**EXHIBIT      10.5**

**STATE      OF ILLINOIS**

**ILLINOIS      COMMERCE COMMISSION**

| **Illinois                Commerce Commission**               | **:** |        |
|---------------------------------------------------------------|-------|-------------|
| **On                Its Own Motion**                          | **:** |        |
|                                                          | **:** |        |
| **v.**                                                        | **:** | **03-0705** |
|                                                          | **:** |        |
| **The                Peoples Gas Light and Coke Company**     | **:** |        |
|                                                          | **:** |        |
| **Reconciliation                of revenues collected under** | **:** |        |
| **gas                adjustment charges with actual**         | **:** |        |
| **costs                prudently incurred**                   | **:** |        |

**ORDER**

**I.**
**The      Settlement**

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**II.**
**Outstanding      Procedural Matters**

**III.**
**Legal      Basis for Approval of the Settlement**

*Business      and Professional Peoples for the Public Interest v. Illinois Commerce      Commission*
*BPI*

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**IV.**
**Terms      of the Settlement**

**A.**
**Distribution      of the $100 Million Refund**

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| §   | the                number of customers receiving service on each Service Classification                as of                the date this Order is entered; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| §   | the                usage of PGA gas by each Service Classification during the Reconciliation                Periods; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| §   | the                amount to be refunded to each customer account in each service                classification; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| §   | the                number of current and former customers that held customer accounts                on                Service Classification No. 3 and Service Classification No. 4 during                the                Reconciliation Periods and consumed PGA gas at any time during the                Reconciliation Periods; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | the                amount of PGA gas consumed during the Reconciliation Periods by each                current and former customer that held a Service Classification No.                3 or                Service Classification No. 4 account during the Reconciliation                Periods; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | an                indication of whether former SC No. 3 and SC No. 4 customers are                still a                going concern, the amount to be refunded to customers in each service                classification; and, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | the                amount to be refunded to each current and former customer account                that                received service under Service Classification No. 3 and Service                Classification No. 4 during the Reconciliation                Periods. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**B.**
**Accounting      Proposals Adopted from the ALJPO in Docket No. 01-**
**0707**

*et.      seq.*

|   | (7) | Peoples                Gas Light and Coke Company shall update its operating agreement,                which was                approved by this Commission in Docket No. 55071, prior to filing                its                petition with the ICC for its next rate case or within sixty days                after                the date a final order is entered in this docket, whichever occurs                first; |
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|   | (8) | Peoples                Gas Light and Coke Company shall account for all gas physically injected                into Manlove Field by including the cost associated with maintenance                gas                in the amount transferred from purchased gas expense to the gas stored                underground account, Account 164.1; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Peoples                Gas Light and Coke Company shall account for the portion of gas injected                into the Manlove Storage Field to maintain pressure, as credits from                Account 164.1, Gas Stored Underground, as charges to Account 117,                Gas                Stored Underground, in the case of recoverable cushion gas, or to                Account                101, in the case of non-recoverable portions of cushion                gas; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | Peoples                Gas Light and Coke Company shall revise its maintenance gas accounting                procedures related to gas injected for the benefit of the North Shore                Gas                Company and third-parties to require those entities to bear the cost                of                maintenance gas, and it shall revise its maintenance gas accounting                procedures to ensure that all customers/consumers bear equal                responsibility for maintenance gas; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (12) | Peoples                Gas Light and Coke Company shall submit its revised maintenance gas                accounting procedures to the Commission’s Chief Clerk with a copy to the                Manager of the Accounting Department within 30 days after the date,                upon                which, a final Order is entered in this                docket; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (14) | Peoples                Gas Light and Coke Company shall submit quarterly reports reflecting                its                use of journal entries regarding maintenance gas to the Manager of                this                Commission’s Accounting Department within 45 days of the end of each                quarter, after the date of a final order is entered in this docket,                through the quarter ending September 30,                2009; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (15) | Peoples                Gas Light and Coke Company shall engage outside consultants to perform                a                management audit of its gas purchasing practices, gas storage operations                and storage activities. The firm selected to perform the management                audit                shall be independent of Peoples Gas Light and Coke Company, its                affiliates, Staff, and all parties in this docket, and approved by                this                Commission. Monthly reporting of the progress of the conduct of the                management audit shall be submitted to the Bureau Chief of the                Commission’s Public Utilities Bureau, with a copy to the Manager of the                Commission’s Accounting Department, until the management audit report has                been submitted. Completion of this management audit shall occur no                later                than eighteen months after the date, upon which, a final order is                entered                in this docket. Upon completion, copies of the management audit reports                shall be submitted to the Commission’s Public Utilities Bureau Chief and                the Manager of the Commission’s Accounting                Department; |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**C.**
**Hardship      Reconnection Program**

