FORM 10-Q

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549

(Mark One)


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

         For the Quarterly Period Ended December 31, 1995

                                OR

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

                 Commission File Number 2-26983


              THE PEOPLES GAS LIGHT AND COKE COMPANY
      (Exact name of registrant as specified in its charter)


                  Illinois                  36-1613900
       (State or other jurisdiction of    (IRS Employer
       incorporation or organization)     Identification No.)


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


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


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes [x]   No [  ] 


Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
24,817,566 shares of Common Stock, without par value, outstanding
at January 31, 1996.

<TABLE>
                         PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements
                         The Peoples Gas Light and Coke Company
                            CONSOLIDATED STATEMENTS OF INCOME
                                     (Unaudited)

<CAPTION>
                                Three Months Ended      Twelve Months Ended
                                    December 31,           December 31,       
                                -------------------     -------------------
                                  1995       1994         1995      1994    
                                ---------  --------     -------- ----------
                                                 (Thousands)
<S>                             <C>         <C>         <C>       <C>

OPERATING REVENUES:
  Gas sales                     $236,321    $229,811    $777,514  $  928,883
  Transportation of customer-
    owned gas                     35,152      29,182     115,597      97,992
  Other                            3,154       7,686      13,780      20,780
                                --------    --------    --------  ----------
    Total Operating Revenues     274,627     266,679     906,891   1,047,655
                                --------    --------    --------  ----------
OPERATING EXPENSES:
  Gas costs                      108,698     123,662     372,712     518,887
  Operation                       47,007      42,929     178,779     190,386
  Maintenance                      9,291       8,707      39,314      35,838
  Depreciation and amortization   14,865      14,786      59,248      58,939
  Taxes- Income                   20,057      11,979      36,242      24,548
       - State & local revenue    30,784      28,634     102,712     114,379
       - Other                     4,581       4,488      19,462      18,634
                                --------    --------    --------  ----------
    Total Operating Expenses     235,283     235,185     808,469     961,611
                                --------    --------    --------  ----------
OPERATING INCOME                  39,344      31,494      98,422      86,044
                                --------    --------    --------  ----------
OTHER INCOME AND (DEDUCTIONS):
  Interest income                  2,291         965       9,995       5,338
  Interest on long-term debt      (9,557)    (10,052)    (40,012)    (39,955)
  Other interest expense          (1,648)     (1,088)     (6,639)     (2,438)
  Miscellaneous - net              1,075         430       1,656       2,592
                                --------    --------    --------  ----------
    Total Other Income 
      and Deductions              (7,839)     (9,745)    (35,000)    (34,463)
                                --------    --------    --------  ----------
NET INCOME APPLICABLE
  TO COMMON STOCK               $ 31,505    $ 21,749    $ 63,422  $   51,581
                                ========    ========    ========  ==========
<FN>             
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>

<TABLE>
                        The Peoples Gas Light and Coke Company
                             CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                             December 31,                 December 31,
                                                1995       September 30,     1994
                                             (Unaudited)        1995      (Unaudited)
                                             ------------  -------------  ------------
                                                            (Thousands)
<S>                                            <C>          <C>           <C>

PROPERTIES AND OTHER ASSETS

CAPITAL INVESTMENTS:

Property, plant and equipment,
   at original cost                            $1,724,036   $1,815,407    $1,773,659
     Less - Accumulated depreciation              546,831      628,258       608,004
       Net property, plant and equipment        1,177,205    1,187,149     1,165,655
Other investments                                   4,936        5,027         6,324
                                               ----------   ----------    ----------
     TOTAL CAPITAL INVESTMENTS - NET            1,182,141    1,192,176     1,171,979
                                               ----------   ----------    ----------
CURRENT ASSETS:

Cash                                                4,996        2,599         4,121
Cash equivalents                                    6,900      149,616        39,640
Other temporary cash investments,
   at cost that approximates market value             600          600           600
Trust fund - utility construction                      --           --        16,440
          - bond redemption                            --          237            --
Receivables -
   Customers, net of allowance for
     uncollectible accounts of $17,625,
       $18,315, and $20,145, respectively         114,478       52,142       106,468
   Other                                            8,390        2,665         5,093
Accrued unbilled revenues                          60,392       18,451        63,367
Materials and supplies, at average cost            13,931       13,843        22,313
Gas in storage, at last-in, first-out cost         88,289       82,151       105,154
Gas costs recoverable through rate adjustments      1,073        2,132        14,983
Prepayments                                         1,496        1,927         1,398
                                               ----------   ----------    ----------
     TOTAL CURRENT ASSETS                         300,545      326,363       379,577
                                               ----------   ----------    ----------
OTHER ASSETS:

