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

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

| Illinois                                                           |   | 36-2863847                                                     |
|--------------------------------------------------------------------|--------|----------------------------------------------------------------|
| (State      of Incorporation)                                      |   | (I.R.S.      Employer                                          |
|                                                               |   | Identification      No.)                                       |
|                                                               |   |                                                           |
| 1844      Ferry Road                                               |   |                                                           |
|      Naperville,      Illinois 60563-9600 |   | (630)      983-8888                                            |
| (Address      of principal executive offices) (Zip Code)           |   | (Registrant’s      telephone number, including areacode) |

| Large      accelerated    filer    [   ] | Accelerated      filer                    [   ] |
|-----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                        |                                                                                                                                                               |
| Non-accelerated      filer      [X]           | Smaller      reporting  company   [   ]                                                                                              |

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Table ofContents

| Item No. |   | Description                                                                                                                  |   | Page No. |   |
|----------|--------|------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|     |   |                                                                                                                         |   |     |   |
|     |   | Glossary                                                                                                                     |   |     | ii     |   |
|     |   |                                                                                                                         |   |     |   |
|     |   | Part I                                                                                                                       |   |     |   |
| 1.       |   | Business                                                                                                                     |   |     | 1      |   |
| 1A.      |   | Risk Factors                                                                                                                 |   |     | 4      |   |
| 1B.      |   | Unresolved Staff Comments                                                                                                    |   |     | 8      |   |
| 2.       |   | Properties                                                                                                                   |   |     | 8      |   |
| 3.       |   | Legal Proceedings                                                                                                            |   |     | 8      |   |
| 4.       |   | Submission      of Matters to a Vote of Security Holders                                                                     |   |     | *      |   |
|     |   |                                                                                                                         |   |     |   |   |
|     |   | Part II                                                                                                                      |   |     |   |   |
| 5.       |   | Market for Registrant’s Common Equity, Related      Stockholder Matters and Issuer Purchases of Equity      Securities |   |     | 9      |   |
| 6.       |   | Selected      Financial Data                                                                                                 |   |     | *      |   |
| 7.       |   | Management’s Discussion and Analysis of Financial      Condition and Results of Operations                             |   |     | 9      |   |
| 7A.      |   | Quantitative and Qualitative Disclosures About      Market Risk                                                              |   |     | 23     |   |
| 8.       |   | Financial Statements and Supplementary      Data                                                                             |   |     | 24     |   |
| 9.       |   | Changes in and Disagreements With Accountants      on Accounting and Financial Disclosure                                    |   |     | 53     |   |
| 9A.      |   | Controls and Procedures                                                                                                      |   |     | 53     |   |
| 9B.      |   | Other Information                                                                                                            |   |     | 54     |   |
|     |   |                                                                                                                         |   |     |   |   |
|     |   | Part III                                                                                                                     |   |     |   |   |
| 10.      |   | Directors,      Executive Officers and Corporate Governance                                                                  |   |     | *      |   |
| 11.      |   | Executive      Compensation                                                                                                  |   |     | *      |   |
| 12.      |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                     |   |     | *      |   |
| 13.      |   | Certain      Relationships and Related Transactions, and Director      Independence                                          |   |     | *      |   |
| 14.      |   | Principal Accounting Fees and    Services                                                                                    |   |     | 55     |   |
|     |   |                                                                                                                         |   |     |   |   |
|     |   | Part IV                                                                                                                      |   |     |   |   |
| 15.      |   | Exhibits, Financial Statement      Schedules                                                                                 |   |     | 56     |   |
|     |   | Signatures                                                                                                                   |   |     | 58     |   |
|     |   | Supplemental Information                                                                                                     |   |     | 59     |   |
|     |   | Exhibit Index                                                                                                                |   |     | 60     |   |

| * | The      Registrant meets the conditions set forth in General Instruction I(1)(a)      and (b) of Form 10-K and is therefore omitting the information called for      by the otherwise required item. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Glossary

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| Item      1. | Business |
|--------------|----------|

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| ·   | Base      rates, which are set by the ICC, are designed to allow the company an      opportunity to recover its costs and earn a fair return for      investors.  On April 29, 2008, Nicor Gas filed with the ICC for      an overall increase in rates.  The company’s filing, as updated,      provides a revenue increase of $140.4 million for a rate of return on rate      base of 9.27 percent, which reflects an 11.15 percent cost of common      equity.  For additional information about the rate proceeding,      see Item 7 – Management’s Discussion and Analysis of Financial Condition      and Results of Operations and Item 8 – Notes to the Consolidated Financial      Statements – Note 14 – RateProceeding. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      company’s ICC-approved tariffs provide that the cost of natural gas      purchased for customers will be fully charged to customers without      markup.  Therefore, the company does not profit from the sale of      natural gas.  Rather, the company earns income from fixed      monthly charges and from variable transportation charges for delivering      natural gas to customers.  Annually, the ICC initiates a review      of the company’s natural gas purchasing practices for prudence, and may      disallow the pass-through of costs considered  imprudent. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As      with the cost of natural gas, the company has a tariff that provides for      the pass-through of prudently incurred environmental costs related to the      remediation of former manufactured gas plant sites.  This      pass-through is also subject to annual ICC  review. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Risk Factors

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| Item      1B. | Unresolved Staff  Comments |
|---------------|----------------------------|

Properties

LegalProceedings

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| Item      5. | Market for Registrant’s Common Equity, Related      Stockholder Matters and Issuer Purchases of Equity      Securities |
|--------------|------------------------------------------------------------------------------------------------------------------------------|

| Item      7. | Management’s Discussion and Analysis of Financial Condition      and Results ofOperations |
|--------------|-------------------------------------------------------------------------------------------------|

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|                     |   | 2008   |     |   | 2007   |   |     | 2006   |   |
|--------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                     |   |   |     |   |   |   |     |   |   |
| Revenues                 |   | $      | 3,206.9  |   |   | $      | 2,627.5  |   |   | $ | 2,452.3 |   |
| Cost      of gas         |   |   | (2,427.8 | )      |   |   | (1,906.5 | )      |   |   | (1,743.7 | ) |
| Revenue      tax expense |   |   | (171.1   | )      |   |   | (148.7   | )      |   |   | (144.4 | ) |
| Margin                   |   | $      | 608.0    |   |   | $      | 572.3    |   |   | $ | 564.2 |   |

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| Nicor      Gas Company                                                                                                                           |   |   |    |   |   |   |    |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |
| Operating      Statistics                                                                                                                        |   |   |    |   |   |   |    |   |   |
|                                                                                                                                             |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |
| Operating revenues      (millions)                                                                                                               |   |   |    |   |   |   |    |   |   |
| Sales                                                                                                                                            |   |   |    |   |   |   |    |   |   |
| Residential                                                                                                                                      |   | $      | 2,176.2 |   |   | $      | 1,791.4 |   |   | $ | 1,671.1 |   |
| Commercial                                                                                                                                       |   |   | 551.4   |   |   |   | 426.2   |   |   |   | 373.9 |   |
| Industrial                                                                                                                                       |   |   | 61.9    |   |   |   | 47.6    |   |   |   | 42.8 |   |
|                                                                                                                                             |   |   | 2,789.5 |   |   |   | 2,265.2 |   |   |   | 2,087.8 |   |
| Transportation                                                                                                                                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                      |   |   | 40.9    |   |   |   | 31.1    |   |   |   | 32.0 |   |
| Commercial                                                                                                                                       |   |   | 82.2    |   |   |   | 76.7    |   |   |   | 82.1 |   |
| Industrial                                                                                                                                       |   |   | 38.3    |   |   |   | 37.5    |   |   |   | 41.0 |   |
|  Other                                                                                                                                      |   |   | 25.7    |   |   |   | 10.6    |   |   |   | 3.7 |   |
|                                                                                                                                             |   |   | 187.1   |   |   |   | 155.9   |   |   |   | 158.8 |   |
| Other      revenues                                                                                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Revenue      taxes                                                                                                                               |   |   | 174.0   |   |   |   | 149.6   |   |   |   | 147.7 |   |
| Environmental      cost recovery                                                                                                                 |   |   | 9.7     |   |   |   | 10.9    |   |   |   | 11.6 |   |
| Chicago      Hub                                                                                                                                 |   |   | 11.3    |   |   |   | 19.0    |   |   |   | 26.4 |   |
|  Other                                                                                                                                      |   |   | 35.3    |   |   |   | 26.9    |   |   |   | 20.0 |   |
|                                                                                                                                        |   |   | 230.3   |   |   |   | 206.4   |   |   |   | 205.7 |   |
|                                                                                                                                             |   | $      | 3,206.9 |   |   | $      | 2,627.5 |   |   | $ | 2,452.3 |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Deliveries      (Bcf)                                                                                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Sales                                                                                                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                      |   |   | 214.4   |   |   |   | 201.8   |   |   |   | 185.9 |   |
| Commercial                                                                                                                                       |   |   | 54.7    |   |   |   | 48.7    |   |   |   | 41.8 |   |
| Industrial                                                                                                                                       |   |   | 6.4     |   |   |   | 5.7     |   |   |   | 5.0 |   |
|                                                                                                                                             |   |   | 275.5   |   |   |   | 256.2   |   |   |   | 232.7 |   |
| Transportation                                                                                                                                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                      |   |   | 25.6    |   |   |   | 19.7    |   |   |   | 17.0 |   |
| Commercial                                                                                                                                       |   |   | 93.1    |   |   |   | 84.6    |   |   |   | 80.4 |   |
| Industrial                                                                                                                                       |   |   | 103.9   |   |   |   | 107.8   |   |   |   | 108.6 |   |
|                                                                                                                                             |   |   | 222.6   |   |   |   | 212.1   |   |   |   | 206.0 |   |
|                                                                                                                                             |   |   | 498.1   |   |   |   | 468.3   |   |   |   | 438.7 |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Year-end customers      (thousands)                                                                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Sales                                                                                                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                      |   |   | 1,760   |   |   |   | 1,789   |   |   |   | 1,807 |   |
| Commercial                                                                                                                                       |   |   | 130     |   |   |   | 128     |   |   |   | 123 |   |
| Industrial                                                                                                                                       |   |   | 8       |   |   |   | 7       |   |   |   | 7 |   |
|                                                                                                                                             |   |   | 1,898   |   |   |   | 1,924   |   |   |   | 1,937 |   |
| Transportation                                                                                                                                   |   |   |    |   |   |   |    |   |   |   |   |   |
| Residential                                                                                                                                      |   |   | 222     |   |   |   | 191     |   |   |   | 166 |   |
| Commercial                                                                                                                                       |   |   | 53      |   |   |   | 54      |   |   |   | 57 |   |
| Industrial                                                                                                                                       |   |   | 5       |   |   |   | 5       |   |   |   | 6 |   |
|                                                                                                                                             |   |   | 280     |   |   |   | 250     |   |   |   | 229 |   |
|                                                                                                                                             |   |   | 2,178   |   |   |   | 2,174   |   |   |   | 2,166 |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Other      statistics                                                                                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Degree      days                                                                                                                                 |   |   | 6,348   |   |   |   | 5,756   |   |   |   | 5,174 |   |
| Colder      (warmer) than normal (1)                                                                                                             |   |   | 9%      |   |   |   | (1%)    |   |   |   | (11%) |   |
| Average      gas cost per Mcf sold                                                                                                               |   | $      | 8.76    |   |   | $      | 7.36    |   |   | $ | 7.44 |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| (1)      Normal weather for Nicor Gas' service territory, for purposes of this      report, is considered to be 5,830 degree      days per year. |   |
|                                                                                                                                             |   |   |    |   |   |   |    |   |   |   |   |   |

