| **UNITED                  STATES**                                                                     |
|--------------------------------------------------------------------------------------------------------|
| **SECURITIES                  AND EXCHANGE COMMISSION**                                                |
| **Washington,                  D.C. 20549**                                                            |
|                                                                                                   |
| **FORM                  10-Q**                                                                         |
|                                                                                                   |   |   |
| [X]                                                                                                    | QUARTERLY                  REPORT PURSUANT TO SECTION 13 OR 15(d) |
| OF                  THE                  SECURITIES EXCHANGE ACT OF 1934                               |
|                                                                                                   |
| For                  the                  quarterly period ended **March                  31, 2007**   |
|                                                                                                   |
| OR                                                                                                     |
|                                                                                                   |   |
| [                  ]                                                                                   | TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(d) |
| OF                  THE                  SECURITIES EXCHANGE ACT OF 1934                               |
|                                                                                                   |
| For                  the                  transition period from ________ to                  ________ |

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

| Indicate                  by                  check mark whether the registrant (1) has filed all reports required                  to be                  filed by Section 13 or 15(d) of the Securities Exchange Act of                  1934 during                  the preceding 12 months (or for such shorter period that the registrant                  was required to file such reports), and (2) has been subject to                  such                  filing requirements for the past 90 days. Yes [X]   No [  ] |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Indicate                  by a                  check mark whether the registrant is a large accelerated filer,                  an                  accelerated filer, or a non-accelerated filer. See definition of                  “accelerated filer and large accelerated filer” in Rule 12b-2 of the                  Exchange Act. (Check One):                                                                                                                                                                                                    |
| Large                  accelerated filer [ ]  Accelerated                  filer [                  ]                   Non-accelerated                  filer [X]                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Indicate                  by                  check mark whether the registrant is a shell company (as defined                  in Rule                  12b-2 of the Exchange Act). Yes [  ]  No                  [X]                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Indicate                  the                  number of shares outstanding of each of the issuer's classes of                  common                  stock as of the latest practicable date: 25,357,566 shares of common                  stock, without par value, outstanding at April 30, 2007, all of                  which were held, beneficially and of record, by Peoples Energy                  Corporation.                                                                                                                                  |

----

**THE        PEOPLES        GAS LIGHT AND COKE COMPANY**

**FORM        10-Q        FOR THE QUARTER ENDED MARCH 31, 2006**

**CONTENTS**

|                          |                                                                                                                          | Page   |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------|--------|
|                          |                                                                                                                          |   |
|                          | **FORWARD-LOOKING                  STATEMENTS**                                                                               | 4      |
|                          |                                                                                                                          |   |
| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                                                                    |   |
|                          |                                                                                                                          |   |
| Item                  1.      | FINANCIAL                  STATEMENTS (Unaudited)                                                                             |   |
|                          | Condensed                  Consolidated Statements of Income                                                                  | 5      |
|                          | Condensed                  Consolidated Balance Sheets                                                                        | 6      |
|                          | Condensed                  Consolidated Statements of Capitalization                                                          | 7      |
|                          | Condensed                  Consolidated Statements of Cash Flows                                                              | 8      |
|                          |                                                                                                                          |   |
|                          | CONDENSED                  NOTES TO FINANCIAL STATEMENTS                                                                      | 9      |
|                          |                                                                                                                          |   |
| Item                  2.      | Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations | 23     |
|                          |                                                                                                                          |   |
| Item                  3.      | Quantitative                  and Qualitative Disclosures About Market Risk                                                   | 29     |
|                          |                                                                                                                          |   |
| Item                  4.      | Controls                  and                  Procedures                                                                     | 30     |
|                          |                                                                                                                          |   |
| **PART                  II.** | **OTHER                  INFORMATION**                                                                                        |   |
|                          |                                                                                                                          |   |
| Item                  1.      | Legal                  Proceedings                                                                                            | 32     |
|                          |                                                                                                                          |   |
| Item                  1A.     | Risk                  Factors                                                                                                 | 32     |
|                          |                                                                                                                          |   |
| Item                  6.      | Exhibits                                                                                                                      | 32     |
|                          |                                                                                                                          |   |
| Signature                     |                                                                                                                          | 33     |

| **EXHIBIT                  INDEX** |                                                                                                                                                                                                                                                                                | 34     |
|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                               |                                                                                                                                                                                                                                                                                |   |
| 12                                 | The                  Peoples                  Gas Light and Coke Company Ratio of Earnings to Fixed                  Charges                                                                                                                                                        |   |
|                               |                                                                                                                                                                                                                                                                                |   |
| 31.1                               | Certification                  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley                  Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                  Act of                  1934 for The Peoples Gas Light and Coke Company |   |
|                               |                                                                                                                                                                                                                                                                                |   |
| 31.2                               | Certification                  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley                  Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange                  Act of                  1934 The Peoples Gas Light and Coke Company     |   |
|                               |                                                                                                                                                                                                                                                                                |   |
| 32                                 | Written                  Statement of the Chief                  Executive Officer and Chief Financial Officer Pursuant                  to 18                  U.S.C. Section 1350 for The                  Peoples                  Gas Light and Coke Company                    |   |