Regulatory assets                                  60,280       29,707        26,525
Deferred charges                                   11,852       13,235        13,905
                                               ----------   ----------    ----------
     TOTAL OTHER ASSETS                            72,132       42,942        40,430
                                               ----------   ----------    ----------
       TOTAL PROPERTIES AND OTHER ASSETS       $1,554,818   $1,561,481    $1,591,986
                                               ==========   ==========    ==========
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>

<TABLE>
                         The Peoples Gas Light and Coke Company
                              CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                             December 31,                 December 31,
                                                1995       September 30,     1994
                                             (Unaudited)       1995       (Unaudited)
                                             ------------  -------------  ------------
                                                    (Thousands of Dollars)
<S>                                            <C>          <C>           <C>

CAPITALIZATION AND LIABILITIES

CAPITALIZATION:

Common Stockholder's Equity:
   Common stock, without par value
       Authorized - 40,000,000 shares
       Outstanding - 24,817,566 shares         $  165,307   $  165,307    $  165,307
   Retained earnings                              381,353      363,001       373,770
                                               ----------   ----------    ----------
       Total Common Stockholder's Equity          546,660      528,308       539,077
Long-term debt, exclusive of sinking fund
   payments and maturities due within one year    462,400      549,150       549,150
                                               ----------   ----------    ----------
       TOTAL CAPITALIZATION                     1,009,060    1,077,458     1,088,227
                                               ----------   ----------    ----------
CURRENT LIABILITIES:

Interim loans                                         900          900            --
Accounts payable                                  143,394       87,693        98,465
Dividends payable on common stock                  13,153       14,146        14,146
Customer gas service and credit deposits           37,882       35,012        50,473
Accrued taxes                                      57,410       26,962        45,897
Gas sales revenue refundable through
   rate adjustments                                46,267       68,558        40,091
Accrued interest                                    6,271       11,025         8,321
Temporary LIFO liquidation credit                      --           --         5,121
                                               ----------   ----------    ----------
       TOTAL CURRENT LIABILITIES                  305,277      244,296       262,514
                                               ----------   ----------    ----------
DEFERRED CREDITS AND OTHER LIABILITIES:

Deferred income taxes - primarily
   accelerated depreciation                       192,965      189,850       181,310
Investment tax credits being amortized
   over the average lives of related property      32,774       34,228        35,428
Other                                              14,742       15,649        24,507
                                               ----------   ----------    ----------
       TOTAL DEFERRED CREDITS AND
          OTHER LIABILITIES                       240,481      239,727       241,245
                                               ----------   ----------    ----------
       TOTAL CAPITALIZATION AND LIABILITIES    $1,554,818   $1,561,481    $1,591,986
                                               ==========   ==========    ==========
<FN>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>

<TABLE>
                       The Peoples Gas Light and Coke Company
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Unaudited)
<CAPTION>
                                                           Three Months Ended
                                                               December 31,   
                                                           -------------------
                                                             1995       1994
                                                           --------   --------
                                                               (Thousands)
<S>                                                        <C>        <C>
OPERATING ACTIVITIES:
  Net Income                                               $ 31,505   $ 21,749
  Adjustments to reconcile net income to net cash: 
    Depreciation and amortization                            14,865     14,786
    Deferred income taxes and investment tax credits - net       49      3,926
    Change in deferred credits and other liabilities            705     (3,418)
    Change in other assets                                  (29,190)       185
    Other                                                        17         25
    Change in current assets and liabilities:
     Receivables - net                                      (68,061)   (39,398)
     Accrued unbilled revenues                              (41,941)   (45,806)
     Materials and supplies                                     (88)      (749)
     Gas in storage                                          (6,138)    18,430
     Gas costs recoverable                                    1,059     (2,959)
     Accounts payable                                        55,701      3,438
     Customer gas service and credit deposits                 2,870     10,930
     Accrued taxes                                           30,448     19,206
     Gas sales revenue refundable                           (22,291)    (1,076)
     Accrued interest                                        (4,754)    (1,883)
     Temporary LIFO liquidation credit                           --      5,121
     Other                                                      430        249
                                                           ---------  ---------
  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES       (34,814)     2,756
                                                           ---------  ---------
INVESTING ACTIVITIES:
  Capital expenditures - construction                       (16,709)   (16,763)
  Other assets                                               11,789       (482)
  Other capital investments                                      74       (113)
                                                           ---------  ---------
  NET CASH USED IN INVESTING ACTIVITIES                      (4,846)   (17,358)
                                                           ---------  ---------
FINANCING ACTIVITIES:
  Retirement of long-term debt                              (86,750)        --
  Interim loans - net                                            --       (900)
  Trust fund - utility construction                              --     15,053
            - bond redemption                                   237         --
  Dividends paid on common stock                            (14,146)   (13,898)
                                                           ---------  ---------
  NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES      (100,659)       255
                                                           ---------  ---------