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|                         |   | Standard&      Poor’s |   |   | Moody’s |   |   | Fitch  |      |
|------------------------------|--------|---------------------------------|--------|--------|---------------|--------|--------|--------|-----------|
|                         |   |                            |   |   |          |   |   |   |      |
| Commercial      Paper        |   |                            | A-1+   |   |          |   | P-1    |   |      | F-1 |   |
| Senior      Secured Debt     |   |  AA                        |   |   |          | A1     |   |   |  AA- |   |
| Senior      Unsecured Debt   |   |  AA                        |   |   |          | A2     |   |   | A+        |   |
| Corporate      Credit Rating |   |  AA                        |   |   |          | n/a    |   |   | n/a       |   |

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|                                       |   | Payments      due by period |   |
|--------------------------------------------|--------|-----------------------------|--------|
|                                       |   | Lessthan      1year         |   |   | 1-3years |   |   | 3-5years |   |   | Morethan      5years |   |   | Total |   |
|                                       |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase      obligations                  |   | $                           | 664.4  |   |   | $ | 356.6 |   |   | $ | 125.5 |   |   | $ | 7.7 |   |   | $ | 1,154.2 |   |
| Long-term      debt                        |   |                        | 50.0   |   |   |   | 75.0 |   |   |   | - |   |   |   | 375.0 |   |   |   | 500.0 |   |
| Fixed      interest on long-term      debt |   |                        | 28.5   |   |   |   | 52.0 |   |   |   | 46.6 |   |   |   | 380.9 |   |   |   | 508.0 |   |
| Operating      leases                      |   |                        | 1.2    |   |   |   | 1.5 |   |   |   | .7 |   |   |   | 9.6 |   |   |   | 13.0 |   |
| Other      long-term obligations           |   |                        | .5     |   |   |   | .7 |   |   |   | .6 |   |   |   | 1.0 |   |   |   | 2.8 |   |
|                                       |   | $                           | 744.6  |   |   | $ | 485.8 |   |   | $ | 173.4 |   |   | $ | 774.2 |   |   | $ | 2,178.0 |   |

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Quantitative and Qualitative Disclosures About MarketRisk

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| Item      8. | Financial Statements and Supplementary      Data |
|--------------|--------------------------------------------------|

|                                                         |                                                 | Page   |
|--------------------------------------------------------------|------------------------------------------------------|--------|
|                                                         |                                                 |   |
| Report of Independent Registered Public Accounting      Firm | 25                                                   |
|                                                         |                                                 |   |
| Financial      Statements:                                   |                                                 |
|                                                         |                                                 |   |
|                                                         | Consolidated Statements of Operations                | 27     |
|                                                         |                                                 |   |
|                                                         | Consolidated Statements of Cash Flows                | 28     |
|                                                         |                                                 |   |
|                                                         | Consolidated Balance Sheets                          | 29     |
|                                                         |                                                 |   |
|                                                         | Consolidated Statements of      Capitalization       | 30     |
|                                                         |                                                 |   |
|                                                         | Consolidated Statements of RetainedEarnings          | 31     |
|                                                         |                                                 |   |
|                                                         | Consolidated Statements of Comprehensive      Income | 31     |
|                                                         |                                                 |   |
|                                                         | Notes to the Consolidated Financial      Statements  | 32     |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

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| Nicor      Gas Company                                                                                                |   |                        |    |   |   |   |    |   |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------|--------|---------|--------|--------|
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |
| Consolidated Statements of Operations                                                                                 |   |                        |    |   |   |   |    |   |   |
| (millions)                                                                                                            |   |                        |    |   |   |   |    |   |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |
|                                                                                                                  |   | Year      ended December 31 |    |
|                                                                                                                  |   | 2008                        |    |   | 2007   |   |    | 2006   |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |
| Operating      revenues (includes      revenue taxes of  $174.0, $149.6 and      $147.7, respectively) |   | $                           | 3,206.9 |   |   | $      | 2,627.5 |   |   | $ | 2,452.3 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| Operating      expenses                                                                                               |   |                        |    |   |   |   |    |   |   |   |   |   |
| Cost      of gas                                                                                                      |   |                        | 2,427.8 |   |   |   | 1,906.5 |   |   |   | 1,743.7 |   |
| Operating      and maintenance                                                                                        |   |                        | 293.0   |   |   |   | 268.3   |   |   |   | 267.2 |   |
| Depreciation                                                                                                          |   |                        | 170.9   |   |   |   | 165.6   |   |   |   | 160.1 |   |
| Taxes,      other than income taxes                                                                                   |   |                        | 189.4   |   |   |   | 166.9   |   |   |   | 163.1 |   |
| Income      tax expense, net                                                                                          |   |                        | 28.9    |   |   |   | 31.8    |   |   |   | 23.6 |   |
| Mercury-related      costs (recoveries), net                                                                          |   |                        | .6      |   |   |   | (8.0    | )      |   |   | (3.6 | ) |
|                                                                                                                  |   |                        | 3,110.6 |   |   |   | 2,531.1 |   |   |   | 2,354.1 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| Operating      income                                                                                                 |   |                        | 96.3    |   |   |   | 96.4    |   |   |   | 98.2 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| Other      income (expense), net                                                                                      |   |                        |    |   |   |   |    |   |   |   |   |   |
| Property      sale gains                                                                                              |   |                        | .8      |   |   |   | 2.0     |   |   |   | 3.3 |   |
| Interest      income                                                                                                  |   |                        | 5.5     |   |   |   | 5.2     |   |   |   | 6.3 |   |
| Other      income                                                                                                     |   |                        | .8      |   |   |   | .8      |   |   |   | .8 |   |
| Other      expense                                                                                                    |   |                        | (1.9    | )      |   |   | (1.8    | )      |   |   | (1.5 | ) |
| Income      tax expense on other income                                                                               |   |                        | (2.1    | )      |   |   | (2.4    | )      |   |   | (4.2 | ) |
|                                                                                                                  |   |                        | 3.1     |   |   |   | 3.8     |   |   |   | 4.7 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| Interest      expense                                                                                                 |   |                        |    |   |   |   |    |   |   |   |   |   |
| Interest      on debt, net of amounts capitalized                                                                     |   |                        | 36.6    |   |   |   | 38.8    |   |   |   | 38.6 |   |
| Other                                                                                                                 |   |                        | 3.2     |   |   |   | (4.9    | )      |   |   | 5.7 |   |
|                                                                                                                  |   |                        | 39.8    |   |   |   | 33.9    |   |   |   | 44.3 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| Net      income                                                                                                       |   | $                           | 59.6    |   |   | $      | 66.3    |   |   | $ | 58.6 |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
|                                                                                                                  |   |                        |    |   |   |   |    |   |   |   |   |   |
| The      accompanying notes are an integral part of these    statements.                                              |   |                        |    |   |   |   |    |   |   |

