UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K


      [X]   Annual Report Pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934

                 For the fiscal year ended December 31, 2000

                                       or

      [ ]  Transition Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934



                                                         I.R.S Employer
  Commission      Registrant, State of Incorporation,    Identification
  File Number         Address and Telephone Number           Number
----------------  -------------------------------------  ---------------

    1-7296        Northern Illinois Gas Company            36-2863847
                  (Doing business as Nicor Gas
                  Company)
                  (An Illinois Corporation)
                  1844 Ferry Road
                  Naperville, Illinois 60563-9600
                  (630) 983-8888


Securities registered pursuant to Section 12(b) or 12(g) of the Act:   None

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore  filing this Form with the reduced  disclosure
format.

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Shares of common stock,  par value $5,  outstanding  at February 28, 2001,  were
15,232,414, all of which are owned by Nicor Inc.




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Nicor Gas Company                                                       Page i

Table of Contents

  Item No.

           Part I
   1.      Business .......................................................  1
   2.      Properties .....................................................  4
   3.      Legal Proceedings...............................................  4
   4.      Submission of Matters to a Vote of Security Holders.............  *

           Part II
   5.      Market for Registrant's Common Equity and Related Stockholder
           Matters.........................................................  4
   6.      Selected Financial Data ........................................  *
   7.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations...........................  5
   7A.     Quantitative and Qualitative Disclosures about Market Risk...... 11
   8.      Financial Statements and Supplementary Data .................... 12
   9.      Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure........................... 27

           Part III
   10.     Directors and Executive Officers of the Registrant.............   *
   11.     Executive Compensation.........................................   *
   12.     Security Ownership of Certain Beneficial Owners and Management.   *
   13.     Certain Relationships and Related Transactions.................   *

           Part IV
   14.     Exhibits, Financial Statement Schedules, and Reports
             on Form 8-K..................................................  27
           Signatures...................................................... 29
           Supplemental Information........................................ 30
           Exhibit Index................................................... 31

*  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.


Glossary

Degree day.......The extent to which the daily average temperature falls below
                 65 degrees Fahrenheit.  Normal weather for Nicor  Gas' service
                 territory is about 6,100 degree days.
FERC.............Federal Energy Regulatory Commission, the agency that
                 regulates the interstate transportation of natural gas, oil
                 and electricity.
ICC..............Illinois Commerce Commission, the agency that regulates
                 investor-owned Illinois utilities.
Mcf, MMcf, Bcf...Thousand cubic feet, million cubic feet, billion cubic feet.
PBR..............Performance-based rate, a plan that provides economic
                 incentives based on performance.
PGA..............Purchased Gas Adjustment, a rate mechanism designed to allow
                 utilities, like Nicor Gas, to recover their gas costs without
                 markup.



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Nicor Gas Company                                                       Page 1

PART I

Item 1.  Business

Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation  formed in 1954,  is a wholly  owned  subsidiary  of Nicor  Inc.,  a
holding  company.  Certain terms used herein are defined in the glossary on page
i.

GENERAL

Nicor Gas, a regulated natural gas distribution  utility, is one of the nation's
largest  distributors  of  natural  gas.  The  company  serves  nearly 2 million
customers in a service  territory that encompasses most of the northern third of
Illinois,  excluding  the city of Chicago.  The company's  service  territory is
diverse and has grown  steadily  over the years,  providing  the company  with a
well-balanced mix of residential,  commercial and industrial customers. In 2000,
residential  customers accounted for about 43 percent of natural gas deliveries,
while commercial and industrial  customers accounted for about 25 percent and 32
percent,  respectively.  The company's large residential  customer base provides
relative  stability  during  weak  economic  periods.  In  addition,  Nicor Gas'
industrial  and  commercial  customer  base is well  diversified,  lessening the
impact of industry-specific economic swings. See Operating Statistics on page 10
for operating revenues, deliveries and customers by customer classification.