NET DECREASE IN CASH AND CASH EQUIVALENTS                  (140,319)   (14,347)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD            152,215     58,108
                                                           ---------  ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 11,896   $ 43,761
                                                           =========  =========
<FN>             
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>


              The Peoples Gas Light and Coke Company

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (Unaudited)


1.  BASIS OF PRESENTATION

   The accompanying consolidated financial statements have been
prepared by The Peoples Gas Light and Coke Company (Company) in
conformity with the rules and regulations of the Securities and
Exchange Commission (SEC) and reflect all adjustments that are, in
the opinion of management, necessary to present fairly the results
for the interim periods herein and to prevent the information from
being misleading.

   Certain footnote disclosures and other information, normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted from these interim financial statements, pursuant to SEC
rules and regulations.  Therefore, the statements should be read in
conjunction with the consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995.

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


2.  SIGNIFICANT ACCOUNTING POLICIES

2A Revenue Recognition

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

2B  Regulated Operations

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

2C Statement of Cash Flows

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

<TABLE>
      Income taxes and interest paid (excluding capitalized
   interest) were as follows:
<CAPTION>
         For the three months
         ended December 31,          1995        1994  
         ---------------------------------------------
                                       (Thousands)
         <S>                      <C>          <C>    

         Income taxes paid        $  2,026     $   124
         Interest paid              14,637      12,076
</TABLE>

2D Income Taxes

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

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

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

      Under the tariffs of the Company, the difference for any
   fiscal year between costs recoverable through the Gas Charge
   and revenues billed to customers under the Gas Charge is
   refunded or recovered over a 12-month billing cycle beginning
   the following January 1.  Consistent with these tariff
   provisions, such difference for any month is recorded either as
   a current liability or as a current asset (with a contra entry
   to Gas Costs), and the fiscal year-end balance is amortized
   over the 12-month period beginning the following January 1.

      The Commission conducts annual proceedings regarding, for
   each gas utility, the reconciliation of revenues from the Gas
   Charge and related costs incurred for gas.  In such
   proceedings, costs recovered by a utility through the Gas
   Charge are subject to challenge.  Such proceedings regarding
   the Company for fiscal years 1992 through 1995 are currently
   pending before the Commission.


3.  RATES AND REGULATION

3A Utility Rate Proceedings

Rate Order.  On November 8, 1995, the Commission issued an order
approving changes in rates of the Company that are designed to
increase annual revenues by approximately $30.8 million, exclusive
of additional charges for revenue taxes.  The Company was allowed a
rate of return on original-cost rate base of 9.19 per cent, which
reflects an 11.10 per cent cost of common equity.  The new rates
were implemented on November 14, 1995.  The Company and a group of
industrial transportation customers have appealed the Commission's
order to the Illinois Appellate Court.  Any change made by the
Appellate Court would have a prospective effect only.

Environmental Cost Recovery.  In 1992, the Commission issued an
order in its consolidated proceedings, initiated in 1991, regarding
the appropriate ratemaking treatment of environmental costs
incurred by Illinois utilities, including the Company, in
connection with the investigation and treatment of residues
associated with past manufactured gas operations ("environmental
costs").  In its order, the Commission approved rate recovery of
environmental costs over a five-year period, but required the
utilities to "share" the environmental costs by disallowing rate
recovery of carrying charges on unrecovered balances. 
Reimbursements of environmental costs from insurance carriers or
other entities are to be netted against costs and reflected in
rates over a five-year period.  In April 1995, the Illinois Supreme
Court upheld in part and reversed in part the Commission's order. 
The Supreme Court upheld the Commission in ruling that
environmental costs are recoverable through rates.  The Supreme
Court also ruled that the Commission's approval of a rate recovery
method called a "rider" (the method utilized by the Company) as the
preferred mechanism for recovery of environmental costs is within
the Commission's authority.  The Supreme Court reversed the part of
the Commission's order that required the utilities to share
environmental costs by disallowing recovery of carrying charges on
unrecovered balances.  The order was remanded to the Commission for
further proceedings consistent with the Supreme Court's opinion. 
On November 21, 1995, the Commission entered its order on remand. 
Consistent with the Illinois Supreme Court's April 20, 1995
decision, the Commission, in its order on remand, reversed its
earlier order to allow utilities to recover carrying charges on
such environmental costs incurred on and after April 20, 1995, the
date of the Supreme Court's decision.  (See Note 4.)

