas*                                           |   |   | 1                  to 3 Years |   |   | 7,372,000 |   |   | (2,596 | ) |
|                                                                     |   |   |   |   |   | **37,506,000** |   | **$** | **(27,599** | **)** |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Swaps***                                                              |   |   | ***Maturity*** |   |   | ***Volumes******(Mmbtus*** | ***)*** |   | ***Fair                  Value*** |   |
| *Natural                  Gas*                                           |   |   | Less                  than 1 Year |   |   | 117,449,152 |   | $ | (77,154 | ) |
| *Natural                  Gas*                                           |   |   | 1                  to 3 Years |   |   | 27,312,351 |   |   | (14,261 | ) |
| *Natural                  Gas*                                           |   |   | 4                  to 5 Years |   |   | 3,861,982 |   |   | (248 | ) |
| *Natural                  Gas*                                           |   |   | More                  than 5 years |   |   | 4,730,000 |   |   | (916 | ) |
|                                                                     |   |   |   |   |   | **153,353,485** |   | **$** | **(92,579** | **)** |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Total                  (Natural Gas)***                               |   |   | ***Maturity*** |   |   | ***Volumes******(Mmbtus*** | ***)*** |   | ***Fair                  Value*** |   |
| *Natural                  Gas*                                           |   |   | Less                  than 1 Year |   |   | 181,179,843 |   | $ | (107,845 | ) |
| *Natural                  Gas*                                           |   |   | 1                  to 3 Years |   |   | 36,432,897 |   |   | (17,078 | ) |
| *Natural                  Gas*                                           |   |   | 4                  to 5 Years |   |   | 3,861,982 |   |   | (248 | ) |
| *Natural                  Gas*                                           |   |   | More                  than 5 years |   |   | 4,730,000 |   |   | (916 | ) |
|                                                                     |   |   |   |   |   | **226,204,722** |   | **$** | **(126,087** | **)** |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Swaps                  (Oil)***                                       |   |   | ***Maturity*** |   |   | ***Volumes******(Bbls*** | ***)*** |   | ***Fair                  Value*** |   |
| *WTI                  Crude Oil*                                         |   |   | Less                  than 1 Year |   |   | 228,500 |   | $ | (9,402 | ) |
| *WTI                  Crude Oil*                                         |   |   | 1                  to 3 Years |   |   | 119,200 |   |   | (2,847 | ) |
|                                                                     |   |   |   |   |   | **347,700** |   | **$** | **(12,249** | **)** |
|                                                                     |   |   |  |   |   |  |   |   |  |   |
| ***Futures/Forwards                  (MegaWatts)***                      |   |   | ***Maturity*** |   |   | ***Volumes******(MWs*** | ***)*** |   | ***Fair                  Value*** |   |
| MegaWatts                                                                |   |   | Less                  than 1 Year |   |   | 109 |   | $ | 35 |   |
|                                                                     |   |   |   |   |   | **109** |   | **$** | **35** |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Grand                  Total - Fair Value of Commodity Derivatives*** | **$** | **(138,301** | **)** |
|                                                                     |   |   |  |   |   |  |   |   |  |   |
| ***Fair                  Value of Interest Rate Swap***                  |   |   |   | **$** | **(2,645** | **)** |
|                                                                     |   |   |  |   |   |  |   |   |  |   |
| ***Grand                  Total - Fair Value of all Derivatives***       |   |   |   | **$** | **(140,946** | **)** |

----

**Notes            to Consolidated Financial Statements            (Unaudited)**

**Revenue      Recognition**

|                                                  |   |   | June                  30, |   |   | September                  30, |   |   | June                  30, |   |
|--------------------------------------------------|--------|--------|---------------------------|--------|--------|--------------------------------|--------|--------|---------------------------|--------|
| *(In                  Thousands)*                |   |   | 2006                      |   |   | 2005                           |   |   | 2005                      |   |
| Peoples                  Gas                     |   | $      | 23,525                    |   | $      | 32,282                         |   | $      | 25,018                    |   |
| North                  Shore Gas                 |   |   | 4,092                     |   |   | 6,136                          |   |   | 4,338                     |   |
| Peoples                  Energy Services         |   |   | 22,118                    |   |   | 19,362                         |   |   | 13,949                    |   |
| **Consolidated                  Peoples Energy** |   | $      | 49,735                    |   | $      | 57,780                         |   | $      | 43,305                    |   |

|                                                |   | Three                Months Ended | Nine                Months Ended |
|------------------------------------------------|--------|-----------------------------------|----------------------------------|
|                                                |   | June 30,                     | June 30,                    |
| *(In                Thousands)*                |   |                              | 2006                             |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Peoples                Gas                     |   | $                                 | 17,653                           |   | $ | 20,048 |   | $ | 137,170 |   | $ | 121,816 |   |
| North                Shore Gas                 |   |                              | 1,548                            |   |   | 1,882 |   |   | 12,261 |   |   | 11,885 |   |
| **Consolidated                Peoples Energy** |   | $                                 | 19,201                           |   | $ | 21,930 |   | $ | 149,431 |   | $ | 133,701 |   |

**Statement      of Cash Flows**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**New      Accounting Pronouncements**

----

**Notes            to Consolidated Financial Statements            (Unaudited)**

**4:      BUSINESS SEGMENTS**

|                                                                                                                                                                                                              |   |   | Gas     |   |   | Oil                  and Gas |   |   | Energy    |   |   | Energy |   |   | Corporateand |   |   |        |   |   |      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------------|--------|--------|-------------|--------|--------|-----------|--------|
| *(In                  Thousands)*                                                                                                                                                                            |   |   | Distribution |   |   | Production                   |   |   | Marketing |   |   | Assets |   |   | Other        |   |   | Adjustments |   |   | Total     |   |
| **Three                  Months Ended June 30, 2006**                                                                                                                                                        |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| Revenues                  (1)                                                                                                                                                                                |   | $      | 223,826      |   | $      | 31,621                       |   | $      | 142,518   |   | $      | 2,480  |   | $      | -            |   | $      | -           |   | $      | 400,445   |   |
| Cost                  of energy sold                                                                                                                                                                         |   |   | 110,883      |   |   | -                            |   |   | 144,381   |   |   | 2,000  |   |   | -            |   |   | (447        | )      |   | 256,817   |   |
| Operation                  and maintenance, excluding                                                                                                                                                        |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| merger                  and environmental costs                                                                                                                                                              |   |   | 64,275       |   |   | 9,101                        |   |   | 5,385     |   |   | 514    |   |   | 3,474        |   |   | 447         |   |   | 83,196    |   |
| Merger                  costs                                                                                                                                                                                |   |   | -            |   |   | -                            |   |   | -         |   |   | -      |   |   | 1,856        |   |   | -           |   |   | 1,856     |   |
| Environmental                  costs                                                                                                                                                                         |   |   | 4,920        |   |   | -                            |   |   | -         |   |   | -      |   |   | -            |   |   | -           |   |   | 4,920     |   |
| Depreciation,                  depletion and amortization                                                                                                                                                    |   |   | 16,011       |   |   | 13,230                       |   |   | 382       |   |   | 89     |   |   | 408          |   |   | -           |   |   | 30,120    |   |
| Taxes,                  other than income taxes                                                                                                                                                              |   |   | 25,574       |   |   | 3,599                        |   |   | 185       |   |   | 41     |   |   | 623          |   |   | -           |   |   | 30,022    |   |
| Losses                  (gains) on property sales                                                                                                                                                            |   |   | (135         | )      |   | -                            |   |   | 8         |   |   | -      |   |   | -            |   |   | -           |   |   | (127      | )      |
| Operating                  income (loss)                                                                                                                                                                     |   | $      | 2,298        |   | $      | 5,691                        |   | $      | (7,823    | )      | $      | (164   | )      | $      | (6,361       | )      | $      | -           |   | $      | (6,359    | )      |
| Income                  (loss) from discontinued operations,                                                                                                                                                 |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  of income taxes                                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 3,608  |   | $      | (5           | )      | $      | -           |   | $      | 3,603     |   |
| Segment                  capital assets of continuing operations,                                                                                                                                            |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  (3)                                                                                                                                                                                     |   | $      | 1,598,034    |   | $      | 517,575                      |   | $      | 4,237     |   | $      | 5,135  |   | $      | 7,586        |   | $      | -           |   | $      | 2,132,567 |   |
| Investments                  in equity investees (4)                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 250    |   | $      | -            |   | $      | -           |   | $      | 250       |   |
| Capital                  spending (5)                                                                                                                                                                        |   | $      | 22,274       |   | $      | 23,325                       |   | $      | (117      | )      | $      | 300    |   | $      | 708          |   | $      | -           |   | $      | 46,490    |   |
| **Three                  Months Ended June 30, 2005**                                                                                                                                                        |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| Revenues                  (1)                                                                                                                                                                                |   | $      | 259,343      |   | $      | 25,416                       |   | $      | 170,754   |   | $      | 581    |   | $      | -            |   | $      | (163        | )      | $      | 455,931   |   |
| Cost                  of energy sold                                                                                                                                                                         |   |   | 138,829      |   |   | -                            |   |   | 165,635   |   |   | -      |   |   | -            |   |   | (578        | )      |   | 303,886   |   |
| Operation                  and maintenance, excluding                                                                                                                                                        |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| restructuring                  and environmental costs                                                                                                                                                       |   |   | 58,324       |   |   | 6,944                        |   |   | 3,181     |   |   | 733    |   |   | 3,534        |   |   | 415         |   |   | 73,131    |   |
| Restructuring                  costs                                                                                                                                                                         |   |   | -            |   |   | -                            |   |   | -         |   |   | -      |   |   | 52           |   |   | -           |   |   | 52        |   |
| Environmental                  costs                                                                                                                                                                         |   |   | 4,599        |   |   | -                            |   |   | -         |   |   | -      |   |   | -            |   |   | -           |   |   | 4,599     |   |
| Depreciation,                  depletion and amortization                                                                                                                                                    |   |   | 12,230       |   |   | 10,969                       |   |   | 467       |   |   | 121    |   |   | 244          |   |   | -           |   |   | 24,031    |   |
| Taxes,                  other than income taxes                                                                                                                                                              |   |   | 28,069       |   |   | 2,720                        |   |   | 145       |   |   | 48     |   |   | 661          |   |   | -           |   |   | 31,643    |   |
| Losses                  (gains) on property sales                                                                                                                                                            |   |   | 41           |   |   | (988                         | )      |   | (3        | )      |   | (10    | )      |   | -            |   |   | -           |   |   | (960      | )      |
| Equity                  investment income (2)                                                                                                                                                                |   |   | -            |   |   | 83                           |   |   | -         |   |   | -      |   |   | 226          |   |   | -           |   |   | 309       |   |
| Operating                  income (loss)                                                                                                                                                                     |   | $      | 17,251       |   | $      | 5,854                        |   | $      | 1,329     |   | $      | (311   | )      | $      | (4,265       | )      | $      | -           |   | $      | 19,858    |   |
| Income                  (loss) from discontinued operations,                                                                                                                                                 |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  of income taxes                                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 1,970  |   | $      | (5           | )      | $      | -           |   | $      | 1,965     |   |
| Segment                  capital assets of continuing operations,                                                                                                                                            |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  (3)                                                                                                                                                                                     |   | $      | 1,575,745    |   | $      | 341,019                      |   | $      | 6,019     |   | $      | 5,622  |   | $      | 4,400        |   | $      | -           |   | $      | 1,932,805 |   |
| Investments                  in equity investees (4)                                                                                                                                                         |   | $      | -            |   | $      | 9,973                        |   | $      | -         |   | $      | -      |   | $      | 3,654        |   | $      | -           |   | $      | 13,627    |   |
| Capital                  spending (5)                                                                                                                                                                        |   | $      | 19,396       |   | $      | 25,093                       |   | $      | 14        |   | $      | -      |   | $      | 500          |   | $      | -           |   | $      | 45,003    |   |
| (1)                  Oil and Gas Production revenues are net of gains and losses from                  hedging                  activities.                                                                  |
| (2)                  Excludes equity investment income from discontinued operations.                  See Note                  6.                                                                           |
| (3)                  Excludes segment assets of discontinued operations at June 30,                  2006 and                  2005 of $9,507 and $11,312, respectively.                                     |
| (4)                  Excludes investments in equity investees of discontinued operations                  at                  June 30, 2006 and 2005 of $63,870 and $102,274,                  respectively. |
| (5)                  Excludes capital spending relating to assets of discontinued operations                  three months ended at June 30, 2006 and 2005 of $148 and $303,                  respectively.  |