----

**Commonly        Used Acronyms**

| AG       | Illinois                  Attorney General                                                                                                  |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------|
| CERCLA   | Comprehensive                  Environmental Response, Compensation and Liability Act of 1980,                  as                  amended |
| EPA      | United                  States                  Environmental Protection Agency                                                             |
| FASB     | Financial                  Accounting Standards Board                                                                                       |
| FERC     | Federal                  Energy Regulatory Commission                                                                                       |
| FIN      | FASB                  Interpretation No.                                                                                                    |
| ICC      | Illinois                  Commerce Commission                                                                                               |
| IEPA     | Illinois                  Environmental Protection Agency                                                                                   |
| LIFO     | Last-in,                  first-out                                                                                                         |
| MD&A | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                     |
| MTM      | Mark-to-market                                                                                                                              |
| NSG      | North                  Shore                  Gas Company                                                                                   |
| NYMEX    | New                  York                  Mercantile Exchange                                                                              |
| PCB      | Polychlorinated                  biphenyl                                                                                                   |
| PEC      | Peoples                  Energy Corporation                                                                                                 |
| PGL      | The                  Peoples                  Gas Light and Coke Company                                                                    |
| RAKTL    | Ronald                  A.                  Katz Technology Licensing, L.P.                                                                 |
| RCRA     | Resource                  Conservation and Recovery Act                                                                                     |
| SEC      | Securities                  and Exchange Commission                                                                                         |
| SFAS     | Statement                  of                  Financial Accounting Standards                                                               |

----

**Forward-Looking        Statements**
| ·   | Revenues                or                expenses, |
|--------------------|-----------------------------------------------------|
| ·   | Capital                expenditure projections, and |
|--------------------|-----------------------------------------------------|
| ·   | Financing                sources. |
|--------------------|-----------------------------------|
| ·   | The                successful combination of the operations of PEC and its subsidiaries,                including PGL, within Integrys Energy Group, Inc. ("Integrys") (Integrys                was formerly known as WPS Resources                Corporation); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Unexpected                costs or liabilities related to the merger between a subsidiary of                Integrys and PEC; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                combined                company of Integrys and PEC may be unable to achieve the forecasted                synergies or it may take longer or cost more than expected to achieve                these synergies; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Resolution                of                pending and future rate cases and negotiations (including the recovery                of                deferred costs) and other regulatory decisions impacting PGL; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                impact of                recent and future federal and state regulatory change, including                changes                in environmental, tax and other laws and regulations to which PGL                and its                subsidiaries are subject, as well as changes in application of existing                laws and regulations; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Current                and                future litigation, regulatory investigations, proceedings or inquiries,                including but not limited to, manufactured gas plant site cleanup,                proceedings concerning the prudence review of PGL’s gas purchases and                costs actually incurred; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                credit                ratings of PGL could change in the                future; |
|--------------------|----------------------------------------------------------------------------------------------------|
| ·   | Resolution                of                audits by the Internal Revenue Service and Illinois state revenue                agencies; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                effects,                extent and timing of additional competition in the markets in which                PGL                operates; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                impact of                fluctuations in commodity prices, interest rates and customer demand; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|
| ·   | The                effectiveness of PGL’s derivative instruments and hedging activities and                their impact on its future results of                operations; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Available                sources and costs of natural gas; |
|--------------------|------------------------------------------------------------|
| ·   | Investment                performance of employee benefit plan assets; |
|--------------------|------------------------------------------------------------------------|
| ·   | Advances                in                technology; |
|--------------------|-------------------------------------------------------|
| ·   | Effects                of                and changes in political, legal and economic conditions and developments                in the United States and Illinois; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                direct or                indirect effects of terrorist incidents, natural disasters or responses                to                such events; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Financial                market conditions and the results of financing efforts, including                risks                associated with commodity prices (particularly natural gas), interest                rates and counter-party credit; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Weather                and                other natural phenomena, in particular the effect of weather on natural                gas sales; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                effect of                accounting pronouncements issued periodically by standard-setting                bodies;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Other                factors                discussed elsewhere herein and in other reports filed by PGL and/or                Integrys from time to time with the SEC. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

**PART        I -        FINANCIAL INFORMATION**

**Item        1.        Financial Statements**

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                                                  |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |   |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)**                                 |   |  **Three                  Months Ended** |   |
|                                                                                                              |   | **March                  31,** |   |
| (Millions)                                                                                                   |   |   | **2007** |   |   | 2006 |   |
|                                                                                                         |   |   |   |   |   |   |   |
| **Gas                  operating revenues**                                                                  |   |   | **$627.1** |   |   | $633.1 |   |
| **Operating                  expenses**                                                                      |   |   |   |   |   |   |   |
| Gas                  purchased                  for resale                                                   |   |   | **458.7** |   |   | 485.2 |   |
| Operating                  and                  maintenance expenses                                         |   |   | **98.5** |   |   | 82.0 |   |
| Gas                  charge                  settlement                                                      |   |   | **-** |   |   | 28.4 |   |
| Depreciation                  and amortization                                                               |   |   | **14.5** |   |   | 14.0 |   |
| Taxes,                  other                  than income taxes                                             |   |   | **7.4** |   |   | 7.0 |   |
| **Operating                  income**                                                                        |   |   | **48.0** |   |   | 16.5 |   |
|                                                                                                         |   |   |   |   |   |   |   |
| Miscellaneous                  income                                                                        |   |   | **1.0** |   |   | 1.0 |   |
| Interest                  expense                                                                            |   |   | **(7.7** | **)** |   | (7.1 | ) |
| **Other                  (expense) income**                                                                  |   |   | **(6.7** | **)** |   | (6.1 | ) |
|                                                                                                         |   |   |   |   |   |   |   |
| Income                  before                  taxes                                                        |   |   | **41.3** |   |   | 10.4 |   |
| Provision                  for                  Income taxes                                                 |   |   | **12.8** |   |   | 2.8 |   |
| **Net                  Income**                                                                              |   |   | **$28.5** |   |   | $7.6 |   |
|                                                                                                         |   |   |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements. |   |