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**D.**
**Gas      Reconciliation**

| 1.  Unamortized                Balance at 9/30/02 per 2002 reconciliation                (Refund)/Recovery                       |   | $      | 2,929,960.13   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|
| 2.  Factor                A Adjustments Amortized to Sch. I at 09/30/02 per 2002 reconciliation                (Refund)/Recovery |   |   | 4,104,778.44   |   |
| 3.  Factor                O (Refunded)/Recovered during 2002                                                                     |   |   | 0              |   |
| 4.  Balance                to be (Refunded)/Recovered during 2003 from prior periods                                             |   |   | 7,034,738.57   |   |
| 5.  2003                PGA Recoverable Costs                                                                                    |   |   | 706,357,105.37 |   |
| 6.  2003                PGA Actual Recoveries                                                                                    |   |   | 691,292,069.43 |   |
| 7.  Interest                                                                                                                     |   |   | 264,823.88     |   |
| 8.  Other                Adjustments                                                                                             |   |   | 0              |   |
| 9.  Pipeline                Refunds                                                                                              |   |   | (31,240.25     | )      |
| 10.  (Over)/Under                Recovery for 2003                                                                               |   |   | 15,298,619.57  |   |
| 11.  PGA                Reconciliation Balance at 9/30/03 (Over)/Under                Collected                                  |   |   | 22,333,358.14  |   |
| 12.  Factor                A Adjustments unreconciled at 9/30/03 (Refund)/Recovery                                               |   |   | 5,738,002.63   |   |
| 13.  Unamortized                Balance at 9/30/03 (Refund)/Recovery                                                             |   | $      | 16,595,355.51  |   |
| 14.  Requested                Ordered Reconciliation Factor to be (Refunded)/Recovered                [Factor O]                 |   |   | 0              |   |

**E.**
**Commission      Analysis and Conclusions **

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**V.**
**Findings      and Ordering Paragraphs**

| (1)                 | The                Peoples Gas Light and Coke Company is                a corporation engaged in the distribution of natural gas service                to the                public in Illinois and, as such, is a public utility within the meaning                of                the Public Utilities Act; |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)                 | the                Commission has jurisdiction over Respondent and of the subject matter                of                this proceeding; |
|-------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| (3)                 | the                Settlement (Exhibit 1) as revised by the Addendum (Exhibit 2) is                adopted                approved and the terms incorporated herein as a settlement of allegations                that, during the reconciliation period, Respondent had not acted                reasonably and prudently in its purchases of natural gas and other                activities that affected the amounts collected through Gas Charges                in its                fiscal year 2003; |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)                 | the                unamortized balances at the end of Respondent’s 2003 reconciliation year                show a recoverable balance for the Commodity Gas Charge of $13,225,025.22;                a recoverable balance of $3,394,605.71 for the Non-Commodity Gas                Charge                and the Demand Gas Charge; and a refundable balance of $24,275.42                for the                Transition Surcharge, for a total recoverable balance of $16,595,355.51;                the Factor O Refund is zero; |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)                 | the                reconciliations submitted by The Peoples Gas Light and Coke Company                of the                costs actually incurred for the purchase of natural gas with revenues                received for such gas for the reconciliation period beginning October                1,                2002, through September 30, 2003, may properly be approved; |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)                 | pursuant                to the Settlement, a refund of $100 million is to be distributed                in the                manner set forth above as part of the consideration paid in global                settlement of this docket as well as I.C.C. Docket Nos. 01-0706,                01-0707,                02-0726, 02-0727, 03-0704, 04-0682 and                04-0683; |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)                 | The                Peoples Gas Light and Coke Company should follow the accounting procedures                recited above the directives contained in the incorporated parts                of the                settlement agreement and the addendum thereto in all future gas adjustment                charge reconciliation dockets. |
|-------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (8) | The                Peoples Gas Light and Coke Company shall file quarterly reports with                the                Chief Clerk’s office detailing the progress of the Hardship Reconnection                program. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**The      Peoples Gas Light and Coke Company**