----

**Notes            to Consolidated Financial Statements            (Unaudited)**

|                                                                                                                                                                                                              |   |   | Gas          |   |   | Oil                  and Gas |   |   | Energy    |   |   | Energy |   |   | Corporateand |   |   |        |   |   |      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------------|--------|--------|-------------|--------|--------|-----------|--------|
| *(In                  Thousands)*                                                                                                                                                                            |   |   | Distribution |   |   | Production                   |   |   | Marketing |   |   | Assets |   |   | Other        |   |   | Adjustments |   |   | Total     |   |
| **Nine                  Months Ended June 30, 2006**                                                                                                                                                         |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| Revenues                  (1)                                                                                                                                                                                |   | $      | 1,774,172    |   | $      | 95,960                       |   | $      | 754,741   |   | $      | 12,878 |   | $      | -            |   | $      | (4,892      | )      | $      | 2,632,859 |   |
| Cost                  of energy sold                                                                                                                                                                         |   |   | 1,211,528    |   |   | -                            |   |   | 725,763   |   |   | 8,128  |   |   | -            |   |   | (5,535      | )      |   | 1,939,884 |   |
| Gas                  charge settlement                                                                                                                                                                       |   |   | 107,330      |   |   | -                            |   |   | -         |   |   | -      |   |   | -            |   |   | -           |   |   | 107,330   |   |
| Operation                  and maintenance, excluding merger,                                                                                                                                                |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| gas                  charge settlement and environmental costs                                                                                                                                               |   |   | 210,341      |   |   | 26,314                       |   |   | 15,011    |   |   | 1,426  |   |   | 10,273       |   |   | 643         |   |   | 264,008   |   |
| Merger                  costs                                                                                                                                                                                |   |   | -            |   |   | -                            |   |   | -         |   |   | -      |   |   | 1,856        |   |   | -           |   |   | 1,856     |   |
| Environmental                  costs                                                                                                                                                                         |   |   | 30,249       |   |   | -                            |   |   | -         |   |   | -      |   |   | -            |   |   | -           |   |   | 30,249    |   |
| Depreciation,                  depletion and amortization                                                                                                                                                    |   |   | 46,480       |   |   | 39,646                       |   |   | 1,264     |   |   | 266    |   |   | 981          |   |   | -           |   |   | 88,637    |   |
| Taxes,                  other than income taxes                                                                                                                                                              |   |   | 164,284      |   |   | 11,717                       |   |   | 429       |   |   | 83     |   |   | 1,698        |   |   | -           |   |   | 178,211   |   |
| Losses                  (gains) on property sales                                                                                                                                                            |   |   | (305         | )      |   | 8                            |   |   | 8         |   |   | -      |   |   | 93           |   |   | -           |   |   | (196      | )      |
| Equity                  investment income (2)                                                                                                                                                                |   |   | -            |   |   | 7,610                        |   |   | -         |   |   | -      |   |   | 67           |   |   | -           |   |   | 7,677     |   |
| Operating                  income (loss)                                                                                                                                                                     |   | $      | 4,265        |   | $      | 25,885                       |   | $      | 12,266    |   | $      | 2,975  |   | $      | (14,834      | )      | $      | -           |   | $      | 30,557    |   |
| Income                  (loss) from discontinued operations,                                                                                                                                                 |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  of income taxes                                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 2,043  |   | $      | (14          | )      | $      | -           |   | $      | 2,029     |   |
| Segment                  capital assets of continuing operations,                                                                                                                                            |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  (3)                                                                                                                                                                                     |   | $      | 1,598,034    |   | $      | 517,575                      |   | $      | 4,237     |   | $      | 5,135  |   | $      | 7,586        |   | $      | -           |   | $      | 2,132,567 |   |
| Investments                  in equity investees (4)                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 250    |   | $      | -            |   | $      | -           |   | $      | 250       |   |
| Capital                  spending (5)                                                                                                                                                                        |   | $      | 63,364       |   | $      | 211,373                      |   | $      | 12        |   | $      | 315    |   | $      | 2,326        |   | $      | -           |   | $      | 277,390   |   |
| **Nine                  Months Ended June 30, 2005**                                                                                                                                                         |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| Revenues                  (1)                                                                                                                                                                                |   | $      | 1,521,843    |   | $      | 82,246                       |   | $      | 612,901   |   | $      | 8,308  |   | $      | -            |   | $      | (5,050      | )      | $      | 2,220,248 |   |
| Cost                  of energy sold                                                                                                                                                                         |   |   | 956,609      |   |   | -                            |   |   | 585,696   |   |   | 4,481  |   |   | -            |   |   | (6,293      | )      |   | 1,540,493 |   |
| Operation                  and maintenance, excluding                                                                                                                                                        |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| restructuring                  and environmental costs                                                                                                                                                       |   |   | 197,195      |   |   | 21,549                       |   |   | 11,877    |   |   | 2,160  |   |   | 8,139        |   |   | 1,243       |   |   | 242,163   |   |
| Restructuring                  costs                                                                                                                                                                         |   |   | -            |   |   | -                            |   |   | -         |   |   | -      |   |   | 13,216       |   |   | -           |   |   | 13,216    |   |
| Environmental                  costs                                                                                                                                                                         |   |   | 27,727       |   |   | -                            |   |   | -         |   |   | -      |   |   | -            |   |   | -           |   |   | 27,727    |   |
| Depreciation,                  depletion and amortization                                                                                                                                                    |   |   | 46,339       |   |   | 34,596                       |   |   | 1,331     |   |   | 364    |   |   | 694          |   |   | -           |   |   | 83,324    |   |
| Taxes,                  other than income taxes                                                                                                                                                              |   |   | 149,697      |   |   | 8,765                        |   |   | 500       |   |   | 88     |   |   | 1,454        |   |   | -           |   |   | 160,504   |   |
| Losses                  (gains) on property sales                                                                                                                                                            |   |   | 163          |   |   | (988                         | )      |   | (52       | )      |   | (11    | )      |   | -            |   |   | -           |   |   | (888      | )      |
| Equity                  investment income (2)                                                                                                                                                                |   |   | -            |   |   | 1,298                        |   |   | -         |   |   | -      |   |   | 756          |   |   | -           |   |   | 2,054     |   |
| Operating                  income (loss)                                                                                                                                                                     |   | $      | 144,113      |   | $      | 19,622                       |   | $      | 13,549    |   | $      | 1,226  |   | $      | (22,747      | )      | $      | -           |   | $      | 155,763   |   |
| Income                  (loss) from discontinued operations,                                                                                                                                                 |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  of income taxes                                                                                                                                                                         |   | $      | -            |   | $      | -                            |   | $      | -         |   | $      | 2,733  |   | $      | (14          | )      | $      | -           |   | $      | 2,719     |   |
| Segment                  capital assets of continuing operations,                                                                                                                                            |   |   |         |   |   |                         |   |   |      |   |   |   |   |   |         |   |   |        |   |   |      |   |
| net                  (3)                                                                                                                                                                                     |   | $      | 1,575,745    |   | $      | 341,019                      |   | $      | 6,019     |   | $      | 5,622  |   | $      | 4,400        |   | $      | -           |   | $      | 1,932,805 |   |
| Investments                  in equity investees (4)                                                                                                                                                         |   | $      | -            |   | $      | 9,973                        |   | $      | -         |   | $      | -      |   | $      | 3,654        |   | $      | -           |   | $      | 13,627    |   |
| Capital                  spending (5)                                                                                                                                                                        |   | $      | 54,499       |   | $      | 56,675                       |   | $      | 144       |   | $      | 408    |   | $      | 706          |   | $      | -           |   | $      | 112,432   |   |
| (1)                  Oil and Gas Production revenues are net of gains and losses from                  hedging                  activities.                                                                  |
| (2)                  Excludes equity investment income from discontinued operations.                  See Note                  6.                                                                           |
| (3)                  Excludes segment assets of discontinued operations at June 30,                  2006 and                  2005 of $9,507 and $11,312, respectively.                                     |
| (4)                  Excludes investments in equity investees of discontinued operations                  at                  June 30, 2006 and 2005 of $63,870 and $102,274,                  respectively. |
| (5)                  Excludes capital spending relating to assets of discontinued operations                  nine months ended at June 30, 2006 and 2005 of $546 and $939,                  respectively.   |