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| Nicor      Gas Company                                                   |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |
|--------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------|--------|--------|--------------------|
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |
| Consolidated Statements of Cash Flows                                    |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |
| (millions)                                                               |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |
|                                                                     |                                                                                                                                                                                                      |   | Year      ended December 31 |   |
|                                                                     |                                                                                                                                                                                                      |   | 2008                        |   |   | 2007               |   |   | 2006               |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   | *      As Adjusted |   |   | *      As Adjusted |   |
| Operating      activities                                                |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |
|                                                                     | Net      income                                                                                                                                                                                           |   | $                           | 59.6   |   |               | $      | 66.3   |               |   | $ | 58.6 |   |
|                                                                     | Adjustments      to reconcile net income to net cash flow provided      from operating activities:                                                                                                        |   |                        |   |   |               |   |   |               |   |   |   |   |
|                                                                     | Depreciation                                                                                                                                                                                              |   |                        | 170.9  |   |               |   | 165.6  |               |   |   | 160.1 |   |
|                                                                     | Deferred      income tax expense (benefit)                                                                                                                                                                |   |                        | 3.0    |   |               |   | (.3    | )                  |   |   | (48.6 | ) |
|                                                                     | Net      gain on sale of property, plant and equipment                                                                                                                                                    |   |                        | (.8    | )      |               |   | (2.0   | )                  |   |   | (3.3 | ) |
|                                                                     | Changes      in assets and liabilities:                                                                                                                                                                   |   |                        |   |   |               |   |   |               |   |   |   |   |
|                                                                     | Receivables,      less allowances                                                                                                                                                                         |   |                        | (44.6  | )      |               |   | (64.3  | )                  |   |   | 257.5 |   |
|                                                                     | Gas      in storage                                                                                                                                                                                       |   |                        | (60.8  | )      |               |   | 40.1   |               |   |   | 68.0 |   |
|                                                                     | Deferred/accrued      gas costs                                                                                                                                                                           |   |                        | (104.1 | )      |               |   | .1     |               |   |   | (173.4 | ) |
|                                                                     | Derivative      instruments                                                                                                                                                                               |   |                        | 136.7  |   |               |   | (66.2  | )                  |   |   | 155.4 |   |
|                                                                     | Margin      accounts - derivative instruments                                                                                                                                                             |   |                        | (113.7 | )      |               |   | 7.6    |               |   |   | (61.2 | ) |
|                                                                     | Pension      benefits                                                                                                                                                                                     |   |                        | 179.1  |   |               |   | (54.5  | )                  |   |   | 26.6 |   |
|                                                                     | Regulatory      postretirement asset                                                                                                                                                                      |   |                        | (186.3 | )      |               |   | 44.1   |               |   |   | (113.5 | ) |
|                                                                     | Other      assets                                                                                                                                                                                         |   |                        | (60.5  | )      |               |   | (9.4   | )                  |   |   | 10.0 |   |
|                                                                     | Accounts      payable and customer credit balances and deposits                                                                                                                                           |   |                        | (57.0  | )      |               |   | 89.7   |               |   |   | (77.2 | ) |
|                                                                     | Health      care and other postretirement benefits                                                                                                                                                        |   |                        | 12.2   |   |               |   | 4.7    |               |   |   | 89.1 |   |
|                                                                     | Other      liabilities                                                                                                                                                                                    |   |                        | (2.4   | )      |               |   | (13.3  | )                  |   |   | (9.5 | ) |
|                                                                     | Other      items                                                                                                                                                                                          |   |                        | (3.2   | )      |               |   | (7.8   | )                  |   |   | (4.1 | ) |
|                                                                     | Net      cash flow provided from (used for) operating activities                                                                                                                                          |   |                        | (71.9  | )      |               |   | 200.4  |               |   |   | 334.5 |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Investing      activities                                                |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |
|                                                                     | Additions      to property, plant and equipment                                                                                                                                                           |   |                        | (230.0 | )      |               |   | (155.4 | )                  |   |   | (164.3 | ) |
|                                                                     | Purchases      of available-for-sale securities                                                                                                                                                           |   |                        | -      |   |               |   | (166.6 | )                  |   |   | - |   |
|                                                                     | Proceeds      from the sales of available-for-sale securities                                                                                                                                             |   |                        | -      |   |               |   | 166.6  |               |   |   | - |   |
|                                                                     | Net      proceeds from sale of property, plant and equipment                                                                                                                                              |   |                        | .8     |   |               |   | .6     |               |   |   | 3.6 |   |
|                                                                     | Other      investing activities                                                                                                                                                                           |   |                        | 6.5    |   |               |   | 4.0    |               |   |   | 5.7 |   |
|                                                                     | Net      cash flow used for investing activities                                                                                                                                                          |   |                        | (222.7 | )      |               |   | (150.8 | )                  |   |   | (155.0 | ) |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Financing      activities                                                |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |
|                                                                     | Proceeds      from issuing long-term debt                                                                                                                                                                 |   |                        | 75.0   |   |               |   | -      |               |   |   | 50.0 |   |
|                                                                     | Disbursements      to retire long-term obligations                                                                                                                                                        |   |                        | (75.5  | )      |               |   | (.5    | )                  |   |   | (50.5 | ) |
|                                                                     | Net      issuances (repayments) of commercial paper                                                                                                                                                       |   |                        | 348.9  |   |               |   | 19.0   |               |   |   | (140.0 | ) |
|                                                                     | Dividends      paid                                                                                                                                                                                       |   |                        | (50.9  | )      |               |   | (69.2  | )                  |   |   | (47.1 | ) |
|                                                                     | Other      financing activities                                                                                                                                                                           |   |                        | (1.2   | )      |               |   | -      |               |   |   | (.4 | ) |
|                                                                     | Net      cash flow provided from (used for) financing activities                                                                                                                                          |   |                        | 296.3  |   |               |   | (50.7  | )                  |   |   | (188.0 | ) |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                |                                                                                                                                                                                                      |   | 1.7                         |   |   |               | (1.1   | )      |               |   | (8.5 | ) |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Cash      and cash equivalents, beginning of year                        |                                                                                                                                                                                                      |   | .6                          |   |   |               | 1.7    |   |               |   | 10.2 |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Cash      and cash equivalents, end of year                              |                                                                                                                                                                                                      | $      | 2.3                         |   |   | $                  | .6     |   |               | $ | 1.7 |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| Supplemental      information                                            |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |
|                                                                     | Income      taxes paid, net                                                                                                                                                                               |   | $                           | 49.3   |   |               | $      | 54.1   |               |   | $ | 84.9 |   |
|                                                                     | Interest      paid, net of amounts capitalized                                                                                                                                                            |   |                        | 50.8   |   |               |   | 36.7   |               |   |   | 36.1 |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| *                                                                        | Periods      prior to 2008 were adjusted due to the retrospective application of FSP      No. FIN 39-1, Amendment      of FIN 39, Offsetting of Amounts Related to Certain Contracts.       See Note |   |
|                                                                     | 2 -      New Accounting Pronouncements for further information.                                                                                                                                           |   |                        |   |   |               |   |   |               |   |   |   |   |
|                                                                     |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |   |
| The      accompanying notes are an integral part of these    statements. |                                                                                                                                                                                                      |   |                        |   |   |               |   |   |               |   |   |   |

----

Table of Contents

| Nicor      Gas Company                                                   |                                                                                                                                                                                                      |   |             |    |               |   |
|--------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------------------|--------|
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |
| Consolidated Balance Sheets                                              |                                                                                                                                                                                                      |   |             |    |               |   |
| (millions)                                                               |                                                                                                                                                                                                      |   |             |    |               |   |
|                                                                     |                                                                                                                                                                                                      |   | December      31 |    |
|                                                                     |                                                                                                                                                                                                      |   | 2008             |    |               | 2007   |   |
| Assets                                                                   |                                                                                                                                                                                                      |   |             |    | *      As Adjusted |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |
| Gas      distribution plant, at cost                                     |                                                                                                                                                                                                      | $      | 4,460.6          |    |               | $      | 4,279.7 |   |
|                                                                     | Less      accumulated depreciation                                                                                                                                                                        |   |             | 1,737.1 |               |   |   | 1,655.6 |   |
| Gas      distribution plant, net                                         |                                                                                                                                                                                                      |   | 2,723.5          |    |               |   | 2,624.1 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Current      assets                                                      |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     | Cash      and cash equivalents                                                                                                                                                                            |   |             | 2.3     |               |   |   | .6 |   |
|                                                                     | Receivables,      less allowances of $42.5 and $32.8, respectively                                                                                                                                        |   |             | 577.8   |               |   |   | 531.6 |   |
|                                                                     | Receivables      - affiliates                                                                                                                                                                             |   |             | 11.4    |               |   |   | 13.0 |   |
|                                                                     | Gas      in storage                                                                                                                                                                                       |   |             | 173.7   |               |   |   | 112.9 |   |
|                                                                     | Derivative      instruments                                                                                                                                                                               |   |             | 4.1     |               |   |   | 14.8 |   |
|                                                                     | Margin      accounts - derivative instruments                                                                                                                                                             |   |             | 115.4   |               |   |   | 26.1 |   |
|                                                                     | Other                                                                                                                                                                                                     |   |             | 138.0   |               |   |   | 66.9 |   |
| Total      current assets                                                |                                                                                                                                                                                                      |   | 1,022.7          |    |               |   | 765.9 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Pension      benefits                                                    |                                                                                                                                                                                                      |   | 36.4             |    |               |   | 215.5 |   |
| Regulatory      postretirement asset                                     |                                                                                                                                                                                                      |   | 232.3            |    |               |   | 64.2 |   |
| Other      assets                                                        |                                                                                                                                                                                                      |   | 137.4            |    |               |   | 40.6 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Total      assets                                                        |                                                                                                                                                                                                      | $      | 4,152.3          |    |               | $      | 3,710.3 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Capitalization and    Liabilities                                        |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Capitalization                                                           |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     | Long-term      obligations                                                                                                                                                                                |   |             |    |               |   |   |   |   |
|                                                                     | Long-term      debt, net of unamortized discount                                                                                                                                                          |   | $                | 448.0   |               |   | $ | 422.8 |   |
|                                                                     | Mandatorily      redeemable preferred stock                                                                                                                                                               |   |             | 2.6     |               |   |   | 3.1 |   |
|                                                                     | Total      long-term obligations                                                                                                                                                                          |   |             | 450.6   |               |   |   | 425.9 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
|                                                                     | Preferred      stock                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
|                                                                     | Non-redeemable      preferred stock                                                                                                                                                                       |   |             | 1.4     |               |   |   | 1.4 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
|                                                                     | Common      equity                                                                                                                                                                                        |   |             |    |               |   |   |   |   |
|                                                                     | Common      stock                                                                                                                                                                                         |   |             | 76.2    |               |   |   | 76.2 |   |
|                                                                     | Paid-in      capital                                                                                                                                                                                      |   |             | 108.1   |               |   |   | 108.1 |   |
|                                                                     | Retained      earnings                                                                                                                                                                                    |   |             | 480.4   |               |   |   | 472.4 |   |
|                                                                     | Accumulated      other comprehensive loss, net                                                                                                                                                            |   |             | (10.7   | )                  |   |   | (2.2 | ) |
|                                                                     | Total      common equity                                                                                                                                                                                  |   |             | 654.0   |               |   |   | 654.5 |   |
| Total      capitalization                                                |                                                                                                                                                                                                      |   | 1,106.0          |    |               |   | 1,081.8 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Current      liabilities                                                 |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     | Long-term      obligations due within one year                                                                                                                                                            |   |             | 50.5    |               |   |   | 75.5 |   |
|                                                                     | Short-term      debt                                                                                                                                                                                      |   |             | 717.9   |               |   |   | 369.0 |   |
|                                                                     | Accounts      payable                                                                                                                                                                                     |   |             | 311.9   |               |   |   | 321.7 |   |
|                                                                     | Customer      credit balances and deposits                                                                                                                                                                |   |             | 187.3   |               |   |   | 234.5 |   |
|                                                                     | Derivative      instruments                                                                                                                                                                               |   |             | 120.1   |               |   |   | 16.2 |   |
|                                                                     | Other                                                                                                                                                                                                     |   |             | 88.2    |               |   |   | 134.3 |   |
| Total      current liabilities                                           |                                                                                                                                                                                                      |   | 1,475.9          |    |               |   | 1,151.2 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Deferred      credits and other liabilities                              |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     | Regulatory      asset retirement cost liability                                                                                                                                                           |   |             | 751.7   |               |   |   | 720.7 |   |
|                                                                     | Deferred      income taxes                                                                                                                                                                                |   |             | 305.3   |               |   |   | 289.5 |   |
|                                                                     | Health      care and other postretirement benefits                                                                                                                                                        |   |             | 196.6   |               |   |   | 185.1 |   |
|                                                                     | Asset      retirement obligation                                                                                                                                                                          |   |             | 184.7   |               |   |   | 177.2 |   |
|                                                                     | Other                                                                                                                                                                                                     |   |             | 132.1   |               |   |   | 104.8 |   |
| Total      deferred credits and other liabilities                        |                                                                                                                                                                                                      |   | 1,570.4          |    |               |   | 1,477.3 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Commitments      and contingencies                                       |                                                                                                                                                                                                      |   |             |    |               |   |   |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| Total      capitalization and liabilities                                |                                                                                                                                                                                                      | $      | 4,152.3          |    |               | $      | 3,710.3 |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| *                                                                        | Periods      prior to 2008 were adjusted due to the retrospective application of FSP      No. FIN 39-1, Amendment      of FIN 39, Offsetting of Amounts Related to Certain Contracts.       See Note |   |
|                                                                     | 2 -      New Accounting Pronouncements for further information.                                                                                                                                           |   |             |    |               |   |   |   |   |
|                                                                     |                                                                                                                                                                                                      |   |             |    |               |   |   |   |   |
| The      accompanying notes are an integral part of these    statements. |                                                                                                                                                                                                      |   |             |    |               |   |   |   |