----

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                  |   |
| **CONDENSED                  CONSOLIDATED BALANCE SHEETS (Unaudited)**                                                                                |   |   | **March                  31,** |   |   | December                  31, |   |   | March                  31, |   |
| (Millions)                                                                                                                                            |   |   | **2007** |   |   | 2006 |   |   | 2006 |   |
| **Assets**                                                                                                                                            |   |
| **Current                  assets**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash                  equivalents                                                                                           |   |   | **$                  -** |   |   | $                  - |   |   | $35.6 |   |
| Customer                  and                  other receivables, net of reserves of $38.2, $29.1 and $43.2                                           |   |   |   |   |   |   |   |   |   |   |
| at                  March 31,                  2007, December 31, 2006 and March 31, 2006, respectively                                               |   |   | **309.5** |   |   | 169.1 |   |   | 358.6 |   |
| Receivables                  from related parties                                                                                                     |   |   | **3.2** |   |   | 5.1 |   |   | 3.9 |   |
| Accrued                  unbilled revenues                                                                                                            |   |   | **59.7** |   |   | 97.7 |   |   | 77.9 |   |
| Natural                  gas                  in storage, at last-in, first-out cost                                                                  |   |   | **28.2** |   |   | 89.4 |   |   | 31.0 |   |
| Materials                  and                  supplies, at average cost                                                                             |   |   | **9.5** |   |   | 9.0 |   |   | 9.5 |   |
| Regulatory                  assets                                                                                                                    |   |   | **45.7** |   |   | 154.8 |   |   | 80.8 |   |
| Assets                  from                  risk management activities                                                                              |   |   | **2.3** |   |   | - |   |   | - |   |
| Deferred                  income taxes                                                                                                                |   |   | **30.8** |   |   | 22.6 |   |   | 11.4 |   |
| Prepayments                  and other                                                                                                                |   |   | **23.4** |   |   | 5.3 |   |   | 3.9 |   |
| **Total                  current assets**                                                                                                             |   |   | **512.3** |   |   | 553.0 |   |   | 612.6 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| Property,                  plant, and equipment, net of accumulated depreciation of $969.8,                  $958.1,                  and   |   |   |   |   |   |   |   |
| $924.4                  at                  March 31, 2007, December 31, 2006 and March 31, 2006,                  respectively                  |   | **1,424.3** |   |   | 1,421.3 |   |   | 1,373.0 |   |
| Noncurrent                  regulatory assets                                                                                                         |   |   | **450.4** |   |   | 464.3 |   |   | 247.7 |   |
| Investments                  and other assets                                                                                                         |   |   | **17.1** |   |   | 16.9 |   |   | 34.4 |   |
| Prepaid                  pension costs                                                                                                                |   |   | **78.8** |   |   | 78.2 |   |   | 153.4 |   |
| Long-term                  assets from risk management activities                                                                                     |   |   | **0.6** |   |   | - |   |   | - |   |
| **Total                  assets**                                                                                                                     |   |   | **$2,483.5** |   |   | $2,533.7 |   |   | $2,421.1 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Capitalization**                                                                                                   |   |
| **Current                  liabilities**                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Current                  portion of long-term debt                                                                                                    |   |   | **$50.0** |   |   | $                  - |   |   | $                  - |   |
| Short-term                  debt                                                                                                                      |   |   | **-** |   |   | 80.3 |   |   | - |   |
| Accounts                  payable                                                                                                                     |   |   | **172.0** |   |   | 193.6 |   |   | 157.1 |   |
| Payables                  to                  related parties                                                                                         |   |   | **45.6** |   |   | 94.4 |   |   | 67.8 |   |
| Current                  liabilities from risk management activities                                                                                  |   |   | **8.2** |   |   | 31.9 |   |   | - |   |
| Gas                  costs                  refundable through rate adjustments                                                                       |   |   | **7.9** |   |   | 13.5 |   |   | 44.8 |   |
| Customer                  deposits                                                                                                                    |   |   | **34.6** |   |   | 33.4 |   |   | 34.1 |   |
| Customer                  credit balances                                                                                                             |   |   | **23.1** |   |   | 69.6 |   |   | 18.8 |   |
| Other                  deposits                                                                                                                       |   |   | **14.8** |   |   | 11.2 |   |   | 111.0 |   |
| Accrued                  interest and taxes                                                                                                           |   |   | **72.3** |   |   | 65.0 |   |   | 59.0 |   |
| Temporary                  LIFO liquidation credit                                                                                                    |   |   | **139.1** |   |   | - |   |   | 153.9 |   |
| Other                                                                                                                                                 |   |   | **13.2** |   |   | 14.6 |   |   | 20.4 |   |
| **Total                  current liabilities**                                                                                                        |   |   | **580.8** |   |   | 607.5 |   |   | 666.9 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Long-term                  liabilities and deferred credits**                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Deferred                  income taxes                                                                                                                |   |   | **344.6** |   |   | 346.1 |   |   | 350.9 |   |
| Deferred                  investment tax credits                                                                                                      |   |   | **23.1** |   |   | 23.2 |   |   | 23.3 |   |
| Noncurrent                  regulatory liabilities                                                                                                    |   |   | **0.9** |   |   | 0.9 |   |   | - |   |
| Environmental                  remediation liability                                                                                                  |   |   | **183.9** |   |   | 193.6 |   |   | 209.3 |   |
| Pension                  and                  postretirement benefit obligations                                                                      |   |   | **115.1** |   |   | 111.5 |   |   | 83.0 |   |
| Long-term                  liabilities from risk management activities                                                                                |   |   | **-** |   |   | 0.2 |   |   | - |   |
| Asset                  retirement obligations                                                                                                         |   |   | **93.7** |   |   | 92.4 |   |   | - |   |
| Other                                                                                                                                                 |   |   | **15.3** |   |   | 7.3 |   |   | 6.3 |   |
| **Total                  long-term liabilities and deferred credits**                                                                                 |   |   | **776.6** |   |   | 775.2 |   |   | 672.8 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Commitments                  and contingencies**                                                                                                    |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Capitalization**                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Common                  stock                  equity                                                                                                 |   |   | **674.9** |   |   | 649.8 |   |   | 580.3 |   |
| Long-term                  debt                                                                                                                       |   |   | **451.2** |   |   | 501.2 |   |   | 501.1 |   |
| **Total                  capitalization**                                                                                                             |   |   | **1,126.1** |   |   | 1,151.0 |   |   | 1,081.4 |   |
| **Total                  liabilities and capitalization**                                                                                             |   |   | **$2,483.5** |   |   | $2,533.7 |   |   | $2,421.1 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements.                                          |   |