----

**Notes            to Consolidated Financial Statements            (Unaudited)**

**5:      RESTRUCTURING COSTS**

**6:      EQUITY INVESTMENTS**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                         |   |  Three                  Months Ended | Nine                  Months Ended |
|-----------------------------------------|--------|-------------------------------------------|------------------------------------|
|                                         |   |  June                  30,           | June                  30,          |
| *(In                  Thousands)*       |   |                                      | 2006                               |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Revenues                                |   | $                                         | 18,359                             |   | $ | 46,570 |   | $ | 40,253 |   | $ | 112,985 |   |
| Operating                  income       |   |                                      | 15,213                             |   |   | 22,246 |   |   | 29,802 |   |   | 53,855 |   |
| Interest                  expense       |   |                                      | 6,824                              |   |   | 9,264 |   |   | 20,758 |   |   | 28,112 |   |
| Net                  income             |   | $                                         | 6,072                              |   | $ | 4,645 |   | $ | 2,785 |   | $ | 16,655 |   |
|                                    |   |                                      |                               |   |   |   |   |   |   |   |   |   |   |
| Current                  assets         |   | $                                         | 44,354                             |   | $ | 67,821 |   | $ | 44,354 |   | $ | 67,821 |   |
| Noncurrent                  assets      |   |                                      | 445,428                            |   |   | 708,353 |   |   | 445,428 |   |   | 708,353 |   |
| Current                  liabilities    |   |                                      | 47,482                             |   |   | 76,256 |   |   | 47,482 |   |   | 76,256 |   |
| Noncurrent                  liabilities |   | $                                         | 316,233                            |   | $ | 430,281 |   | $ | 316,233 |   | $ | 430,281 |   |

|                                                                                                                                                                     |   |                               |   |                                                        | Ownership                Percentage |                                                             |                    | Equity                Investment Income (Loss)                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|-------------------------------------------------------------|-------------------------------------|------------------------------------------------------------------|-------------------------|------------------------------------------------------------------------|
|                                                                                                                                                                     |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   | Three                Months Ended |   | Nine                Months Ended |
| *(In                Thousands)*                                                                                                                                          |   |                               |   | At                June 30,                                  |                                |                                                             | June                30, |                                                                   | June                30, |
| Investment                                                                                                                                                               |   | Segment                            |   |                                                        | 2006                                |                                                             | 2005                    |                                                                   |   | 2006 |   | 2005 |   | 2006 |   | 2005 |
| EnerVest                                                                                                                                                                 |   | Oil                and Gas         | (1)    | 23                                                          | %                                   | 30                                                               | %                       |                                                                   | $                                - |   | $                            83 |   | $                       7,610 |   | $                       1,298 |
| Trigen-Peoples                                                                                                                                                           |   | Corporate                and Other |   |                                                        | 0                                   |                                                             | 50                      |                                                                   |   | - |   | 226 |   | 67 |   | 756 |
| Equity                investment income (loss) from                                                                                                                      |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   |   |   |   |   |   |
| continuing                operations                                                                                                                                     |   |                               |   |                                                        |                                |                                                             |                    | -                                                                      |   | 309 |   | 7,677 |   | 2,054 |
|                                                                                                                                                                     |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   |   |   |   |   |   |   |   |
| Elwood                                                                                                                                                                   |   | Energy                Assets       |   |                                                        | 50                                  |                                                             | 50                      |                                                                   |   | 3,030 |   | 2,400 |   | 1,386 |   | 2,085 |
| SCEP                                                                                                                                                                     |   | Energy                Assets       |   |                                                        | 0                                   |                                                             | 28                      |                                                                   |   | 425 |   | 1,344 |   | 3,021 |   | 4,090 |
| Equity                investment income from                                                                                                                             |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   |   |   |   |   |   |
| discontinued                operations                                                                                                                                   |   |                               |   |                                                        |                                |                                                             |                    | 3,455                                                                  |   | 3,744 |   | 4,407 |   | 6,175 |
| Total                equity investment income (loss)                                                                                                                     |   |                               |   |                                                        |                                |                                                             |                    | $                        3,455 |   | $                       4,053 |   | $                     12,084 |   | $                       8,229 |
| Undistributed                partnership income included in the                                                                                                          |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   |   |   |
| Company's                retained earnings at the end of each period                                                                                                     |   |                               |   | $                      12,800 |                                | $                       8,485 |                    | $                     12,800                  |   | $                       8,485 |
|                                                                                                                                                                     |   |                               |   |                                                        |                                |                                                             |                    |                                                                   |   |   |   |   |   |   |   |   |
| (1)                All remaining properties in the partnership were sold on October                31, 2005                and the partnership will be liquidated during |
| calendar                2006.                                                                                                                                            |

**7:      ENVIRONMENTAL MATTERS**

**A.      Former Manufactured Gas Plant Operations**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**B.      Former Mineral Processing Site in Denver, Colorado**

**C.      Other**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**8:      GAS CHARGE RECONCILIATION PROCEEDINGS AND RELATED MATTERS **

**A.      Illinois Commerce Commission Proceedings**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**B.      Illinois Attorney General and the City of Chicago      Lawsuits**

**C.      Class Action**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**D.      CFTC Subpoena**

**9:      OTHER LITIGATION**

**A.      Oil and Gas Production Royalties Dispute**

**B.      Corrosion Control Inspection Proceeding**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

**C**

**.      Builders Class Action**

**10:      COMPREHENSIVE INCOME**

|                                                                |   | Three                  Months Ended June 30, |
|----------------------------------------------------------------|--------|----------------------------------------------|
|                                                           |   | Peoples                  Energy              | Peoples                  Gas | North                  Shore Gas |
| *(In                  Thousands)*                              |   |                                         | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| **Comprehensive                  income (loss)**               |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                             |   | $                                            | (10,111 | ) | $ | 6,799 |   | $ | (3,374 | ) | $ | 3,947 |   | $ | (20 | ) | $ | 1,195 |   |
| Other                  comprehensive income, net of tax        |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  hedge gain                         |   |                                         | 14,974 |   |   | 10,018 |   |   | 25 |   |   | 11 |   |   | 6 |   |   | 6 |   |
|                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  comprehensive income (loss)**         |   | $                                            | 4,863 |   | $ | 16,817 |   | $ | (3,349 | ) | $ | 3,958 |   | $ | (14 | ) | $ | 1,201 |   |
|                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Nine                  Months Ended June 30,  |
|                                                           |   | Peoples                  Energy              | Peoples                  Gas | North                  Shore Gas |
| *(In                  Thousands)*                              |   |                                         | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| **Comprehensive                  income (loss)**               |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                             |   | $                                            | 3,578 |   | $ | 80,447 |   | $ | (20,006 | ) | $ | 56,855 |   | $ | 8,151 |   | $ | 12,413 |   |
| Other                  comprehensive income (loss), net of tax |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum                  pension liability adjustment          |   |                                         | - |   |   | (13,609 | ) |   | - |   |   | (12,196 | ) |   | - |   |   | (708 | ) |
| Unrealized                  hedge gain (loss)                  |   |                                         | 80,493 |   |   | (10,428 | ) |   | (906 | ) |   | 32 |   |   | 17 |   |   | 17 |   |
|                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  comprehensive income (loss)**         |   | $                                            | 84,071 |   | $ | 56,410 |   | $ | (20,912 | ) | $ | 44,691 |   | $ | 8,168 |   | $ | 11,722 |   |

**11:      RETIREMENT AND POSTRETIREMENT BENEFITS**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

----

**Notes          to Consolidated Financial Statements          (Unaudited)**

|                                                                                                                                                               |   |                                    |     |   |   |   |   | Other                  Postretirement |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|----------|--------|--------|--------|--------|---------------------------------------|
|                                                                                                                                                               |   |  Pension                  Benefits | Benefits |
| (In                  Millions) Three Months Ended June 30                                                                                                     |   |                                    | 2006     |   |   | 2005   |   |                                  | 2006 |   |   | 2005 |   |
| Service                  cost                                                                                                                                 |   | $                                       | 5.4      |   | $      | 4.0    |   | $                                     | 1.8 |   | $ | 2.1 |   |
| Interest                  cost                                                                                                                                |   |                                    | 6.3      |   |   | 6.8    |   |                                  | 1.6 |   |   | 2.0 |   |
| Expected                  return on plan assets                                                                                                               |   |                                    | (10.2    | )      |   | (10.8  | )      |                                  | (0.7 | ) |   | (0.8 | ) |
| Amortization                  of:                                                                                                                             |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| Net                  transition (asset)/obligation                                                                                                            |   |                                    | (0.1     | )      |   | (0.2   | )      |                                  | 0.3 |   |   | 0.4 |   |
| Prior                  service cost                                                                                                                           |   |                                    | 0.6      |   |   | 0.7    |   |                                  | - |   |   | - |   |
| Net                  actuarial (gain)/loss                                                                                                                    |   |                                    | 1.5      |   |   | 0.5    |   |                                  | 0.2 |   |   | 0.4 |   |
| **Net                  periodic benefit cost**                                                                                                                |   |                                    | 3.5      |   |   | 1.0    |   |                                  | 3.2 |   |   | 4.1 |   |
|                                                                                                                                                          |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| Effect                  of lump sum settlements upon retirement-restructuring (See Note                  5)                                                   |   |                                    | -        |   |   | 0.2    |   |                                  | - |   |   | - |   |
| Effect                  of lump sum settlements upon retirement-other                                                                                         |   |                                    | 2.4      |   |   | 1.5    |   |                                  | - |   |   | - |   |
| Cumulative                  recognition of pension expense on deferred compensation                                                                           |   |                                    | -        |   |   | 2.2    |   |                                  | - |   |   | - |   |
| **Net                  benefit cost**                                                                                                                         |   | $                                       | 5.9      |   | $      | 4.9    |   | $                                     | 3.2 |   | $ | 4.1 |   |
|                                                                                                                                                          |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
|                                                                                                                                                               |   |                                    |     |   |   |   |   | Other                  Postretirement |
|                                                                                                                                                               |   |  Pension                  Benefits | Benefits |
| (In                  Millions) Nine Months Ended June 30                                                                                                      |   |                                    | 2006     |   |   | 2005   |   |                                  | 2006 |   |   | 2005 |   |
| Service                  cost                                                                                                                                 |   | $                                       | 15.8     |   | $      | 11.9   |   | $                                     | 5.3 |   | $ | 4.7 |   |
| Interest                  cost                                                                                                                                |   |                                    | 19.1     |   |   | 20.4   |   |                                  | 4.8 |   |   | 6.4 |   |
| Expected                  return on plan assets                                                                                                               |   |                                    | (30.6    | )      |   | (32.3  | )      |                                  | (2.2 | ) |   | (2.5 | ) |
| Amortization                  of:                                                                                                                             |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| Net                  transition (asset)/obligation                                                                                                            |   |                                    | (0.1     | )      |   | (0.6   | )      |                                  | 0.9 |   |   | 1.5 |   |
| Prior                  service cost                                                                                                                           |   |                                    | 2.0      |   |   | 2.1    |   |                                  | - |   |   | - |   |
| Net                  actuarial (gain)/loss                                                                                                                    |   |                                    | 4.5      |   |   | 1.5    |   |                                  | 0.8 |   |   | 1.3 |   |
| **Net                  periodic benefit cost**                                                                                                                |   |                                    | 10.7     |   |   | 3.0    |   |                                  | 9.6 |   |   | 11.4 |   |
|                                                                                                                                                          |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| Effect                  of lump sum settlements upon retirement-restructuring (See Note                  5)                                                   |   |                                    | -        |   |   | 10.4   |   |                                  | - |   |   | - |   |
| Effect                  of lump sum settlements upon retirement-other                                                                                         |   |                                    | 6.8      |   |   | 4.5    |   |                                  | - |   |   | - |   |
| Curtailment                  recognition (See Note 5)                                                                                                         |   |                                    | -        |   |   | 5.1    |   |                                  | - |   |   | 0.4 |   |
| Cumulative                  recognition of pension expense on deferred compensation                                                                           |   |                                    | -        |   |   | 2.2    |   |                                  | - |   |   | - |   |
| **Net                  benefit cost**                                                                                                                         |   | $                                       | 17.5     |   | $      | 25.2   |   | $                                     | 9.6 |   | $ | 11.8 |   |
|                                                                                                                                                          |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| **Weighted-average                  assumptions used to determine net benefit cost:**                                                                         |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| Discount                  rate (1)                                                                                                                            |   |                                    | 5.25     | %      |   | 6.13   | %      |                                  | 5.00 | % |   | 6.02 | % |
| Expected                  return on plan assets                                                                                                               |   |                                    | 8.75     | %      |   | 8.75   | %      |                                  | 8.75 | % |   | 8.75 | % |
| Rate                  of compensation increase                                                                                                                |   |                                    | 3.75     | %      |   | 3.75   | %      |                                  |   |   |   |   |   |
|                                                                                                                                                          |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |
| (1)                  For plans impacted by the September 2004 restructuring, a 6.00%                  discount                  rate was utilized for valuing |
| the                  plan re-measurement at August 31, 2004.                                                                                                  |   |                                    |     |   |   |   |   |                                  |   |   |   |   |   |