----

Table of Contents

| Nicor      Gas Company                                                           |                                           |   |             |   |   |                                   |                                   |   |    |   |   |
|----------------------------------------------------------------------------------|------------------------------------------------|--------|------------------|--------|--------|----------------------------------------|----------------------------------------|--------|---------|--------|--------|
|                                                                             |                                      |   |             |   |   |                                   |                                   |   |    |   |   |   |
| Consolidated Statements of    Capitalization                                     |                                           |   |             |   |   |                                   |                                   |   |    |   |   |
| (millions,      except share data)                                               |                                           |   |             |   |   |                                   |                                   |   |    |   |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |
|                                                                             |                                           |   | December      31 |   |
|                                                                             |                                           |   | 2008             |   | 2007   |                                   |
|                                                                             |                                      |   |             |   |   |                                   |                                   |   |    |   |   |   |
| First      Mortgage Bonds                                                        |                                           |   |             |   |   |                                   |                                   |   |    |   |   |
| 5.875%      Series due 2008                                                      |                                           | $      | -                |   |   |                                   |                                   | $      | 75.0    |   |   |   |   |
| 5.37%      Series due 2009                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 6.625%      Series due 2011                                                      |                                           |   | 75.0             |   |   |                                   |                                   |   | 75.0    |   |   |   |   |
| 7.20%      Series due 2016                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 5.80%      Series due 2023                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 6.58%      Series due 2028                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 5.90%      Series due 2032                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 5.90%      Series due 2033                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 5.85%      Series due 2036                                                       |                                           |   | 50.0             |   |   |                                   |                                   |   | 50.0    |   |   |   |   |
| 6.25%      Series due 2038                                                       |                                           |   | 75.0             |   |   |                                   |                                   |   | -       |   |   |   |   |
|                                                                             |                                      |   |             | 500.0  |   |                                   |                                   |   |    | 500.0  |   |   |   |   |
| Less:                                                                            | Amount      due within one year                |   |             | 50.0   |   |                                   |                                   |   |    | 75.0   |   |   |   |   |
|                                                                             | Unamortized      debt discount, net of premium |   |             | 2.0    |   |                                   |                                   |   |    | 2.2    |   |   |   |   |
|                                                                             |                                           |   |             | 448.0  |   |                                   | 40.5%                                  |   |    | 422.8  |   |   | 39.1% |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
| Preferred      stock, cumulative, $100 par value, 800,000 shares      authorized |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| Mandatorily      redeemable preferred stock, 4.48% and 5.00%                     |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| series,      31,000 shares outstanding in 2008                                   |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| and      36,000 shares outstanding in 2007                                       |                                           |   | 3.1              |   |   |                                   |                                   |   | 3.6     |   |   |   |   |
| Less:  Amount      due within one year                                 |                                           |   | .5               |   |   |                                   |                                   |   | .5      |   |   |   |   |
|                                                                             |                                           |   |             | 2.6    |   |                                   | .3       |   |    | 3.1    |   |   | .3          |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
| Nonredeemable      preferred stock, 4.60% and 5.00%                              |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| convertible      series, 14,008 shares outstanding                               |                                           |   | 1.4              |   |   | .1       |                                   |   | 1.4     |   |   | .1     |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
| Common      equity                                                               |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| Common      stock, $5 par value, 25,000,000 shares                               |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| authorized,      32,365 shares reserved for share-based                          |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| awards      and 15,232,414 shares outstanding                                    |                                           |   | 76.2             |   |   |                                   |                                   |   | 76.2    |   |   |   |   |
| Paid-in      capital                                                             |                                           |   | 108.1            |   |   |                                   |                                   |   | 108.1   |   |   |   |   |
| Retained      earnings                                                           |                                           |   | 480.4            |   |   |                                   |                                   |   | 472.4   |   |   |   |   |
| Accumulated      other comprehensive loss, net                                   |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |
| Cash      flow hedges                                                            |                                           |   | (3.0             | )      |   |                                   |                                   |   | (.5     | )      |   |   |   |
| Postretirement      benefit plans                                                |                                           |   | (7.7             | )      |   |                                   |                                   |   | (1.7    | )      |   |   |   |
| Total      accumulated other comprehensive loss                                  |                                           |   | (10.7            | )      |   |                                   |                                   |   | (2.2    | )      |   |   |   |
| Total      common equity                                                         |                                           |   | 654.0            |   |   | 59.1          |                                   |   | 654.5   |   |   | 60.5     |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
| Total      capitalization                                                        |                                           | $      | 1,106.0          |   |   | 100.0%                                 |                                   | $      | 1,081.8 |   |   | 100.0% |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
|                                                                             |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |   |
| The      accompanying notes are an integral part of these    statements.         |                                           |   |             |   |   |                                   |                                   |   |    |   |   |   |   |

----

Table of Contents

| Nicor      Gas Company                                                                                        |   |                        |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                          |   |                        |   |   |   |   |   |   |   |
| Consolidated Statements of Retained Earnings                                                                  |   |                        |   |   |   |   |   |   |   |
| (millions)                                                                                                    |   |                        |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |
|                                                                                                          |   | Year      ended December 31 |   |
|                                                                                                          |   | 2008                        |   |   | 2007   |   |   | 2006   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |
| Balance      at beginning of year                                                                             |   | $                           | 472.4  |   |   | $      | 480.3  |   |   | $ | 470.7 |   |
| Net      income                                                                                               |   |                        | 59.6   |   |   |   | 66.3   |   |   |   | 58.6 |   |
| Cumulative      effect of change in accounting principle:                                                     |   |                        |   |   |   |   |   |   |   |   |   |   |
| FIN      No. 48                                                                                               |   |                        | -      |   |   |   | (2.5   | )      |   |   | - |   |
| SFAS      No. 158                                                                                             |   |                        | (.2    | )      |   |   | -      |   |   |   | - |   |
| Dividends      declared on common stock                                                                       |   |                        | (51.3  | )      |   |   | (71.6  | )      |   |   | (48.9 | ) |
| Dividends      declared on preferred stock                                                                    |   |                        | (.1    | )      |   |   | (.1    | )      |   |   | (.1 | ) |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                                                   |   | $                           | 480.4  |   |   | $      | 472.4  |   |   | $ | 480.3 |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Consolidated Statements of Comprehensive      Income                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| (millions)                                                                                                    |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   | Year      ended December 31 |   |
|                                                                                                          |   | 2008                        |   |   | 2007   |   |   | 2006   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                               |   | $                           | 59.6   |   |   | $      | 66.3   |   |   | $ | 58.6 |   |
| Other      comprehensive income (loss)                                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Loss      on cash flow hedges (net of income tax of $(1.7) and $(0.3) in 2008      and 2007, respectively)    |   |                        | (2.5   | )      |   |   | (.4    | )      |   |   | (.1 | ) |
| Postretirement      gains (losses) (net of income tax of $(3.9) and $0.9 in 2008 and      2007, respectively) |   |                        | (6.0   | )      |   |   | 1.4    |   |   |   | - |   |
| Other      comprehensive income (loss), net of tax                                                            |   |                        | (8.5   | )      |   |   | 1.0    |   |   |   | (.1 | ) |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                                                                     |   | $                           | 51.1   |   |   | $      | 67.3   |   |   | $ | 58.5 |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these    statements.                                      |   |                        |   |   |   |   |   |   |   |

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Notes to theConsolidated Financial Statements

|                                              |   | 2008    |   |   | 2007   |    |
|---------------------------------------------------|--------|---------|--------|--------|--------|---------|
| Regulatory      assets                            |   |    |   |   |   |    |
| Regulatory      postretirement asset - current    |   | $       | 23.3   |   |   | $       | 5.2 |   |
| Regulatory      postretirement asset - noncurrent |   |    | 232.3  |   |   |    | 64.2 |   |
| Deferred      gas costs - current                 |   |    | 31.5   |   |   |    | - |   |
| Deferred      gas costs – noncurrent        |   |    | 22.5   |   |   |    | - |   |
| Deferred      environmental costs                 |   |    | 19.5   |   |   |    | 9.5 |   |
| Unamortized      losses on reacquired debt        |   |    | 15.4   |   |   |    | 16.5 |   |
| Deferred      rate case costs                     |   |    | 6.1    |   |   |    | 2.6 |   |
| Other                                             |   |    | .1     |   |   |    | .1 |   |
|                                              |   | $  | 350.7  |   |   | $  |  98.1 |   |

|   |   |   |   |   |
|--------|--------|--------|--------|--------|

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|                                                               |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Regulatory      liabilities                                        |   |   |   |   |   |   |
| Regulatory      asset retirement cost liability – current    |   | $      | 15.0   |   |   | $      | 8.0 |   |
| Regulatory      asset retirement cost liability – noncurrent |   |   | 751.7  |   |   |   | 720.7 |   |
| Accrued      gas costs                                             |   |   | -      |   |   |   | 50.1 |   |
| Regulatory      income tax liability                               |   |   | 46.3   |   |   |   | 49.5 |   |
| Other                                                              |   |   | .8     |   |   |   | 1.1 |   |
|                                                               |   | $      | 813.8  |   |   | $      | 829.4 |   |