----

| **THE                  PEOPLES GAS LIGHT AND COKE COMPANY**                                                  |                                                                 |
|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|
|                                                                                                         |                                                                 |
|                                                                                                         |                                                                 |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CAPITALIZATION                  (Unaudited)**        | **March                  31,**                                       |   | December                  31, |   | March                  31, |   |
| (Millions,                  except share amounts)                                                            |                                                                 | **2007** |   | 2006 |   | 2006 |   |
|                                                                                                         |                                                                 |
| **Long-term                  debt**                                                                          |                                                                 |
|                                                                                                         | First                  and                  refunding mortgage bonds |   |   |   |   |   |   |   |
|                                                                                                         |                                                                 | Series |   | Year                  Due |   |   |   |   |   |   |   |   |
|                                                                                                         |                                                                 | HH | 4.75% | 2030 |   |   | **$50.0** |   | $50.0 |   | $50.0 |   |
|                                                                                                         |                                                                 | KK | 5.00% | 2033 |   |   | **50.0** |   | 50.0 |   | 50.0 |   |
|                                                                                                         |                                                                 | LL | 3.05% | 2033 |   |   | **50.0** |   | 50.0 |   | 50.0 |   |
|                                                                                                         |                                                                 | MM-2 | 4.00% | 2010 |   |   | **50.0** |   | 50.0 |   | 50.0 |   |
|                                                                                                         |                                                                 | NN-2 | 4.625% | 2013 |   |   | **75.0** |   | 75.0 |   | 75.0 |   |
|                                                                                                         |                                                                 | QQ | 4.875% | 2038 |   |   | **75.0** |   | 75.0 |   | 75.0 |   |
|                                                                                                         |                                                                 | RR | 4.30% | 2035 |   |   | **50.0** |   | 50.0 |   | 50.0 |   |
|                                                                                                         |                                                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                         | Adjustable                  rate refunding mortgage bonds            |   |   |   |   |   |   |   |
|                                                                                                         |                                                                 | Series |   | Year                  Due |   |   |   |   |   |   |   |   |
|                                                                                                         |                                                                 | OO |   | 2037 |   |   | **51.0** |   | 51.0 |   | 51.0 |   |
|                                                                                                         |                                                                 | PP |   | 2037 |   |   | **51.0** |   | 51.0 |   | 51.0 |   |
| Total                  first                  and refunding mortgage bonds                                   |                                                                 | **502.0** |   | 502.0 |   | 502.0 |   |
| Unamortized                  discount on long-term debt, net                                                 |                                                                 | **(0.8** | **)** | (0.8 | ) | (0.9 | ) |
| Total                                                                                                        |                                                                 | **501.2** |   | 501.2 |   | 501.1 |   |
| Current                  portion                                                                             |                                                                 | **(50.0** | **)** | - |   | - |   |
| **Total                  long-term debt**                                                                    |                                                                 | **451.2** |   | 501.2 |   | 501.1 |   |
|                                                                                                         |                                                                 |   |   |
| **Common                  stock equity**                                                                     |                                                                 |
| Common                  stock,                  without par value—                                     |                                                                 |
| Authorized                  40,000,000 shares                                                           |                                                                 |   |   |   |   |   |   |
| Outstanding 25,357,566,                  25,357,566 and 24,817,566 shares, respectively            |                                                                 | **219.2** |   | 219.2 |   | 165.3 |   |
| Accumulated                  other comprehensive loss                                                        |                                                                 | **(0.3** | **)** | (1.2 | ) | (22.4 | ) |
| Retained                  earnings                                                                           |                                                                 | **456.0** |   | 431.8 |   | 437.4 |   |
| **Total                  common stock equity**                                                               |                                                                 | **674.9** |   | 649.8 |   | 580.3 |   |
| **Total                  capitalization**                                                                    |                                                                 | **$1,126.1** |   | $1,151.0 |   | $1,081.4 |   |
|                                                                                                         |                                                                 |
| The                  accompanying condensed notes are an integral past of these                  statements. |                                                                 |