----

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

**EXECUTIVE      SUMMARY**

|                                                        |   | Three                  Months Ended June                  30,  |
|-------------------------------------------------------------|--------|---------------------------------------------------------------------|
|                                                        |   |                                                                |   |   |   |   |   | Merger,Restructuring  |   |   |   |   |   |   |
|                                                        |   |    Ongoing                                      | and                  Settlement | As                  Reported |
|                                                             |   |  (non-GAAP)                                               | Charges | (GAAP) |
| *(In                  Thousands, except per share amounts)* |   |                                                                | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Operating                  Income (Loss):                   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  Distribution                           |   | $                                                                   | 2,298 |   | $ | 17,251 |   | $ | - |   | $ | - |   | $ | 2,298 |   | $ | 17,251 |   |
| Oil                  and Gas Production                     |   |                                                                | 5,691 |   |   | 5,854 |   |   | - |   |   | - |   |   | 5,691 |   |   | 5,854 |   |
| Energy                  Marketing                           |   |                                                                | (7,823 | ) |   | 1,329 |   |   | - |   |   | - |   |   | (7,823 | ) |   | 1,329 |   |
| Energy                  Assets                              |   |                                                                | (164 | ) |   | (311 | ) |   | - |   |   | - |   |   | (164 | ) |   | (311 | ) |
| Corporate                  and Other                        |   |                                                                | (4,505 | ) |   | (4,213 | ) |   | (1,856 | ) |   | (52 | ) |   | (6,361 | ) |   | (4,265 | ) |
| Total                  Operating Income (Loss)              |   | $                                                                   | (4,503 | ) | $ | 19,910 |   | $ | (1,856 | ) | $ | (52 | ) | $ | (6,359 | ) | $ | 19,858 |   |
|                                                        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations   |   | $                                                                   | (12,596 | ) | $ | 4,865 |   | $ | (1,118 | ) | $ | (31 | ) | $ | (13,714 | ) | $ | 4,834 |   |
| Income                  from discontinued operations,       |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                  of income taxes                        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   | 3,603 |   |   | 1,965 |   |
| Net                  Income (Loss)                          |   |                                                                |   |   |   |   |   |   |   |   |   |   |   | $ | (10,111 | ) | $ | 6,799 |   |
|                                                        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                  Diluted Share:                         |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations   |   | $                                                                   | (0.32 | ) | $ | 0.13 |   | $ | (0.03 | ) | $ | - |   | $ | (0.35 | ) | $ | 0.13 |   |
| Income                  from discontinued operations        |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   | 0.09 |   |   | 0.05 |   |
| Net                  Income (Loss)                          |   |                                                                |   |   |   |   |   |   |   |   |   |   |   | $ | (0.26 | ) | $ | 0.18 |   |

----

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

|                                                        |   |  Nine                  Months Ended June 30, |                            |
|-------------------------------------------------------------|--------|---------------------------------------------------|---------------------------------|
|                                                             |   |                                              |                            |   |   |   |   | Merger,                  Restructuring  |   |   |   |   |   |   |
|                                                        |   | Ongoing                                      | and                  Settlement | As                  Reported |
|                                                        |   | (non-GAAP)                                   | Charges                         | (GAAP) |
| *(In                  Thousands, except per share amounts)* |   |                                              | 2006                            |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Operating                  Income (Loss):                   |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  Distribution                           |   | $                                                 | 111,595                         |   | $ | 144,113 |   | $ | (107,330 | ) | $ | - |   | $ | 4,265 |   | $ | 144,113 |   |
| Oil                  and Gas Production                     |   |                                              | 25,885                          |   |   | 19,622 |   |   | - |   |   | - |   |   | 25,885 |   |   | 19,622 |   |
| Energy                  Marketing                           |   |                                              | 12,266                          |   |   | 13,549 |   |   | - |   |   | - |   |   | 12,266 |   |   | 13,549 |   |
| Energy                  Assets                              |   |                                              | 2,975                           |   |   | 1,226 |   |   | - |   |   | - |   |   | 2,975 |   |   | 1,226 |   |
| Corporate                  and Other                        |   |                                              | (12,978                         | ) |   | (9,531 | ) |   | (1,856 | ) |   | (13,216 | ) |   | (14,834 | ) |   | (22,747 | ) |
| Total                  Operating Income (Loss)              |   | $                                                 | 139,743                         |   | $ | 168,979 |   | $ | (109,186 | ) | $ | (13,216 | ) | $ | 30,557 |   | $ | 155,763 |   |
|                                                        |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations   |   | $                                                 | 67,339                          |   | $ | 85,691 |   | $ | (65,790 | ) | $ | (7,963 | ) | $ | 1,549 |   | $ | 77,728 |   |
| Income                  from discontinued operations,       |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                  of income taxes                        |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   | 2,029 |   |   | 2,719 |   |
| Net                  Income                                 |   |                                              |                            |   |   |   |   |   |   |   |   |   |   | $ | 3,578 |   | $ | 80,447 |   |
|                                                        |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                  Diluted Share:                         |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations   |   | $                                                 | 1.75                            |   | $ | 2.25 |   | $ | (1.71 | ) | $ | (0.21 | ) | $ | 0.04 |   | $ | 2.04 |   |
| Income                  from discontinued operations        |   |                                              |                            |   |   |   |   |   |   |   |   |   |   |   | 0.05 |   |   | 0.07 |   |
| Net                  Income                                 |   |                                              |                            |   |   |   |   |   |   |   |   |   |   | $ | 0.09 |   | $ | 2.11 |   |

| ·   | On                July 10, 2006, Peoples Energy and WPS Resources announced that they                had                signed a definitive merger agreement. The companies have requested                expedited regulatory approval of the merger which would allow the                transaction to be completed during the first calendar quarter of                2007.                (See Note 1 of the Notes to Consolidated Financial Statements for                further                discussion of the merger.) |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As                a result of the merger announcement, several unusual charges impacted                third quarter and year-to-date operating results. Gas Distribution                segment                operating expenses include a $2.0 million write-off of previously                deferred                rate case preparation expenses due to the decision to delay planned                rate                case filings. Merger-related expenses of $1.9 million were recorded                in the                Corporate and Other segment, and are excluded from ongoing (non-GAAP)                results. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Gas                Distribution deliveries were negatively impacted by weather that                was 21%                warmer than normal for the quarter and 10% warmer than normal                year-to-date. In addition, utility deliveries continue to be impacted                by                customer conservation in both the quarter and year-to-date periods. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pursuant                to the gas charge settlement, Hub revenues in fiscal 2006 are being                recorded as a credit to customers’ gas charges, negatively impacting                year-over-year comparisons by $1.5 million for the quarter and $7.4                million year to date. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Oil                and Gas Production volumes for the quarter were up 8.3% for the quarter                and 1.8% year-to-date compared to a year ago. This improvement reflects                strong performance on both existing and new wells and the impact                of the                Company’s second quarter acquisition. Net realized prices also increased                in both periods, offset by higher operating costs and a $1.0 million                settlement of a royalty dispute. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Energy                Marketing operating income decreased in the quarter and year-to-date                periods from a year ago due primarily to unrealized losses of $5.3                million                for the quarter and $21.3 million year-to-date due to                lower-of-cost-or-market inventory adjustments and mark-to-market                accounting. Approximately $13 million of the year-to-date impact                from                these adjustments is expected to reverse over the fourth quarter                and                fiscal 2007. In addition, the timing of certain wholesale transactions                negatively impacted the comparison with the year-ago quarter. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                sale of the Company’s interest in the Southeast Chicago Energy Project                (SCEP) for $50 million was completed in the fiscal third quarter,                resulting in a $4.1 million pretax gain. The Company is continuing                to work                on the sale of its remaining power generation assets, a 50% interest                in                Elwood Energy and a |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