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|                                                |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Assets                                              |   |   |   |   |   |   |
| Receivables                                         |   | $      | (27.2  | )      |   | $      | (19.2 | ) |
| Derivative      instruments                         |   |   | -      |   |   |   | 2.1 |   |
| Margin      accounts – derivative instruments |   |   | 115.4  |   |   |   | 26.1 |   |
| Noncurrent      other assets                        |   |   | 24.4   |   |   |   | - |   |
| Liabilities                                         |   |   |   |   |   |   |   |   |
| Derivative      instruments                         |   | $      | 95.2   |   |   | $      | 9.0 |   |
| Noncurrent      other liabilities                   |   |   | 17.4   |   |   |   | - |   |

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|                                        |   | 2008   |   |   | 2007   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Beginning      of period                    |   | $      | 179.0  |   |   | $      | 170.2 |   |
| Liabilities      incurred during the period |   |   | 2.0    |   |   |   | 2.3 |   |
| Liabilities      settled during the period  |   |   | (3.6   | )      |   |   | (3.2 | ) |
| Accretion                                   |   |   | 10.2   |   |   |   | 9.7 |   |
| Revision      in estimated cash flows       |   |   | (.8    | )      |   |   | - |   |
| End      of period                          |   | $      | 186.8  |   |   | $      | 179.0 |   |

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| 7. | FAIR      VALUE MEASUREMENTS |
|----|------------------------------|

|                              |   | Fair      Value Amount               |        |
|-----------------------------------|--------|--------------------------------------|-------------|
|                              |   | Quoted      prices in active markets |        |   | Significant      observable inputs |   |   | Significant      unobservable inputs |   |   |   |   |
|                              |   | (Level 1)                            |        |   | (Level 2) |   |   | (Level 3) |   |   | Total |   |
| Assets                            |   |
| Money      market funds           |   | $                                    | .3          |   |   | $ | - |   |   | $ | - |   |   | $ | .3 |   |
|                              |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity      derivatives:       |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                           |   |                                 |  .4    |   |   |   |  .1 |   |   |   |  3.6 |   |   |   |  4.1 |   |
| Noncurrent                        |   |                                 |  -     |   |   |   |  .1 |   |   |   |  1.8 |   |   |   |  1.9 |   |
| Total                        |   |                                 |  .4    |   |   |   |  .2 |   |   |   |  5.4 |   |   |   |  6.0 |   |
| Total                             |   | $                               |  .7    |   |   | $  |  .2 |   |   | $  |  5.4 |   |   | $  |  6.3 |   |
| Liabilities                       |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity      derivatives:  |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                           |   | $                               |  96.4  |   |   | $  |  20.0 |   |   | $  |  3.7 |   |   | $  |  120.1 |   |
| Noncurrent                        |   |                                 |  17.4  |   |   |   |  6.0 |   |   |   |  - |   |   |   |  23.4 |   |
| Total                        |   | $                               |  113.8 |   |   | $  |  26.0 |   |   | $  |  3.7 |   |   | $  |  143.5 |   |
|                              |   |                                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                               |   | 2008   |   |
|----------------------------------------------------|--------|--------|--------|
|                                               |   |   |   |
| Balance      at January 1                          |   | $      | 7.5    |   |
| Net      realized/unrealized gains (losses)        |   |   |   |   |
| Included      in regulatory assets and liabilities |   |   | 5.4    |   |
| Settlements,      net of purchases                 |   |   | (11.0  | ) |
| Transfers      in and/or out of Level 3            |   |   | (.2    | ) |
| Balance      at December 31                        |   | $      | 1.7    |   |
|                                               |   |   |   |   |

|                                                |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Assets:                                             |   |   |   |   |   |   |
| Margin      accounts – derivative instruments |   | $      | 115.4  |   |   | $      | 26.1 |   |
| Other      – noncurrent                       |   |   | 24.4   |   |   |   | - |   |

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|                                             |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Current                                          |   |   |   |   |   |   |   |   |   |
| Federal                                          |   | $      | 23.8   |   |   | $      | 30.9   |   |   | $ | 62.0 |   |
| State                                            |   |   | 5.6    |   |   |   | 5.7    |   |   |   | 16.5 |   |
|                                             |   |   | 29.4   |   |   |   | 36.6   |   |   |   | 78.5 |   |
| Deferred                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                          |   |   | 3.3    |   |   |   | (1.4   | )      |   |   | (37.6 | ) |
| State                                            |   |   | (.3    | )      |   |   | 1.1    |   |   |   | (11.0 | ) |
|                                             |   |   | 3.0    |   |   |   | (.3    | )      |   |   | (48.6 | ) |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of investment tax credits, net |   |   | (1.4   | )      |   |   | (2.1   | )      |   |   | (2.1 | ) |
| Income      tax expense, net                     |   | $      | 31.0   |   |   | $      | 34.2   |   |   | $ | 27.8 |   |

|                                    |   | 2008   |   |   | 2007   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred      tax liabilities           |   |   |   |   |   |   |
| Property,      plant and equipment      |   | $      | 299.8  |   |   | $      | 286.2 |   |
| Employee      benefits                  |   |   | 15.1   |   |   |   | 15.0 |   |
| Other                                   |   |   | 21.9   |   |   |   | 16.4 |   |
|                                    |   |   | 336.8  |   |   |   | 317.6 |   |
| Deferred      tax assets                |   |   |   |   |   |   |   |   |
| Unamortized      investment tax credits |   |   | 17.2   |   |   |   | 18.1 |   |
| Allowance      for doubtful accounts    |   |   | 16.8   |   |   |   | 12.4 |   |
| Other                                   |   |   | 43.3   |   |   |   | 27.6 |   |
|                                    |   |   | 77.3   |   |   |   | 58.1 |   |
| Net      deferred tax liability         |   | $      | 259.5  |   |   | $      | 259.5 |   |

|                                                      |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                      |   |   |   |   |   |   |   |   |   |
| Federal      statutory rate                               |   |   | 35.0   | %      |   |   | 35.0   | %      |   |   | 35.0 | % |
| State      income taxes, net                              |   |   | 5.0    |   |   |   | 4.6    |   |   |   | 4.4 |   |
| Amortization      of investment tax credits               |   |   | (2.5   | )      |   |   | (2.2   | )      |   |   | (2.6 | ) |
| Amortization      of regulatory income tax liability      |   |   | (1.5   | )      |   |   | (1.7   | )      |   |   | (1.7 | ) |
| Medicare      subsidy                                     |   |   | (1.5   | )      |   |   | (1.4   | )      |   |   | (2.1 | ) |
| Other,      net                                           |   |   | (.3    | )      |   |   | (.3    | )      |   |   | (.8 | ) |
| Effective      combined federal and state income tax rate |   |   | 34.2   | %      |   |   | 34.0   | %      |   |   | 32.2 | % |

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|                                             |   | 2008   |   |   | 2007   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                             |   |   |   |   |   |   |
| Balance      at January 1                        |   | $      | .6     |   |   | $      | .7 |   |
| Additions      for tax positions of prior years  |   |   | 7.8    |   |   |   | - |   |
| Reductions      for tax positions of prior years |   |   | (1.0   | )      |   |   | - |   |
| Settlements                                      |   |   | -      |   |   |   | (.1 | ) |
| Balance      at December 31                      |   | $      | 7.4    |   |   | $      | .6 |   |

| 9. | POSTRETIREMENT      BENEFITS |
|----|------------------------------|

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|                                           | Pension      benefits |        |   | Health      care and other      benefits |   |
|------------------------------------------------|-----------------------|-------------|--------|------------------------------------------|--------|
|                                           |                  | 2008*       |   |                                     | 2007   |   |   |   | 2008* |   |   | 2007 |   |
| Change      in benefit obligation              |                  |        |   |                                     |   |   |   |   |   |   |   |   |   |
| Benefit      obligation at beginning of period | $                     | 263.2       |   |                                     | $      | 271.3 |   |   | $ | 196.9 |   |   | $ | 193.7 |   |
| Service      cost                              |                  | 10.7        |   |                                     |   | 9.1 |   |   |   | 2.7 |   |   |   | 2.3 |   |
| Interest      cost                             |                  | 19.9        |   |                                     |   | 15.1 |   |   |   | 15.0 |   |   |   | 10.9 |   |
| Actuarial      loss (gain)                     |                  | 2.2         |   |                                     |   | (15.2 | ) |   |   | 3.9 |   |   |   | 1.3 |   |
| Participant      contributions                 |                  | -           |   |                                     |   | - |   |   |   | 1.5 |   |   |   | 1.1 |   |
| Medicare      Part D reimbursements            |                  | -           |   |                                     |   | - |   |   |   | 2.2 |   |   |   | 1.2 |   |
| Benefits      paid                             |                  | (25.8       | )      |                                     |   | (17.1 | ) |   |   | (14.5 | ) |   |   | (13.6 | ) |
| Benefit obligation      at end of period  |                  |  270.2 |   |                                     |   |  263.2 |   |   |   |  207.7 |   |   |   |  196.9 |   |

| Change      in plan assets                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Fair      value of plan assets at beginning of period                                                                                                   |   | 478.7  |   |   |   | 432.3  |   |   |   | -      |   |   |   | 1.2 |   |
| Actual      (loss) return on plan assets                                                                                                                |   | (146.3 | )      |   |   | 63.5   |   |   |   | -      |   |   |   | - |   |
| Employer      contributions                                                                                                                             |   | -      |   |   |   | -      |   |   |   | 13.0   |   |   |   | 11.3 |   |
| Participant      contributions                                                                                                                          |   | -      |   |   |   | -      |   |   |   | 1.5    |   |   |   | 1.1 |   |
| Benefits      paid                                                                                                                                      |   | (25.8  | )      |   |   | (17.1  | )      |   |   | (14.5  | )      |   |   | (13.6 | ) |
| Fair      value of plan assets at end of period                                                                                                         |   | 306.6  |   |   |   | 478.7  |   |   |   | -      |   |   |   | - |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Funded      status                                                                                                                                      |   | 36.4   |   |   |   | 215.5  |   |   |   | (207.7 | )      |   |   | (196.9 | ) |
| Contributions      made after the measurement date                                                                                                      |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2.3 |   |
| Other                                                                                                                                                   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | (.9 | ) |
| Postretirement      benefit asset (liability)                                                                                                           | $      | 36.4   |   |   | $      | 215.5  |   |   | $      | (207.7 | )      |   | $ | (195.5 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  *      Amounts for 2008 reflect 15 months of activity for the transition to a      December 31 measurement date in accordance with SFAS No.  158. |

|                        |   | Pension      benefits |   |   | Health      care and other      benefits |   |
|-----------------------------|--------|-----------------------|--------|--------|------------------------------------------|--------|
|                        |   | 2008                  |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
|                        |   |                  |   |   |                                     |   |   |   |   |   |   |   |
| Noncurrent      assets      |   | $                     | 36.4   |   |                                     | $      | 215.5 |   |   | $ | - |   |   | $ | - |   |
| Current      liabilities    |   |                  | -      |   |                                     |   | - |   |   |   | (11.1 | ) |   |   | (10.4 | ) |
| Noncurrent      liabilities |   |                  | -      |   |                                     |   | - |   |   |   | (196.6 | ) |   |   | (185.1 | ) |
|                        |   | $                     | 36.4   |   |                                     | $      | 215.5 |   |   | $ | (207.7 | ) |   | $ | (195.5 | ) |