----

| **THE                    PEOPLES GAS LIGHT AND COKE COMPANY**                                                |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |   |
| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)**                             |   | **Three                  Months Ended** |   |
|                                                                                                              |   | **March                  31,** |   |
| (Millions)                                                                                                   |   | **2007** |   | 2006 |   |
|                                                                                                         |   |   |   |   |   |
| **Operating                  Activities:**                                                                   |   |   |   |   |   |
| Net                  income                  (loss)                                                          |   | **$28.5** |   | $7.6 |   |
| Adjustments                  to reconcile net income to cash provided by operations:                         |   |   |   |   |   |
| Depreciation                  and amortization                                                               |   | **15.7** |   | 15.1 |   |
| Deferred                  income taxes and investment tax credits—net                                  |   | **(6.7** | **)** | 5.0 |   |
| Gas                  charge                  settlement                                                      |   | **-** |   | 28.4 |   |
| Pension                  funding less than expense                                                           |   | **2.6** |   | 1.9 |   |
| Other                  adjustments                                                                           |   | **0.9** |   | 4.1 |   |
| Net                  changes                  in:                                                            |   |   |   |   |   |
| Receivables—net                                                                                        |   | **(95.6** | **)** | (37.3 | ) |
| Receivables                  from related parties                                                            |   | **1.9** |   | (55.6 | ) |
| Gas                  in                  storage                                                             |   | **61.3** |   | 65.4 |   |
| Gas                  costs                  recoverable/refundable through rate adjustments                  |   | **(24.0** | **)** | 52.1 |   |
| Accounts                  payable                                                                            |   | **(21.6** | **)** | (94.0 | ) |
| Payables                  to                  related parties                                                |   | **1.3** |   | 55.7 |   |
| Accrued                  interest                                                                            |   | **-** |   | 0.6 |   |
| Accrued                  taxes                                                                               |   | **7.3** |   | (2.8 | ) |
| Temporary                  LIFO liquidation                                                                  |   | **139.1** |   | 143.3 |   |
| Customer                  credit balances                                                                    |   | **(46.4** | **) ** | (22.3 | )  |
| Other                                                                                                        |   | **11.2** |   | 3.4 |   |
| **Net                  cash p****rovided                  by (used in) operating activities**                |   | **75.5** |   | 170.6 |   |
|                                                                                                         |   |   |   |   |   |
| **Investing                  Activities:**                                                                   |   |   |   |   |   |
| Capital                  spending                                                                            |   | **(18.4** | **)** | (20.9 | ) |
| Proceeds                  from                  sale of assets                                               |   | **-** |   | 1.3 |   |
| Intercompany                  note receivable                                                                |   | **-** |   | 9.9 |   |
| Other                                                                                                        |   | **0.1** |   | 1.8 |   |
| **Net                  cash provided by (used in) investing activities**                                     |   | **(18.3** | **)** | (7.9 | ) |
|                                                                                                         |   |   |   |   |   |
| **Financing                  Activities:**                                                                   |   |   |   |   |   |
| Retirement                  of                  commercial paper                                             |   | **(80.3** | **)** | (119.9 | ) |
| Intercompany                  loan payable                                                                   |   | **27.4** |   | - |   |
| Dividends                  paid on common stock                                                              |   | **(4.3** | **)** | (7.2 | ) |
| **Net                  cash provided by (used in) financing activities**                                     |   | **(57.2** | **)** | (127.1 | ) |
|                                                                                                         |   |   |   |   |   |
| **Net                  increase (decrease) in cash and cash equivalents**                                    |   | **-** |   | 35.6 |   |
| **Cash                  and cash equivalents at beginning of period**                                        |   | **-** |   | - |   |
| **Cash                  and cash equivalents at end of period**                                              |   | **$                  -** |   | $35.6 |   |
|                                                                                                         |   |   |   |   |   |
| The                  accompanying condensed notes are an integral part of these                  statements. |   |   |   |   |   |

----

**THE        PEOPLES        GAS LIGHT AND COKE COMPANY**

**CONDENSED        NOTES TO FINANCIAL STATEMENTS**

**March        31,        2007**

**NOTE        1--FINANCIAL INFORMATION**

*Condensed        Consolidated Statements of Income*

*Condensed        Consolidated Balance Sheets:*

*Condensed        Consolidated Statements of Cash Flows:*

----

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

|                                                              |   | Three                  Months                  Ended March 31, |
|--------------------------------------------------------------|--------|----------------------------------------------------------------|
| (Millions)                                                   |   |                                                           | **2007** |   |   | 2006 |   |
| Cash                  paid for                  interest     |   |                                                           | **$7.8** |   |   | $5.8 |   |
| Cash                  paid for                  income taxes |   |                                                           | **$27.9** |   |   | $4.1 |   |

**NOTE        3--REVENUE RECOGNITION**

**NOTE        4--GAS        IN STORAGE**

**NOTE        5--RISK MANAGEMENT ACTIVITIES**

**Derivative        Instruments and Hedging Activities**

----

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

**Cash        Flow        Hedges. **

----

**Summary.**

|                                                                       |   | Assets                       |   | Liabilities                     |   |
|-----------------------------------------------------------------------|--------|------------------------------|--------|---------------------------------|--------|
|                                                                       |   | March                    31, |        | December                    31, |        | March                    31, |  | March                    31, |  | December                    31, |  | March                    31, |   |
| (Millions)                                                            |   | 2007                         |   | 2006                            |   | 2006 |   | 2007 |   | 2006 |   | 2006 |   |
|                                                                  |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| Commodity                    contracts                                |   | $4.9                         |   | $(5.4                           | )      | $4.3 |   | $8.2 |   | $109.7 |   | $57.2 |   |
|                                                                  |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| **Balance                    Sheet Presentation**                     |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| Current                                                               |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| Assets/liabilities                    from risk management activities |   | $2.3                         |   | $                    -          |   | $                    - |   | $8.2 |   | $31.9 |   | $                    - |   |
| Other                    receivables                                  |   | (0.4                         | )      | (7.1                            | )      | (0.8 | ) | - |   | - |   | - |   |
| Payable                    to                    related parties      |   | -                            |   | -                               |   | - |   | - |   | 74.5 |   | 57.2 |   |
| Regulatory                    assets                                  |   | 1.8                          |   | 1.6                             |   | 5.1 |   | - |   | - |   | - |   |
| Total                  current                                        |   | $3.7                         |   | $(5.5                           | )      | $4.3 |   | $8.2 |   | $106.4 |   | $57.2 |   |
|                                                                  |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| Long-term                                                             |   |                         |   |                            |   |   |   |   |   |   |   |   |   |
| Assets/liabilities                    from risk management activities |   | $0.6                         |   | $                    -          |   | $                    - |   | $                    - |   | $0.2 |   | $                    - |   |
| Payable                    to                    related parties      |   | -                            |   | -                               |   | - |   | - |   | 3.1 |   | - |   |
| Regulatory                    assets                                  |   | 0.6                          |   | 0.1                             |   | - |   | - |   | - |   | - |   |
| Total                  long-term                                      |   | 1.2                          |   | 0.1                             |   | - |   | - |   | 3.3 |   | - |   |
| **Total**                                                             |   | $4.9                         |   | $(5.4                           | )      | $4.3 |   | $8.2 |   | $109.7 |   | $57.2 |   |

