Exhibit 10(c)

Date: May 28, 1998                         Contract No.: 101471

                    FTS - 1 SERVICE AGREEMENT

This AGREEMENT is entered into by ANR PIPELINE COMPANY
(Transporter) and

NORTH SHORE GAS COMPANY (Shipper).

WHEREAS, Shipper has requested Transporter to transport Gas on
its behalf and Transporter represents that it is willing to
transport Gas under the terms and conditions of this Agreement.

NOW, THEREFORE, Transporter and Shipper agree that the terms
below, together with the terms and conditions of Transporter's
applicable Rate Schedule and General Terms and Conditions of
Transporter's FERC Gas Tariff constitute the transportation
service to be provided and the rights and obligations of Shipper
and Transporter.

1.   AUTHORITY FOR TRANSPORTATION SERVICE:
     (284B = Section 311; 284G = Blanket)

     284G

2.   RATE SCHEDULE: Firm Transportation Service (FTS - 1)

3.   CONTRACT QUANTITIES:

     Primary Route- See Exhibit attached hereto

     Such  contract  quantities shall be reduced  for  scheduling
     purposes,  but  not for billing purposes,  by  the  Contract
     Quantities  that Shipper has released through  Transporter's
     capacity release program for the period of any release.

4.   TERM OF AGREEMENT:

     Nov 01, 1998 to

     Oct 31, 2003

5.   RATES:

     Maximum rates, charges, and fees shall be applicable for the
     entitlements  and  quantities  delivered  pursuant  to  this
     Agreement unless Transporter has advised Shipper in  writing
     or by GEMStm that it has agreed otherwise.


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Date: May 28, 1998                         Contract No.: 101471

     It is further agreed that Transporter may seek authorization
     from  the  Commission and/or other appropriate body  at  any
     time  and from time to time to change any rates, charges  or
     other provisions in the applicable Rate Schedule and General
     Terms  and Conditions of Transporter's FERC Gas Tariff,  and
     Transporter  shall have the right to place such  changes  in
     effect  in  accordance  with  the  Natural  Gas  Act.   This
     Agreement  shall be deemed to include such changes  and  any
     changes  which  become  effective by operation  of  law  and
     Commission   order.  Nothing  contained  herein   shall   be
     construed  to deny Shipper any rights it may have under  the
     Natural Gas Act, including the right to participate fully in
     rate  or  other proceedings by intervention or otherwise  to
     contest changes in rates in whole or in part.

6.   INCORPORATION BY REFERENCE:

     The provisions of Transporter's applicable Rate Schedule and
     the  General Terms and Conditions of Transporter's FERC  Gas
     Tariff are specifically incorporated herein by reference and
     made a part hereof.

7.   NOTICES:

     All  notices  can be given by telephone or other  electronic
     means,  however, such notices shall be confirmed in  writing
     at  the  addresses  below  or through  GEMStm.  Shipper  and
     Transporter may change the addresses below by written notice
     to   the  other  without  the  necessity  of  amending  this
     Agreement:

     TRANSPORTER:

     ANR PIPELINE COMPANY
     500 Renaissance Center
     Detroit, Michigan 48243
     Attentions:    Gas Control (Nominations)
                    Volume Management (Statements)
                    Cash Control (Payments)
                    Customer Administration (All Other Matters)


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Date: May 28, 1998                         Contract No.: 101471



     SHIPPER:

     NORTH SHORE GAS COMPANY
     C/O PEOPLES GAS LIGHT & COKE
     130 E RANDOLPH 22ND FLR.
     CHICAGO, IL 60601-6207
     Attention:    JEROME SLECHTA

     Telephone:  312-240-4362
     Fax:  312-240-4211

     INVOICES AND STATEMENTS:

     NORTH SHORE GAS COMPANY
     C/O PEOPLES GAS LIGHT & COKE
     130 E RANDOLPH 23RD FLR.
     CHICAGO, IL 60601-6207
     Attention:    PATTY GARCIA

     Telephone: 312-240-4275
     Fax: 312-240-3865

     NOMINATIONS:

     NORTH SHORE GAS COMPANY
     C/O PEOPLES GAS LIGHT & COKE
     130 E RANDOLPH 22ND FLR.
     CHICAGO, IL 60601-6207
     Attention:    JEROME SLECHTA

     Telephone: 312-240-4362
     Fax: 312-240-4211


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Date: May 28, 1998                       Contract No.: 101471


     ALL OTHER MATTERS:

     NORTH SHORE GAS COMPANY
     C/O PEOPLES GAS LIGHT & COKE
     130 E RANDOLPH 22ND FLR.
     CHICAGO, IL 60601-6207
     Attention:    JEROME SLECHTA

     Telephone: 312-240-4362
     Fax: 312-240-4211



8    FURTHER AGREEMENT:

     A.  For all quantities of gas transported on the Primary
         Route up to the Primary Route MDQ under this Agreement,
         Shipper will be charged a Reservation Charge of $0.10
         per dth on a 100% load factor basis inclusive of
         Volumetric Buyout/Buydown, Dakota and Transition Costs.
         In addition, for all quantities of gas transported,
         Shipper will be charged the Minimum Commodity Charge,
         ACA and fuel. Shipper shall not be responsible for GRI
         surcharges, unless and to the extent that Transporter
         is required to collect and/or remit such charges to
         GRI.
     
     B.  All   quantities   associated  with  Secondary   Receipt
         Points,  Secondary Delivery Points and Secondary  Routes
         under  this Agreement will be Maximum Tariff Rates  plus
         all  other  related  fees, surcharges  and  fuel  unless
         mutually agreed to otherwise.
     
     C.  The term of service under this Agreement shall begin  on
         the  later of November 1, 1998 or the date on which  the
         Racine  Lateral,  as  defined in the  Letter  Agreements
         dated  September  25,  1997 and  November  4,  1997,  is
         placed into service.
     
     D.  Consistent with provisions of its Tariff, Transporter
         is willing to contract on Shipper's behalf for capacity
         required on third party transporters, or for other
         services to effectuate Shipper's receipt of gas on
         third party facilities and delivery of gas to
         Transporter's facilities.
     
         Shipper has advised Transporter of its desire to have
         Transporter act in such a capacity.


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Date: May 28, 1998                          Contract No.: 101471



               Shipper agrees to pay all charges related to such
          third party transportation arrangements pursuant to
          Transporter's Tariff.

          E.   To the extent Shipper desires to utilize
          receipt/delivery points pursuant to Part 284B (Section
          311 of the NGPA and Section 284.102 of the Commission's
          regulations), Shipper must execute a separate agreement
          with Transporter and Shipper must also certify that the
          transportation of gas will be on behalf of either an
          "intrastate pipeline" or a "local distribution
          company".

9.   OPERATIONAL FLOW ORDERS:

     Shipper hereby guarantees to Transporter that each contract
     it has entered into in connection with the Gas to be
     transported under this Agreement contains a provision that
     permits Transporter to issue an effective Operational Flow
     Order pursuant to Section 8 of the General Terms and
     Conditions, of Transporter's FERC Gas Tariff.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective Officers or Representatives
there unto duly authorized to be effective as of the date stated
above.

SHIPPER: NORTH SHORE GAS COMPANY

By:   /s/ William E. Morrow

Title:     Vice President

Date:      June 29, 1998

TRANSPORTER: ANR PIPELINE COMPANY

By:   /s/ Richard H. Leehr

Title:     Vice President

Date:      7-16-98




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PRIMARY ROUTE EXHIBIT                     Contract No: 101471
  To Agreement Between                  Rate Schedule FTS-1
ANR PIPELINE COMPANY (Transporter)      Contract Date: May 28, 1998
AND NORTH SHORE GAS COMPANY (Shipper)  Amendment Date:

Receipt              Delivery         Annual   Winter  Summer
Number               Number           MDQ      MDQ     MDQ
Name                 Name             (DTH)    (DTH)   (DTH)


246067                               40000      0        0
WILL COUNTY INT     RACINE LATERAL
                    DELIVERY POINT
 FROM: Nov 01, 1998   TO: Oct 31, 2003



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