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Table of Contents

|                                                         |   | Net      regulatory assets |   |   | Accumulated      other comprehensive income |   |   | Total                 |   |
|--------------------------------------------------------------|--------|----------------------------|--------|--------|---------------------------------------------|--------|--------|-----------------------|--------|
|                                                         |   | Pension      benefits      |   |   | Health      care and other benefits         |   |   | Pension      benefits |   |   | Health      care and other benefits |   |   | Pension      benefits |   |   | Health      care and other benefits |   |
|                                                         |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| January      1, 2007                                         |   | $                          | 34.6   |   |                                        | $      | 78.2   |                  |   | $ | 1.8 |   |   | $ | 4.2 |   |   | $ | 36.4 |   |   | $ | 82.4 |   |
| Arising      during period:                                  |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial (gain)      loss                               |   |                       | (40.5  | )      |                                        |   | 1.3    |                  |   |   | (2.1 | ) |   |   | - |   |   |   | (42.6 | ) |   |   | 1.3 |   |
| Amortized      to net periodic benefit cost (credit):        |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial    loss                                        |   |                       | -      |   |                                        |   | (4.5   | )                     |   |   | - |   |   |   | (.2 | ) |   |   | - |   |   |   | (4.7 | ) |
| Net prior service (cost)      benefit                        |   |                       | (.5    | )      |                                        |   | .1     |                  |   |   | - |   |   |   | - |   |   |   | (.5 | ) |   |   | .1 |   |
| December      31, 2007                                       |   |                       | (6.4   | )      |                                        |   | 75.1   |                  |   |   | (.3 | ) |   |   | 4.0 |   |   |   | (6.7 | ) |   |   | 79.1 |   |
|                                                         |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Arising      during period:                                  |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial    loss                                        |   |                       | 188.4  |   |                                        |   | 3.7    |                  |   |   | 9.9 |   |   |   | .2 |   |   |   | 198.3 |   |   |   | 3.9 |   |
| Amortized      to net periodic benefit cost (credit):        |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial    loss                                        |   |                       | -      |   |                                        |   | (4.4   | )                     |   |   | - |   |   |   | (.2 | ) |   |   | - |   |   |   | (4.6 | ) |
| Net prior service (cost)      benefit                        |   |                       | (.3    | )      |                                        |   | .1     |                  |   |   | - |   |   |   | - |   |   |   | (.3 | ) |   |   | .1 |   |
| Net actuarial loss and net prior service                     |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cost      for October 1, 2008 – December      31, 2008 |   |                       | (.1    | )      |                                        |   | (1.1   | )                     |   |   | - |   |   |   | (.1 | ) |   |   | (.1 | ) |   |   | (1.2 | ) |
| December      31, 2008                                       |   | $                          | 181.6  |   |                                        | $      | 73.4   |                  |   | $ | 9.6 |   |   | $ | 3.9 |   |   | $ | 191.2 |   |   | $ | 77.3 |   |

|                                  |   | Net      regulatory assets |   |   | Accumulated      other comprehensive income |   |   | Total                 |   |
|---------------------------------------|--------|----------------------------|--------|--------|---------------------------------------------|--------|--------|-----------------------|--------|
|                                  |   | Pension      benefits      |   |   | Health      care and other benefits         |   |   | Pension      benefits |   |   | Health      care and other benefits |   |   | Pension      benefits |   |   | Health      care and other benefits |   |
|                                  |   |                       |   |   |                                        |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| Net      actuarial loss               |   | $                          | 14.5   |   |                                        | $      | 4.3    |                  |   | $ | .8 |   |   | $ | .2 |   |   | $ | 15.3 |   |   | $ | 4.5 |   |
| Net      prior service cost (benefit) |   |                       | .4     |   |                                        |   | (.1    | )                     |   |   | - |   |   |   | - |   |   |   | .4 |   |   |   | (.1 | ) |
|                                  |   | $                          | 14.9   |   |                                        | $      | 4.2    |                  |   | $ | .8 |   |   | $ | .2 |   |   | $ | 15.7 |   |   | $ | 4.4 |   |

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|                                    |   | Pension      benefits |   |   | Health      care and other benefits |   |
|-----------------------------------------|--------|-----------------------|--------|--------|-------------------------------------|--------|
|                                    |   | 2008                  |   |   | 2007                                |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                    |   |                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      cost                       |   | $                     | 8.6    |   |                                | $      | 9.1 |   |   | $ | 9.4 |   |   | $ | 2.2 |   |   | $ | 2.3 |   |   | $ | 2.4 |   |
| Interest      cost                      |   |                  | 15.9   |   |                                |   | 15.1 |   |   |   | 14.9 |   |   |   | 12.0 |   |   |   | 10.9 |   |   |   | 10.3 |   |
| Expected      return on plan assets     |   |                  | (39.9  | )      |                                |   | (36.0 | ) |   |   | (34.8 | ) |   |   | - |   |   |   | - |   |   |   | (.2 | ) |
| Recognized      net actuarial loss      |   |                  | -      |   |                                |   | - |   |   |   | .2 |   |   |   | 4.6 |   |   |   | 4.7 |   |   |   | 5.0 |   |
| Amortization      of prior service cost |   |                  | .3     |   |                                |   | .5 |   |   |   | .5 |   |   |   | (.1 | ) |   |   | (.1 | ) |   |   | (.1 | ) |
| Net      periodic benefit cost (credit) |   | $                     | (15.1  | )      |                                | $      | (11.3 | ) |   | $ | (9.8 | ) |   | $ | 18.7 |   |   | $ | 17.8 |   |   | $ | 17.4 |   |

|                               |   | Pension      benefits |   |   | Health      care and other      benefits |   |
|------------------------------------|--------|-----------------------|--------|--------|------------------------------------------|--------|
|                               |   | 2008                  |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
|                               |   |                  |   |   |                                     |   |   |   |   |   |   |   |
| Discount      rate                 |   |                  | 6.35   | %      |                                     |   | 6.25 | % |   |   | 6.00 | % |   |   | 6.25 | % |
| Rate      of compensation increase |   |                  | 3.75   |   |                                     |   | 3.75 |   |   |   | 3.75 |   |   |   | 3.75 |   |

|                               |   | Pension      benefits |   |   | Health      care and other benefits |   |
|------------------------------------|--------|-----------------------|--------|--------|-------------------------------------|--------|
|                               |   | 2008                  |   |   | 2007                                |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                               |   |                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount      rate                 |   |                  | 6.25   | %      |                                |   | 5.75 | % |   |   | 5.50 | % |   |   | 6.25 | % |   |   | 5.75 | % |   |   | 5.50 | % |
| Expected      return on assets     |   |                  | 8.50   |   |                                |   | 8.50 |   |   |   | 8.50 |   |   |   | 8.50 |   |   |   | 8.50 |   |   |   | 8.50 |   |
| Rate of      compensation increase |   |                  | 3.75   |   |                                |   |  3.75 |   |   |   |  3.75 |   |   |   |  3.75 |   |   |   |  3.75 |   |   |   |  3.75 |   |

|                                                                                  |   | 2008   |   |   | 2007   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Health      care cost trend rate                                                      |   |   | 8.5    | %      |   |   | 9.0 | % |
| Rate      to which the cost trend rate is assumed to decline (the ultimate      rate) |   |   | 5.0    | %      |   |   | 5.0 | % |
| Years      to reach ultimate rate                                                     |   |   | 7      |   |   |   | 6 |   |

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|                                                                                  | 2008   |   |   | 2007   |   |   | 2006   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Health      care cost trend rate                                                      |   | 9.0    | %      |   |   | 9.5    | %      |   |   | 9.5 | % |
| Rate      to which the cost trend rate is assumed to decline (the ultimate      rate) |   | 5.0    | %      |   |   | 5.0    | %      |   |   | 5.0 | % |
| Years      to reach ultimate rate                                                     |   | 6      |   |   |   | 5      |   |   |   | 5 |   |

|                                                         |   | One-percent |       |
|--------------------------------------------------------------|--------|-------------|------------|
|                                                         |   | Increase    |       |   | Decrease |   |
|                                                         |   |        |       |   |   |   |
| Effect      on total of service and interest cost components |   | $           | 1.1        |   |   | $ | (1.0 | ) |
| Effect      on benefit obligation                            |   |        |  18.7 |   |   |   |  (16.0 | )  |

|                   |   | Target     |   |   | Percentage      of plan assets |   |
|------------------------|--------|------------|--------|--------|--------------------------------|--------|
| Asset      category    |   | allocation |   |   | 2008                           |   |   | 2007 |   |
|                   |   |       |   |   |                           |   |   |   |   |
| Equity      securities |   |       | 69     | %      |                           |   | 70 | % |   |   | 69 | % |
| Debt      securities   |   |       | 31     |   |                           |   | 30 |   |   |   | 31 |   |
|                   |   |       | 100    | %      |                           |   | 100 | % |   |   | 100 | % |

|  Twelve      months ending December 31 |   | Pension      benefits |   |   | Health      care and other benefits |   |   | Expected      Medicare subsidy |   |
|---------------------------------------------|--------|-----------------------|--------|--------|-------------------------------------|--------|--------|--------------------------------|--------|
|                                        |   |                  |   |   |                                |   |   |                           |   |
| 2009                                        |   | $                     | 19.9   |   |                                | $      | 12.5   |                           |   | $ | (1.4 | ) |
| 2010                                        |   |                  | 19.2   |   |                                |   | 13.4   |                           |   |   | (1.5 | ) |
| 2011                                        |   |                  | 20.0   |   |                                |   | 14.3   |                           |   |   | (1.6 | ) |
| 2012                                        |   |                  | 21.9   |   |                                |   | 14.9   |                           |   |   | (1.7 | ) |
| 2013                                        |   |                  | 22.9   |   |                                |   | 15.7   |                           |   |   | (1.8 | ) |
| 2014-2018                                   |   |                  | 153.7  |   |                                |   | 87.9   |                           |   |   | (9.6 | ) |