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

**NOTE        7**
**--ASSET        RETIREMENT OBLIGATIONS**

----

| (Millions)                                                          |   |      |   |
|---------------------------------------------------------------------|--------|-----------|--------|
| Asset                  retirement obligations at December 31, 2006  |   | $92.4     |   |
| Accretion                                                           |   | 1.3       |   |
| **Asset                  retirement obligations at March 31, 2007** |   | **$93.7** |   |

**NOTE        8**
**--INCOME        TAXES**

| ·   | Illinois                Department of Revenue - PGL has agreed to statute extensions for                tax years                covering 2001-2003. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | United                States                Internal Revenue Service - PGL has agreed to statute extensions for                tax                years covering 1999-2003. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | United                States                Internal Revenue Service - PGL has a partially agreed to audit report                and                closing statement for an IRS examination of the 1999-2003 tax years,                but                PGL has protested one issue from the agents report and has been sent                to                IRS appeals for potential resolution. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | United                States                Internal Revenue Service - PGL has an open examination for the 2004-2005                tax years. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Illinois                Department of Revenue - PGL has an open examination for the 2001-2003                tax                years. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

**NOTE        9**
**--COMMITMENTS        AND CONTINGENCIES**

**Commodity        and Purchase Order Commitments **

**Environmental**

*Former        Manufactured Gas Plant Sites*

----

**Gas        Charge        Reconciliation Proceedings and Related Matters**

----

----

*Class        Action*

----

**Corrosion        Control Inspection Proceeding**

**Builders        Class Action**

**Technology        License**

----

**NOTE        10**
**--COMPREHENSIVE        INCOME**

|                                                                              |   | Three                  Months                  Ended March                  31, |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|
| *(*Millions*)*                                                               |   | **2007**                                                                        |   | 2006 |   |
| Net                  income                  (loss)                          |   | **$28.5**                                                                       |   | $7.6 |   |
| Unrealized                  hedge gain (loss), net of tax of $(0.6) and $0.4 |   | **0.9**                                                                         |   | (0.6 | ) |
| **Total                  comprehensive income (loss)**                       |   | **$29.4**                                                                       |   | $7.0 |   |

| (Millions)                                                  |   |      |   |
|-------------------------------------------------------------|--------|-----------|--------|
| December                  31,                  2006 balance |   | **$(1.2** | **)**  |
| Unrealized                  hedge gain (loss)               |   | **0.9**   |   |
| **March                  31, 2007 balance**                 |   | **$(0.3** | **)**  |

**NOTE        11**
**--EMPLOYEE        BENEFIT PLANS**

|                                                                                      |   |                                |   |     |   | Other                    Postretirement |   |
|--------------------------------------------------------------------------------------|--------|-------------------------------------|--------|----------|--------|-----------------------------------------|--------|
|                                                                                      |   | Pension                    Benefits |   | Benefits |   |
| Three                    Months                    Ended March 31, (Millions)        |   | 2007                                |   | 2006     |   | 2007                                    |   | 2006 |   |
| Service                    cost                                                      |   | $3.3                                |   | $3.5     |   | $1.9                                    |   | $1.3 |   |
| Interest                    cost                                                     |   | 5.8                                 |   | 5.1      |   | 1.7                                     |   | 1.3 |   |
| Expected                    return on plan assets                                    |   | (8.9                                | )      | (9.1     | )      | (0.5                                    | )      | (0.6 | ) |
| Amortization                    of:                                                  |   |                                |   |     |   |                                    |   |   |   |
| Net                    transition (asset)/obligation                                 |   | -                                   |   | -        |   | 0.3                                     |   | 0.3 |   |
| Prior                    service                    cost                             |   | 0.6                                 |   | 0.6      |   | -                                       |   | - |   |
| Net                    actuarial                    (gain)/loss                      |   | 1.0                                 |   | 1.1      |   | 0.3                                     |   | 0.2 |   |
| **Net                    periodic benefit cost**                                     |   | 1.8                                 |   | 1.2      |   | 3.7                                     |   | 2.5 |   |
|                                                                                 |   |                                |   |     |   |                                    |   |   |   |
| Effect                    of                    lump sum settlements upon retirement |   | 1.1                                 |   | 1.6      |   | -                                       |   | - |   |
| **Net                    benefit cost**                                              |   | $2.9                                |   | $2.8     |   | $3.7                                    |   | $2.5 |   |

----

**NOTE        **
**12--REGULATORY        ENVIRONMENT**

**Merger**

| ·   | commitments                by the applicants to provide certain reports, |
|--------------------|--------------------------------------------------------------------------|
| ·   | perform                studies of the PGL gas system, |
|--------------------|-------------------------------------------------------|
| ·   | promote                and                hire a limited number of union employees in specific areas, |
|--------------------|-------------------------------------------------------------------------------------------------------|
| ·   | make                no                reorganization-related layoffs or position reductions within the                PGL union                workforce, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | maintain                PGL's operation and maintenance and capital budgets at recent levels, |
|--------------------|-----------------------------------------------------------------------------------------------|
| ·   | file                a plan                for formation and implementation of a services company, |
|--------------------|---------------------------------------------------------------------------------------------------|
| ·   | accept                certain limits on the merger-related costs that can be recovered                from                ratepayers, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | not                seek cost                recovery for any increase in deferred tax assets that may result                from the                tax treatment of the PGL storage gas inventory in connection with                closing                the merger. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Rate        Case**