**Rate      Case.**

**Earnings      Outlook.**

**Ongoing      (Non-GAAP) Earnings Outlook***

|                                                                                                                                                                    |   |  EPS                  Impact  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|
|                                                                                                                                                               |   |                                    |   |   |   |   |   |   |   |
| Previous                  FY 2006 outlook from continuing operations (non-GAAP)                  (5/3/06)                                                          |   | $                                       | 1.40 |   | - |   | $ | 1.65 |   |
|                                                                                                                                                               |   |                                    |   |   |   |   |   |   |   |
| Warmer                  than normal weather/conservation                                                                                                           |   |                                    | (0.05 | ) | - |   |   | (0.07 | ) |
| Unusual                  charges (rate case expenses, oil & gas settlement)                                                                                    |   |                                    | (0.05 | ) | - |   |   | (0.05 | ) |
| Lower                  results from diversified businesses                                                                                                         |   |                                    | (0.09 | ) | - |   |   | (0.13 | ) |
| Higher                  interest expense                                                                                                                           |   |                                    | (0.04 | ) | - |   |   | (0.06 | ) |
| Other,                  net                                                                                                                                        |   |                                    | (0.02 | ) | - |   |   | (0.04 | ) |
|                                                                                                                                                               |   |                                    |   |   |   |   |   |   |   |
| Current                  FY 2006 outlook from continuing operations (non-GAAP)                                                                                     |   | $                                       | 1.15 |   | - |   | $ | 1.30 |   |
|                                                                                                                                                               |   |                                    |   |   |   |   |   |   |   |
| *                  Ongoing (non-GAAP) earnings outlook excludes discontinued operations,                  the                  impact of the utilities' gas charge |
| settlement,                  merger-related expenses and the impact of fair value accounting                  adjustments. Future merger-related                   |
| expenses                  and the impact of fair value accounting adjustments, both of which                  may be                  significant, cannot be       |
| reasonably                  estimated at the present time.                                                                                                         |   |                                    |   |   |   |   |   |   |   |

**RESULTS      OF OPERATIONS**

**Income      Statement Variations**

----

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

| ·   | Increased                bad debt expense at the Gas Distribution segment of $6.8 million                for the                nine-month period ended June 30, 2006 due to high natural gas prices                and                their corresponding impact on                revenues. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                pension expense at Corporate and the Gas Distribution segment totaling                $1.0 million and $6.5 million due to lower discount                rates. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                direct labor costs at Corporate and the Gas Distribution segment                totaling                $3.4 million for the nine-month period ended June 30,                2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                lease operating, exploration and general and administrative costs                at the                Oil and Gas Production segment totaling $2.2 million and $4.8                million. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased                outside services expense of $1.4 million for the three-month period                ended                June 30, 2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Rate                case costs of $2.0 million expensed for the three- and nine-month                periods                ended June 30, 2006. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

**Segment      Discussion**

**Gas      Distribution Segment.**

----

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

----

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

| **Gas                  Distribution Statistics**                 |
|------------------------------------------------------------------|
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Three                  Months Ended  | Nine                  Months Ended | Increase/Decrease |
|                                                                  |   | June                  30,  | June                  30, |   | Three                  Months |   |   | Nine                  Months |   |
| **Margin                  Data***(In Thousands)*                 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | Ended |   |   | Ended |   |
| **Gas                  Distribution revenues:**                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   | $ | 165,390 |   | $ | 193,114 |   | $ | 1,381,574 |   | $ | 1,175,606 |   | $ | (27,724 | ) | $ | 205,968 |   |
| Commercial                                                       |   |   | 24,894 |   |   | 30,857 |   |   | 223,835 |   |   | 187,649 |   |   | (5,963 | ) |   | 36,186 |   |
| Industrial                                                       |   |   | 3,017 |   |   | 4,396 |   |   | 39,496 |   |   | 33,085 |   |   | (1,379 | ) |   | 6,411 |   |
| **Total                  sales**                                 |   |   | 193,301 |   |   | 228,367 |   |   | 1,644,905 |   |   | 1,396,340 |   |   | (35,066 | ) |   | 248,565 |   |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 6,405 |   |   | 5,757 |   |   | 30,136 |   |   | 28,394 |   |   | 648 |   |   | 1,742 |   |
| Commercial                                                       |   |   | 8,866 |   |   | 8,714 |   |   | 42,929 |   |   | 42,281 |   |   | 152 |   |   | 648 |   |
| Industrial                                                       |   |   | 3,851 |   |   | 3,966 |   |   | 15,355 |   |   | 16,392 |   |   | (115 | ) |   | (1,037 | ) |
| Contract                  pooling                                |   |   | 5,863 |   |   | 5,276 |   |   | 26,381 |   |   | 16,847 |   |   | 587 |   |   | 9,534 |   |
| **Total                  transportation**                        |   |   | 24,985 |   |   | 23,713 |   |   | 114,801 |   |   | 103,914 |   |   | 1,272 |   |   | 10,887 |   |
| Total                  Hub revenues                              |   |   | - |   |   | 1,506 |   |   | - |   |   | 7,410 |   |   | (1,506 | ) |   | (7,410 | ) |
| Other                  Gas Distribution revenues (1)             |   |   | 5,540 |   |   | 5,757 |   |   | 14,466 |   |   | 14,179 |   |   | (217 | ) |   | 287 |   |
| **Total                  Gas Distribution revenues**             |   |   | 223,826 |   |   | 259,343 |   |   | 1,774,172 |   |   | 1,521,843 |   |   | (35,517 | ) |   | 252,329 |   |
| Less:                  Gas costs                                 |   |   | 110,883 |   |   | 138,829 |   |   | 1,211,528 |   |   | 956,609 |   |   | (27,946 | ) |   | 254,919 |   |
| **Gross                  margin****(2)**                         |   |   | 112,943 |   |   | 120,514 |   |   | 562,644 |   |   | 565,234 |   |   | (7,571 | ) |   | (2,590 | ) |
| Less:                  Revenue taxes                             |   |   | 20,806 |   |   | 23,384 |   |   | 149,939 |   |   | 135,054 |   |   | (2,578 | ) |   | 14,885 |   |
| Environmental                  costs recovered                   |   |   | 4,920 |   |   | 4,599 |   |   | 30,249 |   |   | 27,727 |   |   | 321 |   |   | 2,522 |   |
| **Net                  margin****(2)**                           |   | $ | 87,217 |   | $ | 92,531 |   | $ | 382,456 |   | $ | 402,453 |   | $ | (5,314 | ) | $ | (19,997 | ) |
| **Gas                  Distribution deliveries (MDth):**         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  sales                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 12,987 |   |   | 14,736 |   |   | 96,221 |   |   | 103,537 |   |   | (1,749 | ) |   | (7,316 | ) |
| Commercial                                                       |   |   | 2,303 |   |   | 2,699 |   |   | 16,469 |   |   | 17,623 |   |   | (396 | ) |   | (1,154 | ) |
| Industrial                                                       |   |   | 337 |   |   | 421 |   |   | 3,051 |   |   | 3,326 |   |   | (84 | ) |   | (275 | ) |
| **Total                  gas sales**                             |   |   | 15,627 |   |   | 17,856 |   |   | 115,741 |   |   | 124,486 |   |   | (2,229 | ) |   | (8,745 | ) |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 2,937 |   |   | 3,080 |   |   | 17,875 |   |   | 18,407 |   |   | (143 | ) |   | (532 | ) |
| Commercial                                                       |   |   | 6,971 |   |   | 5,727 |   |   | 36,833 |   |   | 35,931 |   |   | 1,244 |   |   | 902 |   |
| Industrial                                                       |   |   | 4,418 |   |   | 4,761 |   |   | 17,059 |   |   | 18,724 |   |   | (343 | ) |   | (1,665 | ) |
| **Total                  transportation**                        |   |   | 14,326 |   |   | 13,568 |   |   | 71,767 |   |   | 73,062 |   |   | 758 |   |   | (1,295 | ) |
| **Total                  Distribution deliveries**               |   |   | 29,953 |   |   | 31,424 |   |   | 187,508 |   |   | 197,548 |   |   | (1,471 | ) |   | (10,040 | ) |
| Gross                  margin per Dth delivered                  |   | $ | 3.77 |   | $ | 3.79 |   | $ | 3.00 |   | $ | 2.82 |   | $ | (0.02 | ) | $ | 0.18 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  margin per Dth delivered                    |   | $ | 2.91 |   | $ | 2.90 |   | $ | 2.04 |   | $ | 2.00 |   | $ | 0.01 |   | $ | 0.04 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  cost per Dth of gas sold                |   | $ | 7.10 |   | $ | 7.77 |   | $ | 10.47 |   | $ | 7.68 |   | $ | (0.67 | ) | $ | 2.79 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days (HDD)                |   |   | 615 |   |   | 664 |   |   | 5,658 |   |   | 5,827 |   |   | (49 | ) |   | (169 | ) |
| Normal                  heating degree days                  (3) |   |   | 774 |   |   | 774 |   |   | 6,289 |   |   | 6,307 |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days as a percent         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  normal (actual/normal)                       |   |   | 79 |   |   | 86 |   |   | 90 |   |   | 92 |   |   |   |   |   |   |   |

----

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

**Oil      and Gas Production Segment.**

----

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

|                                                                           |   |   | Remaining                   |   |   |                       |   |
|---------------------------------------------------------------------------|--------|--------|----------------------------------|--------|--------|----------------------------|--------|
|                                                                      |   |   | Fiscal                2006  |   |   | Fiscal                2007 |   |
| Gas                hedges in place (MMbtus)                               |   |   | 2,719,000                        |   |   | 12,705,000                 |   |
| Gas                hedges as a percent of estimated fiscal production (1) |   |   | 65-70                            | %      |   | 50-60                      | %      |
| Percent                of gas hedges that are swaps                       |   |   | 61                               | %      |   | 63                         | %      |
| Average                swap price ($/MMbtu)                               |   | $      | 5.09                             |   | $      | 5.37                       |   |
| Percent                of gas hedges that are no cost collars             |   |   | 39                               | %      |   | 37                         | %      |
| Weighted                average floor price ($/MMbtu)                     |   | $      | 4.34                             |   | $      | 5.62                       |   |
| Weighted                average ceiling price ($/MMbtu)                   |   | $      | 5.56                             |   | $      | 6.77                       |   |
| Oil                hedges in place (MBbls)                                |   |   | 50                               |   |   | 182                        |   |
| Oil                hedges as a percent of estimated fiscal production (1) |   |   | 85-90                            | %      |   | 45-55                      | %      |
| Average                hedge price ($/Bbl)                                |   | $      | 27.65                            |   | $      | 37.50                      |   |