Gas  deliveries  are seasonal  since about  one-half are used for space heating.
Typically,  about 70 percent  of  deliveries  and  revenues  occur from  October
through  March.  Fluctuations  in  weather  can  have a  significant  impact  on
year-to-year   comparisons  of  operating  income  and  cash  flow.  To  provide
protection  from the  financial  impact of  unusually  warm  weather,  Nicor Gas
entered into an agreement  with a third party  designed to protect the company's
2001  earnings  and cash flow if  weather  is warmer  than  5,700  degree  days,
approximately  the same level as actual degree days in 2000. To partially offset
the cost of this earnings protection, Nicor Gas has also agreed to pay the third
party  if  weather  for  2001  is  colder  than  6,100  degree  days,  which  is
approximately normal for Nicor Gas' service territory.

Nicor Gas maintains franchise agreements with most of the communities it serves,
allowing it to construct,  operate and maintain distribution facilities in those
communities.  Franchise  agreement terms range up to 50 years.  Currently,  less
than 5 percent of the agreements will expire within five years.  The company has
approximately 2,200 employees.

CUSTOMER SERVICES

In  addition  to  gas  sales  to  all  customer  classes,   Nicor  Gas  provides
transportation service to commercial and industrial customers who purchase their
own gas supplies.  Beginning in 1999, the company's Customer Select(R) voluntary
pilot program  allowed  residential  customers in certain  communities to choose
their natural gas  supplier.  Nicor Gas supports  customer  choice and has filed
with the Illinois Commerce Commission (ICC) to permanently expand the program to
all of its  customers.  Additional  information  on the program is  presented in
Factors  Affecting  Business  Performance  beginning  on page 7.  Transportation
customers have options that include the use of the company's  storage system and
the ability to choose  varying  supply  backup levels and service  options.  The
company receives a margin generally  comparable to gas sales for  transportation
service with full supply backup.

In recent years, Nicor Gas has been pursuing several nontraditional  activities.
These activities  include finding innovative ways to utilize its physical assets
by providing natural gas storage and transmission-related services to marketers,
other gas distribution companies and electric power generation facilities.


Nicor Gas Company                                                       Page 2

Item 1.  Business (continued)

SOURCES OF GAS SUPPLY

Nicor Gas purchases gas supplies in the open market by contracting directly with
producers and marketers.  Pipeline transportation and purchased storage services
are  contracted  for  at  rates  regulated  by  the  Federal  Energy  Regulatory
Commission (FERC). Firm pipeline capacity and purchased storage services held by
the company  that are  temporarily  not needed can be released in the  secondary
market under FERC-mandated  capacity release provisions,  with proceeds reducing
the company's cost of gas charged to customers.

The company's peak day requirements are met through utilization of company-owned
storage facilities, firm pipeline capacity, purchased storage services and other
supply  arrangements.  Nicor Gas has been able to obtain sufficient  supplies of
natural gas to meet  customer  requirements.  The company  believes  natural gas
supply availability will be sufficient to meet market demands in the foreseeable
future.

Gas supply. Nicor Gas maintains a diversified portfolio of gas supply contracts.
Firm gas  supply  contracts  are  diversified  by  supplier,  producing  region,
quantity and available  transportation.  Contract  pricing is generally  tied to
published  price  indices  so as  to  approximate  current  market  prices.  The
contracts  also  generally  provide for the payment of fixed  demand  charges to
ensure  the  availability  of  supplies  on any  given  day  and  are  generally
negotiated annually.

The company also purchases gas supplies on the spot market to fulfill its supply
requirements  or to take  advantage of favorable  short-term  pricing.  Spot gas
purchases  accounted for about one-half of the company's  total gas purchases in
the last three years.

Customers  served under the company's  transportation  service tariffs  purchase
their own gas supplies.  About one-half of the gas that the company delivered in
2000 was  purchased by  transportation  customers  directly  from  producers and
marketers rather than from the company.