----

**NOTE        **
**13--SEGMENTS        OF BUSINESS**

| **Segments                    of Business**                                                                                                                                |   | **Gas**            |   |                       |   | **PGL**          |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|----------------------------|--------|------------------|--------|
| **(Millions)**                                                                                                                                                             |   | **Utility****(1)** |        | **Other****(2)**           |   | **Consolidated** |   |
|                                                                                                                                                                       |   |               |   |                       |   |             |   |
| **Three                    Months Ended**                                                                                                                                  |   |               |   |                       |   |             |   |
| **March                    31, 2007**                                                                                                                                      |   |               |   |                       |   |             |   |
| Revenues                                                                                                                                                                   |   | **$627.1**         |   | **$                    -** |   | **$627.1**       |   |
| Operating                    expenses                                                                                                                                      |   | **579.1**          |   | **-**                      |   | **579.1**        |   |
| Operating                    income                                                                                                                                        |   | **48.0**           |   | **-**                      |   | **48.0**         |   |
| Net                    income                                                                                                                                              |   | **28.5**           |   | **-**                      |   | **28.5**         |   |
|                                                                                                                                                                       |   |               |   |                       |   |             |   |
| Three                    Months                    Ended                                                                                                                   |   |               |   |                       |   |             |   |
| March                    31,                    2006                                                                                                                       |   |               |   |                       |   |             |   |
| Revenues                                                                                                                                                                   |   | $633.1             |   | **$                    -** |   | $633.1           |   |
| Operating                    expenses                                                                                                                                      |   | 616.6              |   | -                          |   | 616.6            |   |
| Operating                    income                                                                                                                                        |   | 16.5               |   | -                          |   | 16.5             |   |
| Net                    income                                                                                                                                              |   | 7.5                |   | 0.1                        |   | 7.6              |   |
|                                                                                                                                                                       |   |               |   |                       |   |             |   |
| (1)                    Includes                    only utility operations.                                                                                                |   |               |   |                       |   |             |   |
| (2)                    Nonutility operations are included in the Other column. Amounts                    for all                    categories other than 2006 net income |   |               |
| rounded                    to                    less than $0.1 million.                                                                                                   |   |               |   |                       |   |             |   |

**NOTE        **
**14--NEW        ACCOUNTING PRONOUNCEMENTS**

----

----

**Item            2.   **
**MANAGEMENT’S            DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**INTRODUCTION**

**Strategic        Overview**

**Rate        Case**

| ·   | a                "decoupling" mechanism that would allow PGL to adjust rates going                forward                to recover or refund the difference between actual recovered non-gas                cost                revenue and authorized non-gas cost                revenue; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                mechanism                to recover the return on and return of capital investment in excess                of                historical capital investment associated with accelerating the replacement                of cast iron main; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                mechanism                to recover the gas cost portion of uncollectible expense based on                current                gas prices; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                mechanism                to recover $6.4 million of energy efficiency costs under a program                to be                approved by the ICC. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESULTS        OF        OPERATIONS**

**First        Quarter 2007 Compared with First Quarter 2006**

**Overview        of        Operations**

|                                                             |   | Three                    Months                    Ended March 31, |   |   |   |
|-------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|--------|--------|
| **PGL                    Results*****(Millions)***          |   | 2007                                                               |   | 2006   |   | Change |   |
|                                                        |   |                                                               |   |   |   |   |   |
| Revenues                                                    |   | $627.1                                                             |   | $633.1 |   | -0.9 | % |
| Purchased                    gas                    costs   |   | 458.7                                                              |   | 485.2  |   | -5.5 | % |
| Margins                                                     |   | $168.4                                                             |   | $147.9 |   | 13.9 | % |
|                                                        |   |                                                               |   |   |   |   |   |
| **Throughput                    in therms**                 |   |                                                               |   |   |   |   |   |
| Residential                                                 |   | 431.0                                                              |   | 380.6  |   | 13.2 | % |
| Commercial                    and industrial                |   | 84.2                                                               |   | 76.2   |   | 10.5 | % |
| Transport                                                   |   | 305.5                                                              |   | 269.5  |   | 13.4 | % |
| Total                    sales                    in therms |   | 820.7                                                              |   | 726.3  |   | 13.0 | % |
|                                                        |   |                                                               |   |   |   |   |   |
| **Weather**                                                 |   |                                                               |   |   |   |   |   |
| Heating                    degree days - actual             |   | 3,131                                                              |   | 2,741  |   | 14.2 | % |

----

**Operating        Expenses**

|                                                                         |   | Three                  Months                  Ended March 31, |
|-------------------------------------------------------------------------|--------|----------------------------------------------------------------|
| PGL's                  Operating                  Expenses *(Millions)* |   | **2007**                                                       |   | 2006 |   | Change |   |
| Operating                  and                  maintenance expenses    |   | **$98.5**                                                      |   | $82.0 |   | 20.1 | % |
| Gas                  charge                  settlement                 |   | **--**                                                         |   | 28.4 |   | -100.0 | % |
| Depreciation                  and amortization                          |   | **14.5**                                                       |   | 14.0 |   | 3.6 | % |
| Taxes,                  other than                  income taxes        |   | **7.4**                                                        |   | 7.0 |   | 5.7 | % |

*Operating        and        Maintenance Expenses*

| ·   | Increased                utility environmental costs of $8.7 million related to investigation                and remediation activities at multiple sites that formerly had operations                for gas manufacturing and the storage of manufactured gas (see Note                9 of                the Condensed Notes to Financial Statements for further discussion).                These                costs are recovered through the utility's rate mechanism and a similar                amount is included in revenues, therefore these costs do not affect                operating income. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Increased                injuries and damages expense of $2.7                million. |
|--------------------|---------------------------------------------------------------------------------------|
| ·   | Increased                maintenance expense of $2.6 million. |
|--------------------|---------------------------------------------------------------|
| ·   | Increased                employee benefits expense of $2.1                million. |
|--------------------|------------------------------------------------------------------------------------|
| ·   | Increased                outside consulting and legal services expense of $1.3                million. |
|--------------------|--------------------------------------------------------------------------------------------------------|
| ·   | Accrued                expenses of $3.3 million related to the fiscal 2005 Gas Charge                reconciliation case as discussed in Note 9 of the Condensed Notes                to                Financial Statements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Decreased                bad                debt expense of $4.1                million due                primarily to lower weather-normalized deliveries and lower natural                gas                prices, as well as improved credit and collection                experience. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gas        Charge        Settlement*