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|               |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|               |   |   |    |   |   |   |    |   |   |
| Bundled      sales |   | $      | 2,789.5 |   |   | $      | 2,265.2 |   |   | $ | 2,087.8 |   |
| Transportation     |   |   | 187.1   |   |   |   | 155.9   |   |   |   | 158.8 |   |
| Revenue      taxes |   |   | 174.0   |   |   |   | 149.6   |   |   |   | 147.7 |   |
| Other              |   |   | 56.3    |   |   |   | 56.8    |   |   |   | 58.0 |   |
|               |   | $      | 3,206.9 |   |   | $      | 2,627.5 |   |   | $ | 2,452.3 |   |

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|            |   | Purchase      obligations |   |   | Operating      leases |   |   | Other      long-term obligations |   |
|-----------------|--------|---------------------------|--------|--------|-----------------------|--------|--------|----------------------------------|--------|
|            |   |                      |   |   |                  |   |   |                             |   |
| 2009            |   | $                         | 19.8   |   |                  | $      | 1.2    |                             |   | $ | .5 |   |
| 2010            |   |                      | 12.2   |   |                  |   | .8     |                             |   |   | .4 |   |
| 2011            |   |                      | 12.1   |   |                  |   | .7     |                             |   |   | .3 |   |
| 2012            |   |                      | 5.6    |   |                  |   | .4     |                             |   |   | .3 |   |
| 2013            |   |                      | 3.1    |   |                  |   | .3     |                             |   |   | .3 |   |
| After      2013 |   |                      | -      |   |                  |   | 9.6    |                             |   |   | 1.0 |   |
|            |   | $                         | 52.8   |   |                  | $      | 13.0   |                             |   | $ | 2.8 |   |

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|                    |   | Quarter      ended |    |
|-------------------------|--------|--------------------|---------|
|                    |   | Mar.      31       |    |   | June      30 |   |   | Sept.      30 |   |   | Dec.      31 |   |
| 2008                    |   |               |    |   |   |   |   |   |   |   |   |   |
| Operating      revenues |   | $                  | 1,464.2 |   |   | $ | 560.1 |   |   | $ | 306.1 |   |   | $ | 876.5 |   |
| Operating      income   |   |               | 45.7    |   |   |   | 18.2 |   |   |   | 3.2 |   |   |   | 29.2 |   |
| Net      income (loss)  |   |               | 35.6    |   |   |   | 9.9 |   |   |   | (6.0 | ) |   |   | 20.1 |   |
|                    |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                    |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      revenues |   | $                  | 1,208.4 |   |   | $ | 431.4 |   |   | $ | 238.9 |   |   | $ | 748.8 |   |
| Operating      income   |   |               | 51.1    |   |   |   | 12.2 |   |   |   | 5.4 |   |   |   | 27.7 |   |
| Net      income (loss)  |   |               | 38.4    |   |   |   | 4.8 |   |   |   | (2.8 | ) |   |   | 25.9 |   |

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| Item      9. | Changes in and Disagreements With Accountants on      Accounting and FinancialDisclosure |
|--------------|------------------------------------------------------------------------------------------|

Controls and Procedures

| 1.   | Pertain      to the maintenance of records that in reasonable detail accurately and      fairly reflect the transactions and dispositions of the assets of the      company; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Provide      reasonable assurance that transactions are recorded as necessary to permit      preparation of financial statements in accordance with generally accepted      accounting principles, and that receipts and expenditures of the company      are being made only in accordance with authorizations of management and      directors of the company; and |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Provide      reasonable assurance regarding prevention or timely detection of      unauthorized acquisition, use or disposition of the company’s assets that      could have a material effect on the financial  statements. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item      9B. | OtherInformation |
|---------------|------------------|

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| Item      14. | Principal Accounting Fees and      Services |
|---------------|---------------------------------------------|

| Fee      Category       |   | 2008   |   |   | 2007   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
|                    |   |   |   |   |   |   |
| Audit      fees         |   | $      | 1.7    |   |   | $      | 1.4 |   |
| Audit-related      fees |   |   | .1     |   |   |   | .1 |   |
| Total      fees         |   | $      | 1.8    |   |   | $      | 1.5 |   |

Audit Committee Pre-Approval Policies andProcedures

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| Item      15. | Exhibits, Financial Statement      Schedules |
|---------------|----------------------------------------------|

|   | 1) | Financial      Statements: |
|--------|----|----------------------------|

|   | 2) | Financial      Statement Schedules: |
|--------|----|-------------------------------------|

|   | Schedule |                                                         |   |
|--------|----------|--------------------------------------------------------------|--------|
|   | Number   |                                                         | Page   |
|   |     | Report of Independent Registered Public Accounting      Firm | 25     |
|   | II       | Valuation and Qualifying Accounts                            | 57     |

|   | Schedules      other than those listed are omitted because they are not      applicable. |
|--------|------------------------------------------------------------------------------------------|

|   | 3) | Exhibits      Filed: |
|--------|----|----------------------|

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| Nicor      Gas Company                                                                              |   |            |   |   |            |   |            |   |       |   |   |           |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|-----------------|--------|-----------------|--------|------------|--------|--------|----------------|--------|
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
| Schedule II                                                                                         |   |            |   |   |            |   |            |   |       |   |   |           |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
| VALUATION      AND QUALIFYING ACCOUNTS                                                              |   |            |   |   |            |   |            |   |
| (millions)                                                                                          |   |            |   |   |            |   |            |   |       |   |   |           |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
|                                                                                                |   |            |   |   | Additions       |   |            |   |       |   |   |
|                                                                                                |   | Balance      at |   |   | Charged      to |   | Charged      to |   |       |   |   | Balance        |   |
|                                                                                                |   | beginning       |   |   | costs      and  |   | other           |   |       |   |   | at      end    |   |
| Description                                                                                         |   | of      period  |   |   | expenses        |   | accounts        |   | Deductions |   |   | of      period |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
| 2008                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |
| Allowance      for doubtful accounts receivable                                                |   | $               | 32.8   |   |            | $      | 70.6            |   | $          | -      |   | $              | 60.9   | (a) |   | $ | 42.5 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      mercury-related costs                                                                  |   |            | 2.8    |   |            |   | .6              |   |       | -      |   |           | .9     | (b) |   |   | 2.5 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      manufactured gas plant environmental    costs                                     |   |            | 15.2   |   |            |   | -               |   |       | 19.8   | (c)    |           | 13.6   | (b) |   |   | 21.4 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| 2007                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Allowance      for doubtful accounts receivable                                                |   | $               | 30.9   |   |            | $      | 53.0            |   | $          | -      |   | $              | 51.1   | (a) |   | $ | 32.8 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      mercury-related costs                                                                  |   |            | 13.2   |   |            |   | -               |   |       | -      |   |           | 10.4   | (b) |   |   | 2.8 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      manufactured gas plant environmental    costs                                     |   |            | 19.9   |   |            |   | -               |   |       | 4.5    | (c)    |           | 9.2    | (b) |   |   | 15.2 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| 2006                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Allowance      for doubtful accounts receivable                                                |   | $               | 30.1   |   |            | $      | 38.1            |   | $          | -      |   | $              | 37.3   | (a) |   | $ | 30.9 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      mercury-related costs                                                                  |   |            | 17.5   |   |            |   | -               |   |       | -      |   |           | 4.3    | (b) |   |   | 13.2 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| Accrued      manufactured gas plant environmental    costs                                     |   |            | 19.5   |   |            |   | -               |   |       | 12.7   | (c)    |           | 12.3   | (b) |   |   | 19.9 |   |
|                                                                                                |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |   |   |   |
| (a)      Accounts receivable written off, net of recoveries.                                        |   |            |   |   |            |   |            |   |       |   |   |
| (b)      Expenditures, other adjustments.                                                           |   |            |   |   |            |   |            |   |       |   |   |           |   |   |   |
| (c)      Accrual of estimated future remediation costs that are deferred as      regulatory assets. |   |            |   |   |            |

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Signatures

|                                                                                                                                                                                                                                  |   | Nicor      Gas Company                   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|
|                                                                                                                                                                                                                                  |   |                                     |
| Date  February 25,2009                                                                                                                                                                                                      |   | /s/ KAREN K. PEPPING                     |
|                                                                                                                                                                                                                                  |   | Karen      K. Pepping                    |
|                                                                                                                                                                                                                                  |   | Vice      President and Controller       |
|                                                                                                                                                                                                                                  |   | (Principal      Accounting Officer and   |
|                                                                                                                                                                                                                                  |   | Duly      Authorized Officer)            |
|                                                                                                                                                                                                                                  |
| Pursuant      to the requirements of the Securities Exchange Act of 1934, this report      has been signed below by      the following persons on behalf of the registrant and in the capacities      indicated on February 25, 2009. |
|                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                  |   |                                     |
| Signature                                                                                                                                                                                                                             |   | Title                                    |
|                                                                                                                                                                                                                                  |   |                                     |
| /s/ RUSS M. STROBEL                                                                                                                                                                                                                   |   |                                     |
| Russ      M. Strobel                                                                                                                                                                                                                  |   | Chairman,      President and             |
| (Principal      Executive Officer)                                                                                                                                                                                                    |   | Chief      Executive Officer             |
|                                                                                                                                                                                                                                  |   |                                     |
| /s/ RICHARD L. HAWLEY                                                                                                                                                                                                                 |   |                                     |
| Richard      L. Hawley                                                                                                                                                                                                                |   | Executive      Vice President and        |
| (Principal      Financial Officer)                                                                                                                                                                                                    |   | Chief      Financial Officer             |
|                                                                                                                                                                                                                                  |   |                                     |
| /s/ KAREN K. PEPPING                                                                                                                                                                                                                  |   |                                     |
| Karen      K. Pepping                                                                                                                                                                                                                 |   | Vice      President and Controller       |
| (Principal      Accounting Officer)                                                                                                                                                                                                   |   |                                     |
|                                                                                                                                                                                                                                  |   |                                     |
| ROBERT      M. BEAVERS, JR.*                                                                                                                                                                                                          |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| BRUCE      P. BICKNER*                                                                                                                                                                                                                |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| JOHN      H. BIRDSALL, III*                                                                                                                                                                                                           |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| NORMAN      R BOBINS*                                                                                                                                                                                                                 |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| BRENDA      J. GAINES*                                                                                                                                                                                                                |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| RAYMOND      A. JEAN*                                                                                                                                                                                                                 |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| DENNIS      J. KELLER*                                                                                                                                                                                                                |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| R.      EDEN MARTIN*                                                                                                                                                                                                                  |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| GEORGIA      R. NELSON*                                                                                                                                                                                                               |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| ARMANDO      J. OLIVERA*                                                                                                                                                                                                              |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| JOHN      RAU*                                                                                                                                                                                                                        |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
| JOHN      C. STALEY*                                                                                                                                                                                                                  |   | Director                                 |
|                                                                                                                                                                                                                                  |   |                                     |
|                                                                                                                                                                                                                                  | *      | By  /s/ RICHARD L.      HAWLEY |
|                                                                                                                                                                                                                                  |   | Richard      L. Hawley                   |
|                                                                                                                                                                                                                                  |   | (Attorney-in-fact)                       |