FERC Order 636 Cost Recovery.  On September 15, 1993,  the
Commission entered an order initiating an investigation into the
appropriate means of recovery by Illinois gas utilities of pipeline
charges for FERC Order 636 transition costs.  The Commission issued
a final order in this proceeding on March 9, 1994.  The order
provides for the full recovery of transition costs from the
Company's gas service customers and transportation customers to the
extent they contract for firm standby service.  The Citizens
Utility Board and State's Attorney of Cook County filed an
application for rehearing of the March 9 order with the Commission.
In its orders on rehearing, the Commission continued to provide for
full recovery of transition costs, but directed that, effective
November 1, 1994, gas supply realignment (GSR) costs (one of the
four categories of transition costs) be recovered on a uniform
volumetric basis from all transportation and sales customers.  In
December 1994, a group of industrial transportation customers of
Illinois utilities appealed the Commission's orders on rehearing to
the Illinois Appellate Court.  The Illinois Appellate Court, on
September 21, 1995, affirmed the Commission's order.  A group of
industrial transportation customers of Illinois utilities gave
notice of their intent to appeal the Appellate Court's order to the
Illinois Supreme Court.  If the Illinois Supreme Court accepts the
appeal, any change made by it to the Commission's order would have
a prospective effect only.  (See Notes 2E and 3B.)

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

   FERC Order 636 and successor orders require pipelines to make
separate rate filings to recover transition costs.  There are four
categories of such costs, the largest of which for the Company is
GSR costs.  The Company is subject to charges for transition cost
recovery by Natural Gas Pipeline Company of America (Natural). 
Charges by Natural for transition costs commenced on January 1,
1994.  On September 29, 1994, the FERC approved a Stipulation and
Agreement (Agreement) filed by Natural.  The Agreement places a cap
on the amount of GSR costs recoverable by Natural from the Company.
For the Company, that cap is approximately $103 million.  However,
subject to this cap, the level of costs that the Company will incur
is dependent primarily upon the future market price of natural gas
and pipeline negotiations with producers.  The Company is currently
recovering transition costs through the Gas Charge.  At December
31, 1995, the Company has made payments of $51 million and has
accrued an additional $5.2 million toward the cap.

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


4.  ENVIRONMENTAL MATTERS

   The Company, its predecessors, and certain former affiliates
operated facilities in the past for manufacturing gas and storing
manufactured gas.  In connection with manufacturing and storing
gas, various by-products and waste materials were produced, some of
which might have been disposed of rather than sold.  Under certain
laws and regulations relating to the protection of the environment,
the Company might be required to undertake remedial action with
respect to some of these materials, if found at the sites.

   The current owner of a site in McCook, Illinois, near Chicago,
has advised the Company that the owner has found what appear to be
wastes associated with by-products of the gas manufacturing process
under its property.  The owner has asserted that these wastes are
the responsibility of the Company.  The Company is currently
evaluating this claim.

   The Company, in cooperation with the Illinois Environmental
Protection Agency (IEPA), is conducting investigations of other
sites (a total of 29) to determine whether remedial action might be
necessary.  The investigations were initiated pursuant to an
informal request by the IEPA.  To the best of the Company's
knowledge, similar informal requests have been made by the IEPA to
other major Illinois gas and electric utilities.  The Company has
engaged environmental consulting firms to assist in its
investigations.  At this time, except for the 110th Street Station
site (discussed below), it is not known what, if any, remedial
action will be necessary at the sites or, if necessary, what the
cost of any such action would be.  As discussed below, the Company
may conduct a remedial investigation/feasibility study (RI/FS) at
the Division Street site under the supervision of the IEPA.  In
addition, the Company is conducting investigations under the
supervision of the IEPA at the 110th Street Station and Equitable
Distribution Station sites.

   In August 1988, the IEPA conducted an inspection at the
Company's Division Street property in Chicago.  During the
inspection, the IEPA and the Company took several soil samples for
laboratory analysis.  The analysis of the samples collected by the
Company indicates the presence of certain substances within the
soil of the Division Street property that could be attributable to
former manufactured gas operations.  The Company may conduct an
RI/FS of the property under the supervision of the IEPA.

   The Company has been sued by a prior owner and has received
demands from the current owner of a site in Chicago formerly called
Pitney Court Station.  The former owner alleges damages of over $1
million arising from alleged contamination by the Company resulting
from past gas manufacturing activities on the property.  The
current owner has demanded that the Company assume responsibility
for investigation and remediation of the alleged contamination. 
The Company is currently evaluating these claims.

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

   The current owners at a site in Chicago, formerly called South
Station, have advised the Company that they have found what appear
to be gas manufacturing wastes underneath their property.  The
owners have demanded monetary compensation from the Company because
of the presence of such wastes.  The Company is currently
evaluating this claim.

   In 1994, the Company became aware of a planned residential
development at a site in Chicago, formerly called the Equitable
Distribution Station.  The Company is conducting a preliminary
investigation under the supervision of the IEPA to determine
whether gas manufacturing wastes are present at the site.