Pipeline  transportation.  Nicor Gas is directly  connected to seven  interstate
pipelines  which  provide  access to most of the  major  natural  gas  producing
regions in North America.  The company's primary firm  transportation  contracts
are with:  Natural Gas  Pipeline  Company of America,  which  accounts for about
two-thirds of the contracted  capacity,  Midwestern Gas Transmission Company and
Northern Natural Gas Company.  Nearly all of the contracted capacity will expire
by 2004.

Storage.  Nicor Gas owns and operates seven underground gas storage  facilities.
This storage system is one of the largest in the gas distribution industry. With
about 140 Bcf of top storage  capacity,  the system is designed to meet about 55
percent of the company's peak day deliveries and approximately 30 percent of its
normal winter deliveries. In addition to the company-owned facilities, Nicor Gas
purchases about 40 Bcf of storage service.  Storage provides supply flexibility,
improves reliability of deliveries and allows the company to maintain rates that
are among the lowest in the nation.

COMPETITION/DEMAND

Nicor Gas is one of the largest utility energy suppliers in Illinois, delivering
about one-third of all utility energy consumed in the state.  Substantially  all
single-family homes in Nicor Gas' service territory are heated with natural gas.
The company's gas services compete with other forms of energy, such as

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Nicor Gas Company                                                       Page 3

Item 1.  Business (concluded)

electricity  and oil, based on such factors as price,  service and  reliability.
Significant factors that impact demand for natural gas include weather, economic
conditions and the price of gas relative to competitive fuels.

The energy  industry  has  undergone  fundamental  changes over the past several
years.  In  1997,  Illinois  adopted   legislation   directing  the  process  of
deregulating the state's electric utility industry.  All customers will be given
a choice of  electric  supplier  by 2002.  While  natural  gas prices  increased
significantly  in  2000,  Nicor  Gas  has  traditionally  maintained  a  pricing
advantage  over  electricity  and  expects  to  maintain  an  advantage  in  the
foreseeable future.

Additional  information  on  competition  and  demand is  presented  in  Factors
Affecting Business Performance beginning on page 7.

REGULATION

Nicor Gas is regulated by the ICC, which  establishes  the rules and regulations
governing utility rates and services in Illinois.  Rates are generally  designed
to allow the company to recover its costs and provide an  opportunity  to earn a
fair  return for its  investors.  Changes in the  regulatory  environment  could
affect the longer-term performance of Nicor Gas.

The cost of gas the company  purchases  for  customers  is  recovered  through a
monthly gas supply charge,  which  accounted for  approximately  70 percent of a
typical  residential  customer's  annual  bill  in the  last  three  years.  The
company's cost of gas is passed on to the customer without markup.

Nicor Gas'  performance-based  rate (PBR) plan for  natural  gas costs went into
effect in 2000.  Under the PBR  plan,  Nicor  Gas'  total gas  supply  costs are
compared to a  market-sensitive  benchmark.  Savings and losses  relative to the
benchmark are shared equally with customers.  After 2001, the ICC is required to
review the plan.  Additional  information  on the plan is  presented  in Factors
Affecting Business Performance beginning on page 7.

Customer  Select,  a voluntary  pilot program that offers  customers a choice of
natural gas  suppliers,  is in its fourth year.  Additional  information  on the
program is presented in Factors Affecting Business Performance beginning on page
7.

ENVIRONMENTAL MATTERS

For information on environmental  matters,  see Contingencies  beginning on page
24.




<PAGE>


Nicor Gas Company                                                       Page 4

Item 2.     Properties

The company's  properties are located in the territory  described  under Item 1,
Business, and are suitable, adequate and utilized in its operations.

The gas  distribution,  transmission  and storage system includes  approximately
30,000 miles of steel, plastic and cast iron main; approximately 27,000 miles of
steel,  plastic/aluminum  composite,  plastic and copper service pipe connecting
the mains to customers'  premises;  and seven underground storage fields.  Other
properties  include  buildings,   land,  motor  vehicles,   meters,  regulators,
compressors,   construction   equipment,   tools,   communication  and  computer
equipment, software and office equipment.