*Depreciation        and Amortization*

*Taxes        Other        Than Income*

**Other        (Expense) Income**

|                                                                                   |   | Three                  Months                  Ended March 31, |
|-----------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
| PGL’s                  Other                  (Expense) Income *(Millions)* |   | **2007**                                                       |   | 2006 |   | Change |   |
| Miscellaneous                  income                                             |   | **$1.0**                                                       |   | $1.0 |   | 0.0 | % |
| Interest                  expense                                                 |   | **(7.7**                                                       | **)** | (7.1 | ) | 8.5 | % |
| Other                  (expense)                  income                          |   | **$(6.7**                                                      | **)** | $(6.1 | ) | 9.8 | % |

----

*Interest        Expense*

**Provision        for Income Taxes**

**LIQUIDITY        AND CAPITAL RESOURCES**

**Cash        Flows        Variations**

| (Millions)                                                                            |   | Three                  Months EndedMarch                  31, 2007 |   | Three                  MonthsEndedMarch                  31, 2006 |   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
| Net                  cash                  provided by (used in) operating activities |   | $75.5                                                              |   | $170.6                                                            |   |
| Net                  cash                  provided by (used in) investing activities |   | $(18.3                                                             | )      | $(7.9                                                             | )      |
| Net                  cash                  provided by (used in) financing activities |   | $(57.2                                                             | )      | $(127.1                                                           | )      |

*Operating        Cash        Flows*

*Investing        Cash        Flows*

*Financing        Cash        Flows*

----

*Credit        Ratings*

*Balance        Sheet        Variations*

**Future        Capital Requirements and Resources**

*Contractual        Obligations *

|                                                        |   | Payments                    Due                    by Period |   |
|--------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                   |   |                                                         |   |   |   | 2008- |   | 2010- |   | 2012                    and |   |
| (Millions)                                             |   | Total                                                        |   | 2007 |   | 2009 |   | 2011 |   | Thereafter |   |
| Total                    debt                          |   | $502.0                                                       |   | $                    - |   | $50.0 |   | $50.0 |   | $402.0 |   |
| Estimated                    interest payments on debt |   | 478.0                                                        |   | 16.1 |   | 42.7 |   | 39.7 |   | 379.5 |   |
| Operating                    leases                    |   | 29.2                                                         |   | 3.2 |   | 6.7 |   | 7.1 |   | 12.2 |   |
| Purchase                    obligations                |   | 317.6                                                        |   | 53.4 |   | 107.5 |   | 65.2 |   | 91.5 |   |
| Total                    contractual cash obligations  |   | $1,326.8                                                     |   | $72.7 |   | $206.9 |   | $162.0 |   | $885.2 |   |

----

*Capital        Requirements*

*Capital        Resources*

**Other        Future Considerations**

*Gas        Charge        Reconciliation Proceedings and Related Matters*

*Environmental        Matters*

----

*Proposed        Illinois Gross Receipts Tax*

*Service        Company*

**CRITICAL        ACCOUNTING POLICIES**

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

**Commodity        Price Risk**

**Derivative        Summary.**

----

|                                                                                               |   | **Cash                    Flow Hedges** |   |
|-----------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
| ***(Millions)***                                                                              |   | **2007**                                |   | **2006** |   |
| Value                    of                    contracts outstanding at January 1             |   | **$(1.5**                               | **)**  | $(0.6 | ) |
| Less:                    Gain                    (loss) on contracts realized or otherwise    |   |                                    |   |   |   |
| settled                    during the period                                                  |   | **(0.6**                                | **)**  | (0.8 | ) |
| Plus:                    Unrealized gain (loss) on new contracts entered                      |   |                                    |   |   |   |
| into                    during                    the period and outstanding at end of period |   | **0.1**                                 |   | (0.5 | ) |
| Plus:                    Other                    unrealized gain (loss), primarily changes   |   |                                    |   |   |   |
| in                    market                    prices on contracts outstanding at the        |   |                                    |   |   |   |
| beginning                    of                    the period                                 |   | **0.6**                                 |   | (1.3 | ) |
| **Value                    of contracts outstanding at March 31**                             |   | **$(0.2**                               | **)**  | $(1.6 | ) |

| *(Fair                  Value amounts in thousands)* |
|------------------------------------------------------|
| ***Maturity***                                       | ***Volumes******(Mmbtu's)*** |   | ***Fair                  Value*** |
| Less                  than 1                  Year   | **720,000** |   | $(148.5) |
| 1                  - 3                  Years        | **60,000** |   | (19.7) |
|                                                 | **780,000** |   | **$(168.2)** |

**Item        4.        Controls and Procedures**

**Evaluation        of Disclosure Controls and Procedures**

----

**Changes        In        Internal Control **

----

**Part        II -        Other Information**

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

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

**Item        6.****Exhibits**

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

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**SIGNATURE**

|                                                                 |   | The                  Peoples                  Gas Light and Coke Company |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|
|                                                                 |   |                                                                          |
|                                                                 |   |                                                                     |
|                                                                 |   |                                                                     |
| Date:                  May                  9,                  2007 |   | /s/                  Diane L.                  Ford                      |
|                                                                 |   | Diane                  L.                  Ford                          |
|                                                                 |   | Vice                  President and Corporate Controller                 |
|                                                                 |   |                                                                     |
|                                                                 |   | (Duly                  Authorized Officer and                            |
|                                                                 |   | Chief                  Accounting Officer)                               |

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**THE        PEOPLES        GAS LIGHT AND COKE COMPANY**

**EXHIBIT        INDEX TO FORM 10-Q**

**FOR        THE        QUARTER ENDED MARCH 31, 2007**

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

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