   The Company is accruing and deferring the costs it incurs in
connection with all of the sites, including related legal expenses,
pending recovery through rates or from insurance carriers or other
entities.  At December 31, 1995, the total of the costs deferred by
the Company, net of recoveries and amounts billed to other
entities, was $10.7 million.  This amount includes an estimate of
the costs of the investigations initiated at the request of the
IEPA at the sites referred to above.  The amount also includes an
estimate of the costs of remediation at the 110th Street Station
site in Chicago, at the minimum amount of the current estimated
range of such costs.  The costs of remediation at the other sites
cannot be determined until more is known about the nature and
extent of contamination and the remedial action, if any, to be
required by the IEPA.  While the Company intends to seek
contribution from other entities for the costs incurred at the
sites, the full extent of such contributions cannot be determined
at this time.

   The Company has filed suit against a number of insurance
carriers for the recovery of environmental costs relating to its
former manufactured gas operations.  The suit asks the court to
declare that the insurers are liable under policies in effect
between 1938 and 1985 for costs incurred or to be incurred by the
Company in connection with former manufactured gas sites in
Chicago.  The Company is also asking the court to award damages
stemming from the insurers' breach of their contractual obligation
to defend and indemnify the Company against these costs.  At this
time, management cannot determine the timing and extent of the
Company's recovery of costs from its insurance carriers. 
Accordingly, the costs deferred at December 31, 1995 have not been
reduced to reflect recoveries from insurance carriers.

   Costs incurred by the Company for environmental activities
relating to former manufactured gas operations will be recovered
from insurance carriers or other entities or through rates for
utility service.  Accordingly, management believes that the costs
incurred by the Company in connection with the sites will not have
a material adverse effect on financial position or results of
operations.  The Company is recovering the costs of environmental
activities relating to its former manufactured gas operations under
a rate mechanism approved by the Commission.  At December 31, 1995,
it had recovered $564,000 of such costs through rates.  (See Note
3A for a discussion of proceedings regarding the recovery of such
costs through utility rates.)


5.  GAS OVER-PRESSURE CONDITION

   On January 17, 1992, an over-pressure condition occurred in the
gas mains of the Company serving an approximately one-square-mile
area of the Near Northwest Side of the City of Chicago.  The
over-pressure condition caused a major explosion and numerous
fires.

   A number of lawsuits, some of which included wrongful-death
claims, were filed against the Company as a result of the
over-pressure condition.  All of the lawsuits alleging
wrongful-death claims have been settled.  While property damage
cases are still pending, management believes that any liability
that may arise from such cases will not have a material adverse
effect on financial position or results of operations of the
Company.


6.  TAX MATTERS

   On September 30, 1993, the Company received notification from
the Internal Revenue Service (IRS) that settlement of past income
tax returns had been reached for fiscal years 1978 through 1990. 
The IRS settlement resulted in payments of principal and interest
to the Company in 1994 in total amount of approximately $25
million, or $19.4 million after income taxes.  The Company has
received regulatory authorization to defer the recognition of the
settlement amount in income for fiscal year 1993, and to recognize
its portion of the settlement amount in income for fiscal years
1994 and 1995.  The Company has represented to the Commission that,
having received this accounting authorization, it would not file a
request for an increase in base rates before December 1994.  The
regulatory treatment of the IRS settlement having been resolved in
November 1993, the Company included $12.7 million, or $9.7 million
after income taxes, in income in 1994.  The amount after income
taxes was included in Other Income - Miscellaneous.  At September
30, 1994, approximately $12.7 million was included in Deferred
Credits and Other Liabilities - Other.

   As a result of the Commission's accounting authorization, the
fiscal year 1995 portion of the settlement amount for the Company
was amortized (credited) to operation expense.  The effect was to
offset increases in costs that the Company would incur during the
year.  In fiscal 1995, the Company amortized approximately $12.7
million, or $9.7 million after income taxes.


7.  LONG-TERM DEBT

7A Interest-Rate Adjustments

   The rate of interest on the City of Joliet 1984 Series C Bonds,
which are secured by the Company's Adjustable-Rate First Mortgage
Bonds, Series W, is subject to adjustment annually on October 1. 
Owners of the Series C Bonds have the right to tender such bonds at
par during a limited period prior to that date.  The Company is
obligated to purchase any such bonds tendered if they cannot be
remarketed.  All Series C Bonds that were tendered prior to October
1, 1995, have been remarketed.  The interest rate on such bonds is
4 per cent for the period October 1, 1995, through September 30,
1996.