The principal real properties are held under easements,  permits, or licenses or
in fee. Land in fee is owned for essentially all administrative  offices and for
certain  transmission  mains and underground  storage fields.  Substantially all
properties are subject to the lien of the indenture securing the company's first
mortgage bonds.

Item 3.     Legal Proceedings

See  Contingencies  beginning  on page  24,  which  is  incorporated  herein  by
reference.  One of the lawsuits  referred to under Mercury Program involves five
previous  class actions that have been  consolidated  before a single judge.  On
March 7, 2001, the Circuit Court of Cook County entered an order  dismissing the
pending  consolidated  class action  complaint  without  prejudice  and allowing
plaintiffs to file an amended consolidated class action complaint.

PART II

Item 5.     Market for  Registrant's  Common  Equity and Related  Stockholder
            Matters

All of the outstanding common stock of Nicor Gas is owned by Nicor Inc. There is
no public trading market for the company's  common stock.  During 2000 and 1999,
the company  declared  quarterly  dividends  on its common stock  totaling  $111
million and $99.6 million, respectively.


<PAGE>


Nicor Gas Company                                                       Page 5

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations

The  purpose  of this  financial  review is to  explain  changes  in Nicor  Gas'
operating  results and  financial  condition  from 1998 to 2000,  and to discuss
business  trends and  uncertainties  that might affect Nicor Gas.  Certain terms
used herein are defined in the glossary on page i.


RESULTS OF OPERATIONS

Nicor  Gas' net income for 2000 was $22.2  million  compared  with net income of
$96.1 million in 1999. An unusual  pretax charge of $148 million was recorded as
other  operating  expense in the third  quarter of 2000 related to the company's
mercury inspection and repair program described beginning on page 24. Net income
excluding the unusual charge  increased 16 percent to $111.5 million in 2000 due
to higher gas deliveries and contributions from the performance-based rate (PBR)
plan for gas costs. Gas deliveries rose to 526 Bcf in 2000 compared with 508 Bcf
in 1999 due to 8 percent colder weather and customer  additions.  Net income for
1999  increased  $2 million to $96.1  million  from the prior year due to higher
deliveries of natural gas related primarily to 9 percent colder weather than the
prior year.  Results for both  periods  also  include  increased  operating  and
maintenance expenses and depreciation.

Operating  revenues.  Operating  revenues  increased  $557.5 million to $1,883.7
million in 2000 due to higher  natural  gas prices and  related  revenue  taxes,
which  are both  passed  directly  through  to  customers  without  markup,  and
increased natural gas deliveries.  Operating revenues increased $97.2 million in
1999 to  $1,326.2  million  due to higher  deliveries  of natural gas and higher
natural  gas  prices.  Partially  offsetting  this  increase  was the  impact of
customers switching from sales to transportation service, which reduces revenue,
but generally has no impact on margin.

Margin.  Margin,  defined as  operating  revenues  less cost of gas and  revenue
taxes,  which are both passed  directly  through to customers,  increased  $19.4
million in 2000 to $506.6  million.  Improvements  reflect  the impact of colder
weather  compared  to  1999,   customer  additions  and  increased  income  from
power-generation  services.  In 1999,  margin  increased $17.8 million to $487.2
million due primarily to colder weather compared to 1998.

Operating and maintenance.  Operating and maintenance expense for 2000 increased
by $7 million to $160.3 million.  A larger provision for uncollectible  accounts
and weather insurance premiums  contributed to the increase.  In 1999, operating
and maintenance  expenses increased $8.5 million to $153.3 million due, in part,
to higher  information  technology  spending  levels.  Operating and maintenance
expenses were offset by net pension credits of $19.9 million,  $13.3 million and
$14.7 million in 2000,  1999, and 1998,  respectively.  The increase in the 2000
credit resulted principally from favorable pension fund investment returns.