**Gas      Charge Reconciliation Summary**

**Fiscal      2003**

|                                                                                                                                               | CommodityGas                Charges(CGC) | Non-Commodity                Gas Chargeand                Demand Gas Charge(NCGC                and DGC) | TransitionSurcharge(TS) | TotalGas                Charge |
|----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|----------------------------------------------------------------------------------------------------------|-------------------------|--------------------------------|
| Line                                                                                                                                               |                                     |                                                                                                     |                    |                           |
| **Fiscal                2002**                                                                                                                     |                                     |                                                                                                     |                    |                           |
| 1  Unamortized                Balance at September 30, 2002(Refund)                / Recovery                                            | $2,194,194.24                            | $760,047.68                                                                                              | ($24,281.79)            | $2,929,960.13                  |
| 2  Factor                A Adjustments unreconciled at September 30, 2002 (Refund) / Recovery                                            | $3,352,154.88                            | $756,712.12                                                                                              | ($4,088.56)             | $4,104,778.44                  |
| 3  Factor                O(Refunded)                / Recovered                                                                          | $0.00                                    | $0.00                                                                                                    | $0.00                   | $0.00                          |
| **4**  **Balance                (Refundable) / Recoverable from Prior Periods (Line 1 + Line 2 +                Line                3)** | $5,546,349.12                            | $1,516,759.80                                                                                            | ($28,370.35)            | $7,034,738.57                  |
| **Fiscal                2003**                                                                                                                     |                                     |                                                                                                     |                    |                           |
| 5   Costs                Recoverable through the Gas Charge                                                                         | $653,653,807.37                          | $52,703,298.00                                                                                           | $0.00                   | $706,357,105.37                |
| 6   Revenues                Arising though Application of the Gas Charge                                                            | $641,025,406.44                          | $50,266,794.40                                                                                           | ($131.41)               | $691,292,069.43                |
| 7   Separately                Reported Pipeline Refunds or Surcharges                                                               | $0.00                                    | ($31,240.25)                                                                                             | $0.00                   | ($31,240.25)                   |
| 8   Separately                Reported Other Adjustments                                                                            | $0.00                                    | $0.00                                                                                                    | $0.00                   | $0.00                          |
| 9   Interest                Calculated at 2.00% thru Dec. 2002; 1.50% thereafter                                                    | $283,848.94                              | ($18,652.24)                                                                                             | ($372.82)               | $264,823.88                    |
| 10  (Over)                / Under Recovery for Reconciliation Year(Line                5 - Line 6 + Line 7 + Line 8 + Line 9)            | $12,912,249.87                           | $2,386,611.11                                                                                            | ($241.41)               | $15,298,619.57                 |
| 11  (Over)                / Under Recovery Balance for Reconciliation Year (Line 4 + Line                10)                             | $18,458,598.99                           | $3,903,370.91                                                                                            | ($28,611.765)           | $22,333,358.14                 |
| 12  Factor                A Adjustments unreconciled at September 30, 2003 (Refund) / Recovery                                           | $5,233,573.77                            | $508,765.20                                                                                              | ($4,336.34)             | $5,738,002.63                  |
| 13  Unamortized                Balance at September 30, 2003 (Refund)                / Recovery (Line 11 - Line 12)                      | $13,225,025.22                           | $3,394,605.71                                                                                            | ($24,275.42)            | $16,595,355.51                 |
| 14  Requested                Factor O (Line 11 - Line 12 - Line 13) (Refund) / Recovery                                                  | $0.00                                    | $0.00                                                                                                    | $0.00                   | $0.00                          |

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