   The rate of interest on the City of Chicago 1993 Series B Bonds,
which are secured by the Company's Adjustable-Rate First Mortgage
Bonds, Series EE, is subject to adjustment annually on December 1. 
Owners of the Series B Bonds have the right to tender such bonds at
par during a limited period prior to that date.  The Company is
obligated to purchase any such bonds tendered if they cannot be
remarketed.  All Series B Bonds that were tendered prior to
December 1, 1995, have been remarketed.  The interest rate on such
bonds is 3.85 per cent for the period December 1, 1995, through
November 30, 1996.

   The Company classifies these adjustable-rate bonds as long-term
liabilities since it would refinance them on a long-term basis if
they could not be remarketed.  In order to ensure its ability to do
so, the Company established a $37.4 million three year line of
credit with The Northern Trust Company.  The term of this facility
has been extended to January 31, 1998.  (See Liquidity and Capital
Resources - Credit Lines.)

7B Bonds Redeemed

   On November 14, 1995, the Company notified the trustee of the
City of Joliet 1984 Gas Supply Revenue Refunding Bonds, Series A
and B, which were secured by the Company's Series U and V First
Mortgage Bonds, of its intention to redeem approximately $87
million aggregate principal amount of the bonds.  The redemption,
from general corporate funds, was completed on December 29, 1995.


8.  SNG PLANT CLOSING

   The Company has closed its synthetic gas-making plant located
near Joliet, Illinois.  The decision was effected after a
cost-benefit analysis was performed, which showed that, as of
December 1, 1995, it would not be cost-effective to use the plant
as a source of gas, given new, more economical supply arrangements
to become effective on that date.  Those supply arrangements were
the result of initiatives undertaken by the Company to restructure
its gas supply portfolio in response to FERC Order 636.  The rates
approved by the Commission in the Company's most recent rate case
reflect the annual effect of a five-year amortization of the
undepreciated investment in the plant and decommissioning expenses.
The plant closing did not have a material effect on financial
position or results of operations of the Company.


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

RESULTS OF OPERATIONS

Net Income

   Net income applicable to common stock increased $9.8 million, to
$31.5 million, for the three months ended December 31, 1995, from
the results of last year's like quarter, due mainly to increased
gas deliveries largely resulting from weather that was 34 per cent
colder than last year's period, which was abnormally warm.  In
addition, net income benefited from a rate increase that went into
effect for the Company on November 14, 1995.  (See Note 3A of the
Notes to Consolidated Financial Statements.)  Last year's first
quarter was helped by a federal income tax settlement (see Note 6
of the Notes to Consolidated Financial Statements) and by the sale
of interests in certain oil and gas rights.

   Net income applicable to common stock increased $11.8 million,
to $63.4 million, for the current 12-month period, from the results
of the prior similar period, due principally to weather that was 5
per cent colder than the previous 12 months.  The current 12-month
period also benefited from the aforementioned rate increase and
increased gas deliveries to large volume customers.  In addition,
positive impacts on net income resulted from a decrease in the
provision for uncollectible accounts, and the timing difference in
recognizing a federal income tax settlement.  The prior period also
benefited from the sale of interests in certain oil and gas rights.
<TABLE>
   A summary of variations affecting income between periods is
presented below, with explanations of significant differences
following:
<CAPTION>
                                  Three Months Ended     12 Months Ended
                                   December 31, 1995    December 31, 1995
                                  Increase/(Decrease)  Increase/(Decrease)
                                   from Prior Period    from Prior Period
                                  -------------------  -------------------
(Thousands of dollars)                  Amount    %       Amount     %
-------------------------------------------------------------------------
<S>                                    <C>        <C>     <C>       <C>

Net operating revenues (a)             $20,762    18.2    $17,078    4.1
Operation and maintenance expenses       4,662     9.0     (8,131)  (3.6)
Depreciation and amortization expense       79     0.5        309    0.5
Income taxes                             8,078    67.4     11,694   47.6
Other income and deductions             (1,906)  (19.6)       537    1.6 
Net income applicable to common stock    9,756    44.9     11,841   23.0
-------------------------------------------------------------------------
<FN>
(a) Operating revenues, net of gas costs and revenue taxes.
</TABLE>

Net Operating Revenues

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

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

   Net operating revenues increased $20.8 million, to $135.1
million, and $17.1 million, to $431.5 million, for the current
three- and 12-month periods, respectively, reflecting increased gas
deliveries mainly caused by colder weather in each of the more
recent periods.  The aforementioned rate increase for the Company
improved net operating revenues in both periods by about $5.1
million, and net income by $3.1 million.  Also, the 12-month period
was impacted by increased deliveries to large volume customers.