|                                                                          |   | Three                Months EndedJune 30,  | Nine                Months EndedJune 30, |
|--------------------------------------------------------------------------|--------|------------------------------------------------------|-----------------------------------------------|
|                                                                     |   |                                                 | 2006                                          |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Total                production - gas equivalent (MMcfe)(1)              |   |                                                 | 6,280                                         |   |   | 5,792 |   |   | 18,616 |   |   | 18,296 |   |
| Daily                average gas production (MMcfd)                      |   |                                                 | 63.6                                          |   |   | 57.1 |   |   | 62.1 |   |   | 59.6 |   |
| Daily                average oil production (MBd)                        |   |                                                 | 0.9                                           |   |   | 1.1 |   |   | 1.0 |   |   | 1.2 |   |
| Daily                average production - gas equivalent (MMcfed)(1)     |   |                                                 | 69.0                                          |   |   | 63.7 |   |   | 68.2 |   |   | 67.0 |   |
| Gas                production as a percentage of total production        |   |                                                 | 92                                            |   |   | 90 |   |   | 91 |   |   | 89 |   |
| Percent                of production hedged during the period - gas      |   |                                                 | 65                                            |   |   | 103 |   |   | 71 |   |   | 98 |   |
| Percent                of production hedged during the period - oil(2)   |   |                                                 | 89                                            |   |   | 115 |   |   | 81 |   |   | 97 |   |
| Gas                net realized price ($/Mcf) (3)                        |   | $                                                    | 5.32                                          |   | $ | 4.47 |   | $ | 5.29 |   | $ | 4.50 |   |
| Oil                net realized price ($/Bbl) (3)                        |   | $                                                    | 22.40                                         |   | $ | 22.18 |   | $ | 26.06 |   | $ | 26.69 |   |
| Depreciation,                depletion and amortization rate ($/Mcfe)(4) |   | $                                                    | 2.09                                          |   | $ | 1.88 |   | $ | 2.11 |   | $ | 1.88 |   |
| Average                lease operating expense ($/Mcfe)                  |   | $                                                    | 0.70                                          |   | $ | 0.72 |   | $ | 0.71 |   | $ | 0.69 |   |
| Average                production taxes ($/Mcfe)                         |   | $                                                    | 0.55                                          |   | $ | 0.45 |   | $ | 0.61 |   | $ | 0.46 |   |

**Energy      Marketing Segment. **

----

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

|                                                    |   | Three                Months Ended June 30,  | Nine                Months EndedJune 30, |
|----------------------------------------------------|--------|-------------------------------------------------------|-----------------------------------------------|
|                                               |   |                                                  | 2006                                          |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
| Wholesale                gas volumes sold (MDth)   |   |                                                  | 9,328                                         |   |   | 14,451 |   |   | 33,251 |   |   | 40,253 |   |
| Retail                gas volumes sold (MDth)      |   |                                                  | 8,254                                         |   |   | 8,532 |   |   | 41,279 |   |   | 43,973 |   |
| Number                of retail gas customers      |   |                                                  | 31,852                                        |   |   | 23,721 |   |   | 31,852 |   |   | 23,721 |   |
| Retail                electric volumes sold (Mwh)  |   |                                                  | 400,523                                       |   |   | 335,381 |   |   | 1,217,254 |   |   | 999,319 |   |
| Number                of retail electric customers |   |                                                  | 3,283                                         |   |   | 2,177 |   |   | 3,283 |   |   | 2,177 |   |

**Energy      Assets Segment.**

**Critical      Accounting Policies**

----

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

**LIQUIDITY      AND CAPITAL RESOURCES**

|                                                                    |   | Nine                Months EndedJune 30,  |
|--------------------------------------------------------------------|--------|-----------------------------------------------------|
| *(In                Thousands)*                                    |   |                                                | 2006 |   |   | 2005 |   |
| Net                cash provided by operating activities           |   | $                                                   | 203,200 |   | $ | 277,964 |   |
| Net                cash used in investing activities               |   | $                                                   | (214,482 | ) | $ | (132,781 | ) |
| Net                cash provided by (used in) financing activities |   | $                                                   | 109,568 |   | $ | (87,972 | ) |

**Balance      Sheet Variations**

----

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

**Financial      Sources**

----

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

**Changes      in Equity Securities**

|                                                          |   | Three                  Months Ended  | Nine                  Months Ended |
|---------------------------------------------------------------|--------|-------------------------------------------|------------------------------------|
|                                                               |   | June                  30, 2006       | June                  30, 2006     |
| *(Dollars                  in Thousands)*                     |   |                                      | Shares                             |   |   | Dollars |   |   | Shares |   |   | Dollars |   |
| **Shares                  outstanding - beginning of period** |   |                                      | 38,357,016                         |   | $ | 408,893 |   |   | 38,157,218 |   | $ | 402,383 |   |
| **Shares                  issued:**                           |   |                                      |                               |   |   |   |   |   |   |   |   |   |   |
| Employee                  Stock Purchase Plan                 |   |                                      | 7,598                              |   |   | 254 |   |   | 15,590 |   |   | 514 |   |
| Long-Term                  Incentive Compensation Plans, net  |   |                                      | (814                               | ) |   | 37 |   |   | 50,285 |   |   | 1,134 |   |
| Directors                  Deferred Compensation Plan         |   |                                      | -                                  |   |   | 568 |   |   | 3,056 |   |   | 730 |   |
| Direct                  Purchase and Investment Plan          |   |                                      | 62,674                             |   |   | 2,248 |   |   | 200,325 |   |   | 7,239 |   |
| **Total                  activity for the period**            |   |                                      | 69,458                             |   |   | 3,107 |   |   | 269,256 |   |   | 9,617 |   |
|                                                          |   |                                      |                               |   |   |   |   |   |   |   |   |   |   |
| **Shares                  outstanding - end of period**       |   |                                      | 38,426,474                         |   | $ | 412,000 |   |   | 38,426,474 |   | $ | 412,000 |   |

**Financial      Uses**

**Capital      Spending. **

----

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

**Gas      Charge Settlement. **

**Dividends**

**Commitments,      Contractual Obligations and Uncertainties**

**Off-Balance      Sheet Arrangements.**

**Contractual      Obligations.**

----

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

**Environmental      Matters.**

**Gas      Charge Reconciliation Proceedings and Related Matters.**

**Indenture      Restrictions**

----

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

**PEOPLES      GAS AND NORTH SHORE GAS DISCUSSIONS**

|                                                 |   | Peoples                  Gas  | North                  Shore Gas |
|-------------------------------------------------|--------|------------------------------------|----------------------------------|
|                                                 |   |                               | Gas                         |   |   | Corporate |   |   |   |   |   | Gas |   |   | Corporate |   |   |   |   |
| *(In                  Thousands)*               |   |                               | Distribution                     |   |   | and                  Other |   |   | Total |   |   | Distribution |   |   | and                  Other |   |   | Total |   |
| **For                  the Three Months Ended** |   |                               |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June                  30, 2006                  |   | $                                  | 1,527                            |   | $ | (2,898 | ) | $ | (1,371 | ) | $ | 851 |   | $ | (387 | ) | $ | 464 |   |
| June                  30, 2005 (GAAP)           |   |                               | 13,543                           |   |   | (2,506 | ) |   | 11,037 |   |   | 2,964 |   |   | (363 | ) |   | 2,601 |   |
| June                  30, 2005 (non-GAAP) (1)   |   |                               | 13,543                           |   |   | (2,678 | ) |   | 10,865 |   |   | 2,964 |   |   | (357 | ) |   | 2,607 |   |
|                                            |
| **For                  the Nine Months Ended**  |   |                               |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June                  30, 2006 (GAAP)           |   | $                                  | (11,686                          | ) | $ | (8,931 | ) | $ | (20,617 | ) | $ | 16,146 |   | $ | (1,197 | ) | $ | 14,949 |   |
| June                  30, 2006 (non-GAAP) (2)   |   |                               | 91,344                           |   |   | (8,931 | ) |   | 82,413 |   |   | 20,446 |   |   | (1,197 | ) |   | 19,249 |   |
| June                  30, 2005 (GAAP)           |   |                               | 120,996                          |   |   | (14,801 | ) |   | 106,195 |   |   | 23,736 |   |   | (1,435 | ) |   | 22,301 |   |
| June                  30, 2005 (non-GAAP) (2)   |   |                               | 120,996                          |   |   | (6,506 | ) |   | 114,490 |   |   | 23,736 |   |   | (867 | ) |   | 22,869 |   |