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SupplementalInformation

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ExhibitIndex

| Exhibit |   |                                                                                                                                                                                                                                        |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description of Document                                                                                                                                                                                                                     |
|    |   |                                                                                                                                                                                                                                        |
| 3.01    | *      | Restated      Articles of Incorporation of the company as filed with the Illinois      Secretary of State on July 21, 2006.  (File No. 1-7296, Form      10-Q for June 30, 2006, Exhibit 3.01.)                                   |
|    |   |                                                                                                                                                                                                                                        |
| 3.02    | *      | Nicor      Gas Company Amended and Restated By-laws effective as of December 1,      2007.  (File No. 1-7296, Form 8-K for November 29, 2007, Exhibit      3.1.)                                                                  |
|    |   |                                                                                                                                                                                                                                        |
| 4.01    | *      | Indenture      of Commonwealth Edison Company to Continental Illinois National Bank and      Trust Company of Chicago, Trustee, dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 1995, Exhibit      4.01.)      |
|    |   |                                                                                                                                                                                                                                        |
| 4.02    | *      | Indenture      of Adoption of the company to Continental Illinois National Bank and Trust      Company of Chicago, Trustee, dated February 9, 1954.  (File No.      1-7296, Form 10-K for 1995, Exhibit 4.02.)                    |
|    |   |                                                                                                                                                                                                                                        |
| 4.03    | *      | Supplemental      Indenture, dated February 15, 1998, of the company to Harris Trust and      Savings Bank, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 1997, Exhibit      4.19.) |
|    |   |                                                                                                                                                                                                                                        |
| 4.04    | *      | Supplemental      Indenture, dated February 1, 2001, of the company to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 2000, Exhibit      4.17.)      |
|    |   |                                                                                                                                                                                                                                        |
| 4.05    | *      | Supplemental      Indenture, dated May 15, 2001, of the company to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-Q for June 2001, Exhibit      4.01.)     |
|    |   |                                                                                                                                                                                                                                        |
| 4.06    | *      | Supplemental      Indenture, dated December 1, 2003, of the company to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 2003, Exhibit      4.09.)      |
|    |   |                                                                                                                                                                                                                                        |
| 4.07    | *      | Supplemental      Indenture, dated December 1, 2003, of the company to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 2003, Exhibit      4.10.)      |

| 4.08   | *      | Supplemental      Indenture, dated December 1, 2003, of the company to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 2003, Exhibit      4.11.)                                   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                     |
| 4.09   | *      | Supplemental      Indenture, dated December 1, 2006, of Nicor Gas to BNY Midwest Trust      Company, Trustee, under Indenture dated as of January 1,      1954.  (File No. 1-7296, Form 10-K for 2006, Exhibit      4.11.)                                     |
|   |   |                                                                                                                                                                                                                                                                     |
| 4.10   | *      | Supplemental      Indenture, dated August 1, 2008, of Nicor Gas to BNY Mellon Trust Company,      Trustee, under Indenture dated January 1, 1954.  (File No.      1-7296, Form 10-Q for September 30, 2008, Northern Illinois Gas Company,      Exhibit 4.01.) |
|   |   |                                                                                                                                                                                                                                                                     |
| 10.01  |   | Nicor Gas Supplementary Savings Plan (as      Amended and Restated for Post-2004 Benefits, Effective January 1,      2008.)                                                                                                                                              |

|   |   |   |
|--------|--------|--------|

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Table of Contents

| Exhibit |   |                                                                                                                                                                                                                             |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description of Document                                                                                                                                                                                                          |
|    |   |                                                                                                                                                                                                                             |
| 10.02   | *      | Amendment      and Restatement of Nicor Gas Supplementary Retirement      Plan.  (File No. 1-7297, Form 10-Q for March 2000, Nicor Inc.,      Exhibit 10.01.)                                                          |
|    |   |                                                                                                                                                                                                                             |
| 10.03   | *      | Amendment      to Nicor Gas Supplementary Retirement Plan (as in Effect on October 3,      2004, for Pre-2005 Benefits). (File No. 1-7297, Form 8-K for July 28,      2008, Nicor Inc., Exhibit 10.12.)                          |
|    |   |                                                                                                                                                                                                                             |
| 10.04   | *      | Nicor      Gas Supplementary Retirement Plan (as Amended and Restated for Post-2004      Benefits, Effective January 1, 2008). (File No. 1-7297, Form 8-K for July      28, 2008, Nicor Inc., Exhibit 10.11.)                    |
|    |   |                                                                                                                                                                                                                             |
| 10.05   | *      | 2007      Nicor Gas Annual Incentive Compensation Plan for      Officers.  (File No. 1-7296, Form 10-Q for March 31, 2007,      Northern Illinois Gas Company, Exhibit 10.01.)                                         |
|    |   |                                                                                                                                                                                                                             |
| 10.06   |   | 2008 Nicor Gas Annual Incentive      Compensation Plan for Officers.                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                             |
| 10.07   | *      | Nicor      Gas Directors’ Deferred Compensation Plan, as amended and restated      effective January 1, 2008.  (File No. 1-7296, Form 10-Q for June      30, 2007, Northern Illinois Gas Company, Exhibit10.01.) |
|    |   |                                                                                                                                                                                                                             |
| 10.08   |   | First Amendment to the Northern      Illinois Gas Company Directors’ Deferred Compensation      Plan.                                                                                                                      |
|    |   |                                                                                                                                                                                                                             |
| 10.09   |   | Second Amendment to the Northern      Illinois Gas Company Directors’ Deferred Compensation      Plan.                                                                                                                     |
|    |   |                                                                                                                                                                                                                             |
| 10.10   | *      | 5-Year      Credit Agreement dated as of September 13, 2005.  (File No.      1-7296, Form 10-Q for September 30, 2005, Northern Illinois Gas Company,      Exhibit 10.03.)                                             |
|    |   |                                                                                                                                                                                                                             |
| 10.11   | *      | Second      Amendment to the 5-Year Credit Agreement dated as of October 26,      2006.  (File No. 1-7296, Form 10-Q for September 30, 2006,      Northern Illinois Gas Company, Exhibit 10.02.)                       |
|    |   |                                                                                                                                                                                                                             |
| 10.12   | *      | 9-Month      Credit Agreement dated as of August 11, 2008.  (File No. 1-7296,      Form 10-Q for September 30, 2008, Northern Illinois Gas Company, Exhibit      10.01.)                                               |
|    |   |                                                                                                                                                                                                                             |
| 10.13   | *      | 1993      Interim Cooperative Agreement between Commonwealth Edison Company and      Northern Illinois Gas Company. (File No. 1-7296, Form 10-Q for March 31,      2006, Northern Illinois Gas Company, Exhibit 10.02.)          |
|    |   |                                                                                                                                                                                                                             |
| 10.14   | *      | Amendment      No. 1 to the 1993 Interim Cooperative Agreement. (File No. 1-7296, Form      10-Q for March 31, 2006, Northern Illinois Gas Company, Exhibit      10.03.)                                                         |
|    |   |                                                                                                                                                                                                                             |
| 10.15   | *      | Amendment      No. 2 to the 1993 Interim Cooperative Agreement.  (File No.      1-7296, Form 10-Q for March 31, 2006, Northern Illinois Gas Company,      Exhibit 10.04.)                                              |
|    |   |                                                                                                                                                                                                                             |

| 10.16 | * | Amendment      No. 3 to the 1993 Interim Cooperative Agreement.  (File No.      1-7296, Form 10-Q for March 31, 2006, Northern Illinois Gas Company,      Exhibit10.05.) |
|-------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| Exhibit |   |                                                                                                                                                                                                                     |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description of Document                                                                                                                                                                                                  |
|    |   |                                                                                                                                                                                                                     |
| 10.17   | *      | Memorandum      of Understanding between Nicor Gas and Commonwealth Edison      Company.  (File No. 1-7296, Form 10-Q for June 30, 2007,      Northern Illinois Gas Company, Exhibit 99.01.)                   |
|    |   |                                                                                                                                                                                                                     |
| 10.18   | *      | Final      Allocation Agreement between Nicor Gas and Commonwealth Edison Company      dated as of January 3, 2008.  (File No. 1-7296, Form 10-K for      2007, Northern Illinois Gas Company, Exhibit 10.15.) |
|    |   |                                                                                                                                                                                                                     |
| 12.01   |   | Computation of Consolidated Ratio of      Earnings to Fixed Charges.                                                                                                                                                     |
|    |   |                                                                                                                                                                                                                     |
| 24.01   |   | Powers of Attorney.                                                                                                                                                                                                      |
|    |   |                                                                                                                                                                                                                     |
| 31.01   |   | Rule 13a-14(a)/15d-14(a)      Certification.                                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                     |
| 31.02   |   | Rule 13a-14(a)/15d-14(a)      Certification.                                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                     |
| 32.01   |   | Section 1350      Certification.                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                     |
| 32.02   |   | Section 1350      Certification.                                                                                                                                                                                         |

| *   | These      exhibits have been previously filed with the SEC as exhibits to      registration statements or to other filings with the SEC and are      incorporated herein as exhibits by reference.  The file number      and exhibit number of each such exhibit, where applicable, are stated, in      parentheses, in the description of suchexhibit. |
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