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

Operation and Maintenance Expenses

   Operation and maintenance expenses increased $4.7 million, to
$56.3 million, for the current three-month period, due mainly to
the recognition in the prior year's first quarter of $3.2 million
from the sale of interests in certain oil and gas rights and $3.9
million for an IRS settlement.  (See Note 6 of the Notes to
Consolidated Financial Statements.)  The effect of these increases
was partially offset by reduced pension expenses of $1.7 million,
primarily resulting from a change in assumptions.  Also, group
insurance expenses declined $636,000.

   Operation and maintenance expenses decreased $8.1 million, to
$218.1 million for the current 12-month period, due principally to
a decrease of $8.7 million for the provision for uncollectible
accounts, and an increased credit of $5.0 million between periods
for the timing difference in recognizing an IRS settlement.  In
addition, pension and group insurance expenses decreased $1.8
million and $1.8 million, respectively.  These decreases were
partially offset by increased costs of $2.9 million related to the
reengineering program, higher maintenance costs of $3.5 million,
and the prior year's benefit of $3.2 million from the sale of
interests in certain oil and gas rights.

Depreciation and Amortization Expense

   Depreciation and amortization expense increased $309,000, to
$59.2 million, for the current 12-month period, due primarily to
depreciable property additions and the amortization of costs
associated with the closing of the SNG Plant (see Note 8 of the
Notes to Consolidated Financial Statements).  These increases were
largely offset by lower net dismantling costs in the current
period.

Income Taxes

   Income taxes, exclusive of taxes related to the closing of the
SNG Plant included in other income and deductions, increased $8.1
million, to $20.1 million, for the current three-month period, due
principally to higher pre-tax income.

   Income taxes, exclusive of taxes related to the closing of the
SNG Plant included in other income and deductions, increased $11.7
million, to $36.2 million, for the current 12-month period, due
mainly to higher pre-tax income together with an adjustment made in
1994 to reduce taxes accrued.

Other Income and Deductions

   Other income and deductions decreased $1.9 million, for the
current three-month period, due primarily to increased interest
income and the accelerated recognition of investment tax credits
for Peoples Gas' SNG Plant closing.  These amounts were partially
offset by a charge, after income taxes, reflecting the disallowance
of carrying charges associated with the closing of the SNG Plant.
(See Note 8 of the Notes to Consolidated Financial Statements.)

   Other income and deductions increased $537,000, for the current
12-month period, due primarily to increased interest expense on
amounts refundable to customers and on budget accounts, and the
aforementioned charge for the SNG Plant closing.  Also, the
amortization of the net gain on the sale of the Peoples Gas
Building was completed in March 1995 with the expiration of the
Company's lease at its former headquarters.  These increases were
partially offset by increased interest income and the accelerated
recognition of investment tax credits for the SNG Plant closing.  

Other Matters

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

FERC Order 636 Costs.  In 1992, the FERC issued Order No. 636 and
successor orders that required substantial restructuring of the
service obligations of interstate pipelines.  (See Notes 2E, 3A,
and 3B of the Notes to Consolidated Financial Statements.)

   On September 15, 1993, the Commission entered an order
initiating an investigation into the appropriate means of recovery
by Illinois gas utilities of pipeline charges for FERC Order No.
636 transition costs.  The Illinois Appellate Court affirmed the
Commission's order on rehearing on September 21, 1995.  (See Notes
2E, 3A, and 3B of the Notes to Consolidated Financial Statements.)

Reengineering Study.  The Company has undertaken a major project to
reengineer its business processes with the goal of increasing
efficiency, responsiveness to customer needs, and cost
effectiveness.

<TABLE>
Operating Statistics.  The following table represents gas
distribution margin components:
<CAPTION>
                                Three Months Ended     Twelve Months Ended
                                    December 31,           December 31,
                               -------------------    --------------------
                                 1995       1994       1995        1994
                               --------  --------     --------  ----------
<S>                            <C>       <C>          <C>       <C>

Operating Revenues (thousands):
  Gas sales
    Residential                $200,535  $195,023     $654,273  $  767,856
    Commercial                   29,446    29,067      101,815     129,013
    Industrial                    6,340     5,721       21,426      32,014
                               --------  --------     --------  ----------
                                236,321   229,811      777,514     928,883
                               --------  --------     --------  ----------
  Transportation
    Residential                  11,945    10,107       38,455      33,654
    Commercial                   14,479    11,705       46,234      39,327
    Industrial                    8,728     7,370       30,908      25,011
                               --------  --------     --------  ----------
                                 35,152    29,182      115,597      97,992
                               --------  --------     --------  ----------

  Other                           3,154     7,686       13,780      20,780
                               --------  --------     --------  ----------

Total Operating Revenues        274,627   266,679      906,891   1,047,655
Less  - Gas Costs               108,698   123,662      372,712     518,887
      - Revenues Taxes           30,784    28,634      102,712     114,379
                               --------  --------     --------  ----------
Net Operating Revenues         $135,145  $114,383     $431,467  $  414,389
                               ========  ========     ========  ==========