**Peoples      Gas Discussion**

**Income      Statement Variations**

----

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

**Balance      Sheet Variations**

**North      Shore Gas Discussion**

**Income      Statement Variations**

----

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

**Balance      Sheet Variations**

----

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

| **The                  Peoples Gas Light and Coke Company**      |
|------------------------------------------------------------------|
| **Gas                  Distribution Statistics**                 |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | Three                  Months Ended  | Nine                  Months Ended | Increase/Decrease |
|                                                                  |   | June                  30,  | June                  30, |   | Three                  Months |   |   | Nine                  Months |   |
| **Margin                  Data***(In Thousands)*                 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | Ended |   |   | Ended |   |
| **Gas                  Distribution revenues:**                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   | $ | 139,823 |   | $ | 163,000 |   | $ | 1,163,445 |   | $ | 990,717 |   | $ | (23,177 | ) | $ | 172,728 |   |
| Commercial                                                       |   |   | 20,843 |   |   | 26,001 |   |   | 187,656 |   |   | 157,252 |   |   | (5,158 | ) |   | 30,404 |   |
| Industrial                                                       |   |   | 2,471 |   |   | 3,505 |   |   | 31,125 |   |   | 25,770 |   |   | (1,034 | ) |   | 5,355 |   |
| **Total                  sales**                                 |   |   | 163,137 |   |   | 192,506 |   |   | 1,382,226 |   |   | 1,173,739 |   |   | (29,369 | ) |   | 208,487 |   |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 6,040 |   |   | 5,439 |   |   | 28,525 |   |   | 26,981 |   |   | 601 |   |   | 1,544 |   |
| Commercial                                                       |   |   | 7,582 |   |   | 7,444 |   |   | 37,156 |   |   | 36,841 |   |   | 138 |   |   | 315 |   |
| Industrial                                                       |   |   | 3,217 |   |   | 3,329 |   |   | 13,128 |   |   | 14,176 |   |   | (112 | ) |   | (1,048 | ) |
| Contract                  pooling                                |   |   | 5,550 |   |   | 4,847 |   |   | 24,038 |   |   | 15,382 |   |   | 703 |   |   | 8,656 |   |
| **Total                  transportation**                        |   |   | 22,389 |   |   | 21,059 |   |   | 102,847 |   |   | 93,380 |   |   | 1,330 |   |   | 9,467 |   |
| Total                  Hub revenues                              |   |   | - |   |   | 1,506 |   |   | - |   |   | 7,410 |   |   | (1,506 | ) |   | (7,410 | ) |
| Other                  Gas Distribution revenues                 |   |   | 5,061 |   |   | 4,204 |   |   | 13,202 |   |   | 11,083 |   |   | 857 |   |   | 2,119 |   |
| **Total                  Gas Distribution revenues**             |   |   | 190,587 |   |   | 219,275 |   |   | 1,498,275 |   |   | 1,285,612 |   |   | (28,688 | ) |   | 212,663 |   |
| Less:                  Gas costs                                 |   |   | 91,416 |   |   | 114,628 |   |   | 1,003,470 |   |   | 790,783 |   |   | (23,212 | ) |   | 212,687 |   |
| **Gross                  margin****(1)**                         |   |   | 99,171 |   |   | 104,647 |   |   | 494,805 |   |   | 494,829 |   |   | (5,476 | ) |   | (24 | ) |
| Less:                  Revenue taxes                             |   |   | 18,928 |   |   | 21,181 |   |   | 136,873 |   |   | 122,344 |   |   | (2,253 | ) |   | 14,529 |   |
| Environmental                  costs recovered                   |   |   | 4,719 |   |   | 4,161 |   |   | 28,345 |   |   | 26,105 |   |   | 558 |   |   | 2,240 |   |
| **Net                  margin****(1)**                           |   | $ | 75,524 |   | $ | 79,305 |   | $ | 329,587 |   | $ | 346,380 |   | $ | (3,781 | ) | $ | (16,793 | ) |
| **Gas                  Distribution deliveries (MDth):**         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  sales                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 10,722 |   |   | 12,114 |   |   | 79,497 |   |   | 85,713 |   |   | (1,392 | ) |   | (6,216 | ) |
| Commercial                                                       |   |   | 1,912 |   |   | 2,248 |   |   | 13,585 |   |   | 14,569 |   |   | (336 | ) |   | (984 | ) |
| Industrial                                                       |   |   | 277 |   |   | 332 |   |   | 2,359 |   |   | 2,546 |   |   | (55 | ) |   | (187 | ) |
| **Total                  gas sales**                             |   |   | 12,911 |   |   | 14,694 |   |   | 95,441 |   |   | 102,828 |   |   | (1,783 | ) |   | (7,387 | ) |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 2,808 |   |   | 2,959 |   |   | 17,085 |   |   | 17,677 |   |   | (151 | ) |   | (592 | ) |
| Commercial                                                       |   |   | 5,759 |   |   | 4,704 |   |   | 30,942 |   |   | 30,520 |   |   | 1,055 |   |   | 422 |   |
| Industrial                                                       |   |   | 3,238 |   |   | 3,558 |   |   | 13,081 |   |   | 14,510 |   |   | (320 | ) |   | (1,429 | ) |
| **Total                  transportation**                        |   |   | 11,805 |   |   | 11,221 |   |   | 61,108 |   |   | 62,707 |   |   | 584 |   |   | (1,599 | ) |
| **Total                  Distribution deliveries**               |   |   | 24,716 |   |   | 25,915 |   |   | 156,549 |   |   | 165,535 |   |   | (1,199 | ) |   | (8,986 | ) |
| Gross                  margin per Dth delivered                  |   | $ | 4.01 |   | $ | 3.98 |   | $ | 3.16 |   | $ | 2.94 |   | $ | 0.03 |   | $ | 0.22 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  margin per Dth delivered                    |   | $ | 3.06 |   | $ | 3.00 |   | $ | 2.11 |   | $ | 2.05 |   | $ | 0.06 |   | $ | 0.06 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  cost per Dth of gas sold                |   | $ | 7.08 |   | $ | 7.80 |   | $ | 10.51 |   | $ | 7.69 |   | $ | (0.72 | ) | $ | 2.82 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days (HDD)                |   |   | 615 |   |   | 664 |   |   | 5,658 |   |   | 5,827 |   |   | (49 | ) |   | (169 | ) |
| Normal                  heating degree days                  (2) |   |   | 774 |   |   | 774 |   |   | 6,289 |   |   | 6,307 |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days as a percent         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  normal (actual/normal)                       |   |   | 79 |   |   | 86 |   |   | 90 |   |   | 92 |   |   |   |   |   |   |   |

----

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

| **North                  Shore Gas Company**                     |
|------------------------------------------------------------------|
| **Gas                  Distribution Statistics**                 |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | Three                  Months Ended  | Nine                  Months Ended | Increase/Decrease |
|                                                                  |   | June                  30,  | June                  30, |   | Three                  Months |   |   | Nine                  Months |   |
| **Margin                  Data***(In Thousands)*                 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | Ended |   |   | Ended |   |
| **Gas                  Distribution revenues:**                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   | $ | 25,567 |   | $ | 30,114 |   | $ | 218,129 |   | $ | 184,889 |   | $ | (4,547 | ) | $ | 33,240 |   |
| Commercial                                                       |   |   | 4,051 |   |   | 4,856 |   |   | 36,179 |   |   | 30,397 |   |   | (805 | ) |   | 5,782 |   |
| Industrial                                                       |   |   | 546 |   |   | 891 |   |   | 8,371 |   |   | 7,315 |   |   | (345 | ) |   | 1,056 |   |
| **Total                  sales**                                 |   |   | 30,164 |   |   | 35,861 |   |   | 262,679 |   |   | 222,601 |   |   | (5,697 | ) |   | 40,078 |   |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 365 |   |   | 318 |   |   | 1,611 |   |   | 1,413 |   |   | 47 |   |   | 198 |   |
| Commercial                                                       |   |   | 1,284 |   |   | 1,270 |   |   | 5,773 |   |   | 5,440 |   |   | 14 |   |   | 333 |   |
| Industrial                                                       |   |   | 634 |   |   | 637 |   |   | 2,227 |   |   | 2,216 |   |   | (3 | ) |   | 11 |   |
| Contract                  pooling                                |   |   | 314 |   |   | 429 |   |   | 2,343 |   |   | 1,465 |   |   | (115 | ) |   | 878 |   |
| **Total                  transportation**                        |   |   | 2,597 |   |   | 2,654 |   |   | 11,954 |   |   | 10,534 |   |   | (57 | ) |   | 1,420 |   |
| Other                  Gas Distribution revenues                 |   |   | 478 |   |   | 442 |   |   | 1,264 |   |   | 1,066 |   |   | 36 |   |   | 198 |   |
| **Total                  Gas Distribution revenues**             |   |   | 33,239 |   |   | 38,957 |   |   | 275,897 |   |   | 234,201 |   |   | (5,718 | ) |   | 41,696 |   |
| Less:                  Gas costs                                 |   |   | 19,466 |   |   | 24,201 |   |   | 208,058 |   |   | 165,826 |   |   | (4,735 | ) |   | 42,232 |   |
| **Gross                  margin****(1)**                         |   |   | 13,773 |   |   | 14,756 |   |   | 67,839 |   |   | 68,375 |   |   | (983 | ) |   | (536 | ) |
| Less:                  Revenue taxes                             |   |   | 1,878 |   |   | 2,203 |   |   | 13,066 |   |   | 12,710 |   |   | (325 | ) |   | 356 |   |
| Environmental                  costs recovered                   |   |   | 201 |   |   | 438 |   |   | 1,904 |   |   | 1,622 |   |   | (237 | ) |   | 282 |   |
| **Net                  margin****(1)**                           |   | $ | 11,694 |   | $ | 12,115 |   | $ | 52,869 |   | $ | 54,043 |   | $ | (421 | ) | $ | (1,174 | ) |
| **Gas                  Distribution deliveries (MDth):**         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gas                  sales                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 2,265 |   |   | 2,622 |   |   | 16,725 |   |   | 17,824 |   |   | (357 | ) |   | (1,099 | ) |
| Commercial                                                       |   |   | 391 |   |   | 451 |   |   | 2,883 |   |   | 3,054 |   |   | (60 | ) |   | (171 | ) |
| Industrial                                                       |   |   | 60 |   |   | 89 |   |   | 692 |   |   | 780 |   |   | (29 | ) |   | (88 | ) |
| **Total                  gas sales**                             |   |   | 2,716 |   |   | 3,162 |   |   | 20,300 |   |   | 21,658 |   |   | (446 | ) |   | (1,358 | ) |
| Transportation                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                      |   |   | 129 |   |   | 121 |   |   | 790 |   |   | 730 |   |   | 8 |   |   | 60 |   |
| Commercial                                                       |   |   | 1,212 |   |   | 1,023 |   |   | 5,891 |   |   | 5,411 |   |   | 189 |   |   | 480 |   |
| Industrial                                                       |   |   | 1,180 |   |   | 1,203 |   |   | 3,978 |   |   | 4,214 |   |   | (23 | ) |   | (236 | ) |
| **Total                  transportation**                        |   |   | 2,521 |   |   | 2,347 |   |   | 10,659 |   |   | 10,355 |   |   | 174 |   |   | 304 |   |
| **Total                  Gas Distribution deliveries**           |   |   | 5,237 |   |   | 5,509 |   |   | 30,959 |   |   | 32,013 |   |   | (272 | ) |   | (1,054 | ) |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  margin per Dth delivered                  |   | $ | 2.63 |   | $ | 2.68 |   | $ | 2.19 |   | $ | 2.14 |   | $ | (0.05 | ) | $ | 0.05 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  margin per Dth delivered                    |   | $ | 2.23 |   | $ | 2.20 |   | $ | 1.71 |   | $ | 1.69 |   | $ | 0.03 |   | $ | 0.02 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  cost per Dth of gas sold                |   | $ | 7.17 |   | $ | 7.65 |   | $ | 10.25 |   | $ | 7.66 |   | $ | (0.48 | ) | $ | 2.59 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days (HDD)                |   |   | 615 |   |   | 664 |   |   | 5,658 |   |   | 5,827 |   |   | (49 | ) |   | (169 | ) |
| Normal                  heating degree days                  (2) |   |   | 774 |   |   | 774 |   |   | 6,289 |   |   | 6,307 |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                  heating degree days as a percent         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  normal (actual/normal)                       |   |   | 79 |   |   | 86 |   |   | 90 |   |   | 92 |   |   |   |   |   |   |   |

----

**FORWARD-LOOKING      INFORMATION**

| ·   | The                outcome of the pending merger between the Company and WPS Resources                Corporation; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | the                outcome of rate increase proceedings if filed with the Commission                by the                utility subsidiaries; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adverse                decisions in proceedings before the Commission, including, but not                limited                to, proceedings concerning the prudence review of the utility                subsidiaries' gas purchases; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adverse                changes in the Commission's approved rate mechanisms for recovery                of                environmental remediation costs at former manufactured gas sites                of the                Company's subsidiaries, or adverse decisions by the Commission with                respect to the prudence of costs actually                incurred; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                future health of the United States and Illinois                economies; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | the                timing and extent of changes in interest rates and energy commodity                prices, including but not limited to the effect of gas prices on                cost of                gas supplies, accounts receivable and the provision for uncollectible                accounts, interest expense and earnings from the Oil and Gas Production                segment; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                effectiveness of the Company's derivative instruments and hedging                activities and their impact on our future results of                operations; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adverse                resolution of material litigation; |
|--------------------|-----------------------------------------------------------|

| ·   | effectiveness                of the Company's risk management policies and the creditworthiness                of                customers and counterparties; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in the credit ratings of the Company, Peoples Gas and North Shore                Gas; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | regulatory                developments in the United States, Illinois and other states where                the                Company does business; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in the nature of the Company's competition resulting from industry                consolidation, legislative change, regulatory change and other factors,                as                well as action taken by particular                competitors; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company's success in identifying diversified business segment projects                on                financially acceptable terms and generating earnings from projects                in a                reasonable time; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | operational                factors affecting the Company's Gas Distribution, Energy Assets and                Oil                and Gas Production segments; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company's ability to complete its divestment of its power generation                assets on advantageous terms; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | drilling                and production risks and the inherent uncertainty of oil and gas                reserve                estimates; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | weather-related                energy demand; |
|--------------------|-----------------------------------------------|

| ·   | terrorist                activities; and |
|--------------------|------------------------------------------|

| ·   | the                application of, or changes in, accounting rules or interpretations,                including, but not limited to the impact of mark-to market accounting                treatment for some of the Company's derivative contracts used by                the                Company to manage commodity price basis, and other                risks. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

**ITEM      4. **
**Controls      and Procedures**

**Disclosure      Controls and Procedures**

**Changes      In Internal Control Over Financial Reporting**

----

**Part            II - Other            Information**

**Item      1. **
**Legal      Proceedings**

**Item      1A. **
**Risk      Factors**

**Adverse      changes in our credit ratings may negatively affect us.**

**Risks      Relating to the Merger**

*The      merger may not be completed, which could adversely affect Peoples Energy’s      business operations and stock prices.*

| ·   | Peoples                Energy would not realize the benefits of the proposed merger, including                any synergies from combining the two                companies; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                trading price of Peoples Energy common stock may decline to the extent                that the current market prices reflect a market assumption that the                merger                will be completed; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Part              II - Other              Information**

| ·   | Peoples                Energy would continue to be exposed to the general competitive pressures                and risks discussed in its Annual Report on Form 10-K/A for the year                ended                September 30, 2005, which pressures and risks may be increased if                the                merger is not completed. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Peoples      Energy will be subject to business uncertainties and contractual restrictions      while the merger is pending that could adversely affect its      business.*

*The      value of shares of WPS Resources common stock to be received by Peoples Energy      shareholders in the merger will fluctuate.*

| ·   | changes                in the business, operations or prospects of WPS Resources and/or                Peoples                Energy; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | speculation                regarding the likelihood that the merger will be completed and the                timing                of the completion; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | general                market and economic conditions; and |
|--------------------|------------------------------------------------------------|

----

**Part              II - Other              Information**

| ·   | litigation                and/or regulatory developments. |
|--------------------|-----------------------------------------------------------|

*The      merger is subject to receipt of consent or approval from governmental entities      that could delay or prevent the completion of the merger or impose conditions      that could have a material adverse effect on the combined company or that could      cause abandonment of the merger.*

*The      anticipated benefits of combining WPS Resources and Peoples Energy may not      be      realized.*

| ·   | whether                United States federal and state public utility, antitrust and other                regulatory authorities whose approval is required to complete the                merger                impose conditions on the merger or require the combined company to                share a                portion of the expected synergies of the merger with customers, any                of                which may have an adverse effect on the combined                company; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                ability of the two companies to combine certain of their operations                or                take advantage of expected growth opportunities; and general market                and                economic conditions; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | general                competitive factors in the market                place. |
|--------------------|--------------------------------------------------------------------------------|

*The      integration of WPS Resources and Peoples Energy following the merger will      present significant challenges that may result in a decline in the anticipated      potential benefits of the merger.*

----

**Part              II - Other              Information**

| ·   | integrating                the best practices of two companies, including distribution and utility                operations and staff functions; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                necessity of coordinating geographically separated organizations,                systems                and facilities; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | integrating                personnel with diverse business backgrounds and organizational                cultures; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | reducing                the costs associated with each company’s operations;                and |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | preserving                important relationships of both WPS Resources and Peoples Energy                and                resolving potential conflicts that may                arise. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Peoples      Energy will incur significant transaction, merger-related and restructuring      costs in connection with the merger.*

*The      combined company will record goodwill that could become impaired and adversely      affect the combined company’s operating results.*

----

**Part          II - Other Information**

**Item      2. **
**Unregistered      Sales of Equity Securities and Use of Proceeds**

**Item      3. **
**Defaults      Upon Senior Securities**

**Item      4. Submission of Matters to a Vote of Security      Holders**

**Item      5. **
**Other      Information**

| **Item                6.****Exhibits** |
|----------------------------------------|
|                                   |   |   |   |   |   |
|                                   | **Peoples                Energy Corporation**: |
|                                   |   |   |   |   |   |
|                                   |   |   | Exhibit |   |   |
|                                   |   |   | Number |   | Description                of Document |
|                                   |   |   |   |   |   |
|                                   |   |   | 10(a) |   | Credit                Agreement dated as of June 13, 2006, by and among Peoples Gas, the                financial institutions party hereto, and Bank of America, N.A., JPMorgan                Chase Bank, N.A., ABN AMRO Incorporated, US Bank National Association,                and                The Bank of Tokyo-Mitsubishi, Ltd. Chicago Branch, as                agents. |
|                                   |   |   |   |   |   |
|                                   |   |   | 12 |   | Statement                re: Computation of Ratio of Earnings to Fixed Charges for the                Company |
|                                   |   |   |   |   |   |
|                                   |   |   | 31(a) |   | Certification                of Thomas M. Patrick on behalf of the Company pursuant to 17 CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. |

|   |   |   | 31(b)  |   | Certification                of Thomas A. Nardi on behalf of the Company pursuant to 17 CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002.                             |
|--------|--------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |   |   |                                                                                                                                                                                                                                                                              |
|   |   |   | 32(a)  |   | Certification                of Thomas M. Patrick on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002. |
|   |   |   |   |   |                                                                                                                                                                                                                                                                              |
|   |   |   | 32(b)  |   | Certification                of Thomas A. Nardi on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002.   |

----

**Part          II - Other Information**

|   | **The                Peoples Gas Light and Coke Company**: |
|--------|------------------------------------------------------------|
|   |                                                       |   |   |   |   |
|   |                                                       |   | Exhibit |   |   |
|   |                                                       |   | Number |   | Description                of Document |
|   |                                                       |   | 31(a) |   | Certification                of Thomas M. Patrick on behalf of Peoples Gas pursuant to 17 CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. |
|   |                                                       |   |   |   |   |
|   |                                                       |   | 31(b) |   | Certification                of Thomas A. Nardi on behalf of Peoples Gas pursuant to 17 CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. |
|   |                                                       |   |   |   |   |
|   |                                                       |   | 32(a) |   | Certification                of Thomas M. Patrick on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002. |
|   |                                                       |   |   |   |   |
|   |                                                       |   | 32(b) |   | Certification                of Thomas A. Nardi on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002. |

|   | **North                Shore Gas Company**: |
|--------|---------------------------------------------|
|   |                                        |   |   |   |   |
|   |                                        |   | Exhibit |   |   |
|   |                                        |   | Number |   | Description                of Document |
|   |                                        |   |   |   |   |
|   |                                        |   | 31(a) |   | Certification                of Thomas M. Patrick on behalf of North Shore Gas pursuant to 17                CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. |
|   |                                        |   |   |   |   |
|   |                                        |   | 31(b) |   | Certification                of Thomas A. Nardi on behalf of North Shore Gas pursuant to 17 CFR                240.13a-14(a) or 17 CFR 240.15d-14(a), as adopted pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. |
|   |                                        |   |   |   |   |
|   |                                        |   | 32(a) |   | Certification                of Thomas M. Patrick on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002. |
|   |                                        |   |   |   |   |
|   |                                        |   | 32(b) |   | Certification                of Thomas A. Nardi on behalf of the Company, Peoples Gas and North                Shore                Gas pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906                of the Sarbanes-Oxley Act of 2002. |

----

| **SIGNATURES**                                                                                                                                                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
| 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                9, 2006                                                                                                                                                                                                                                    |   | By:                /s/                THOMAS A. NARDI |
| (Date)                                                                                                                                                                                                                                                           |   | Thomas                A. Nardi |
|                                                                                                                                                                                                                                                             |   | Executive                Vice Presidentand                Chief Financial Officer |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   | (Same                as above) |
|                                                                                                                                                                                                                                                             |   | Principal                Financial Officer |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
| 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. |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   | The                Peoples Gas Light and Coke Company |
|                                                                                                                                                                                                                                                             |   | (Registrant) |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
| August                9, 2006                                                                                                                                                                                                                                    |   | By:                /s/                THOMAS A. NARDI |
| (Date)                                                                                                                                                                                                                                                           |   | Thomas.                A. Nardi |
|                                                                                                                                                                                                                                                             |   | Executive                Vice Presidentand                Chief Financial Officer |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   | (Same                as above) |
|                                                                                                                                                                                                                                                             |   | Principal                Financial Officer |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
| 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. |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   | North                Shore Gas Company |
|                                                                                                                                                                                                                                                             |   | (Registrant) |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   |   |
| August                9, 2006                                                                                                                                                                                                                                    |   | By:                /s/                THOMAS A. NARDI |
| (Date)                                                                                                                                                                                                                                                           |   | Thomas.                A. Nardi |
|                                                                                                                                                                                                                                                             |   | Executive                Vice Presidentand                Chief Financial Officer |
|                                                                                                                                                                                                                                                             |   |   |
|                                                                                                                                                                                                                                                             |   | (Same                as above) |
|                                                                                                                                                                                                                                                             |   | Principal                Financial Officer |

----