Deliveries (MDth):
  Gas Sales
    Residential                  40,760    31,468      120,801     115,877
    Commercial                    6,390     5,013       20,583      21,200
    Industrial                    1,559     1,048        4,868       5,738
                               --------  --------     --------  ----------
                                 48,709    37,529      146,252     142,815
                               --------  --------     --------  ----------
  Transportation
    Residential                   8,653     6,935       25,950      23,537
    Commercial                   11,843     9,617       38,356      35,212
    Industrial                   10,392     8,366       35,548      29,353
                               --------  --------     --------  ----------
                                 30,888    24,918       99,854      88,102
                               --------  --------     --------  ----------
Total Gas Sales
  and Transportation             79,597    62,447      246,106     230,917
                               ========  ========     ========  ==========

Margin per Dth delivered       $   1.70  $   1.83     $   1.75  $     1.79
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

Regulatory Actions.  On November 8, 1995, the Commission issued
orders approving changes in rates of the Company.  (See Note 3A of
the Notes to Consolidated Financial Statements.)

   In 1992, the Commission issued an order in its consolidated
proceedings, initiated in 1991, regarding the appropriate
ratemaking treatment of environmental costs relating to past
manufactured gas operations incurred by Illinois utilities,
including the Company.  In its order, the Commission approved rate
recovery of such environmental costs but required that the recovery
occur over a five-year period without recovery of carrying charges
on unrecovered balances.  The part of the Commission's order that
disallowed recovery of carrying charges on unrecovered balances has
been reversed on appeal by the Illinois Supreme Court, which has
remanded the case to the Commission.  On November 21, 1995, the
Commission entered its order on remand.  (See Note 3A of the Notes
to Consolidated Financial Statements.)

   On September 29, 1995, the Company filed a petition with the
Commission for approval of a performance-based rate program (PBR
Program) for gas costs.  The objectives of the PBR Program are to
provide incentives to minimize gas supply and capacity costs in a
changing market and to pursue innovative gas supply-related
opportunities.  Under specified conditions and up to certain
limits, the Company would share equally with gas sales customers
the savings or costs from the program.  The PBR Program would be
for a pilot period covering fiscal years 1996 through 1998 and was
filed pursuant to a new provision of the Illinois Public Utilities
Act which allows experiments in performance-based rates.  The
Commission has commenced hearings on the PBR Program proposals, and
an order is expected during the third quarter of fiscal 1996.

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

Bonds Redeemed.  On November 14, 1995, the Company notified the
trustee of the City of Joliet 1984 Gas Supply Revenue Refunding
Bonds, Series A and B, which were secured by the Company's Series U
and V First Mortgage Bonds, of its intention to redeem
approximately $87 million aggregate principal amount of the bonds. 
The redemption, from general corporate funds, was completed on
December 29, 1995.  (See Note 7B of the Notes to Consolidated
Financial Statements.)

Credit Lines.  The Company has lines of credit of approximately
$131.1 million of which North Shore Gas may borrow up to $30
million.  Agreements covering $93.7 million of the total will
expire on June 26, 1996.  The agreement covering the remaining
$37.4 million will expire on January 31, 1998.  Such lines of
credit cover projected short-term credit needs of the Company and
North Shore Gas and support the long-term debt treatment of the
Company's adjustable-rate mortgage bonds.  (See Note 7A of the
Notes to Consolidated Financial Statements.)

Interest Coverage.  The fixed charges coverage ratios for the
Company for the 12-months ended December 31, 1995, and for fiscal
1995 and 1994 were 3.09, 2.76, and 3.28, respectively.



                   PART II.   OTHER INFORMATION


Item 1.  Legal Proceedings

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

   See Note 5 of the Notes to Consolidated Financial Statements for
a discussion of an over-pressure condition that occurred on January
17, 1992, in the Company's gas mains on the Near Northwest Side of
the City of Chicago.


Item 6.  Exhibits and Reports on Form 8-K

      a.  Exhibits

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

            27          Financial Data Schedule

      b.  Reports on Form 8-K filed during the quarter ended
         December 31, 1995

           Date of Report - November 15, 1995
           Item 5.  Other Events
               Rates and Regulation







                            SIGNATURE



   Pursuant to the requirements of the Securities Exchange Act of

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

be signed on its behalf by the undersigned thereunto duly

authorized.




                           The Peoples Gas Light and Coke Company
                           --------------------------------------
                                     (Registrant)




February 13, 1996           By:  /s/  K. S. BALASKOVITS
-----------------               ------------------------------
     (Date)                           K. S. Balaskovits
                                 Vice President and Controller





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