Other  operating  expense.  Other operating  expense in 2000 reflects  estimated
costs  associated  with the company's  mercury  inspection  and repair  program.
Additional information about this program is presented under the heading Mercury
program beginning on page 24.

Other income (expense).  Other income increased $12.8 million in 2000 due to PBR
plan results and property  sale gains.  In 1999,  other  income  decreased  $5.7
million as a result of a decline in property sale gains compared to 1998 and the
write-off of software development costs.




Nicor Gas Company                                                       Page 6

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (continued)

Interest on debt  increased 7 percent in 2000 to $43.3  million due to increased
average  borrowing levels compared to 1999. In 1999 interest on debt decreased 7
percent to $40.4 million due primarily to  refinancing  at lower  interest rates
and reduced average  borrowing levels compared to the prior year. Other interest
was  lower in 1999  compared  to 2000 and  1998,  due to  interest  benefits  on
tax-related matters.

Income taxes. The lower-than-normal effective income tax rate of 23.6 percent in
2000 is due to the effect of the unusual charge  related to the Mercury  program
described  beginning  on page 24.  Excluding  the  mercury-related  charge,  the
combined  effective  income tax rate was 37 percent,  which is comparable to the
1999 and 1998 rates.


FINANCIAL CONDITION AND LIQUIDITY

The company  believes it has access to adequate  resources to meet its needs for
capital expenditures,  debt redemptions,  dividend payments and working capital.
These  resources  include  net cash flow from  operating  activities,  access to
capital markets and lines of credit.

Operating  cash flows.  Net cash flow provided  from  operating  activities  was
$202.9  million,  $170.9  million  and $314.9  million  in 2000,  1999 and 1998,
respectively.  Year-to-year  changes in operating  cash flow result largely from
fluctuations in working capital items because of factors including weather,  the
price of gas,  the  timing of  collections  from  customers  and gas  purchasing
practices.  The  company  generally  relies  on  short-term  financing  to  meet
temporary increases in working capital needs.

Capital expenditures.  Capital expenditures were $124.6 million in 2000 compared
with $127.4  million in 1999 and $112.6  million in 1998.  Capital  expenditures
were higher in 2000 and 1999 than in 1998 due primarily to  enhancements  to the
company's  operating  system.  Capital  spending in 2001 is expected to be about
$140 million. The estimated increase in capital expenditures for 2001 is related
mostly to  information  technology  projects and  improvements  to the company's
operating system.

Financing  activities.  Nicor Gas has earned the highest  long-term debt ratings
given in the  industry.  The  ratio of  earnings  to fixed  charges  in 2000 was
negatively affected by the unusual mercury-related charge.

                                              2000      1999      1998
                                           ------------------------------
Long-term debt, net of current maturities,
    as a percent of capitalization            36.9%     38.2%     43.1%
Ratio of earnings to fixed charges             1.7       4.9       4.3

Long-term  debt.  At  December  31,  2000,  Nicor Gas had $250  million of First
Mortgage  Bonds  remaining  available  for issuance  under a December 1998 shelf
registration  filing. Net proceeds from securities issued are typically used for
the  refinancing  of certain  outstanding  First  Mortgage  Bonds,  construction
programs to the extent not provided by internally  generated  funds, and general
corporate purposes.

In February  2001,  Nicor Gas issued $75 million of First  Mortgage Bonds due in
2011 at 6.625%.  A portion of the net  proceeds  replaced  $50 million of 5.875%
First  Mortgage  Bonds  due May 1,  2000  that had been  temporarily  refinanced
through the  issuance of  unsecured  notes.  The  remainder  of the net proceeds
replenished a portion of corporate  funds used  previously to redeem $50 million
of 8.25% First Mortgage Bonds due in 2024.


<PAGE>


Nicor Gas Company                                                       Page 7

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (continued)

In January 2000, Nicor Gas issued $50 million of adjustable-rate unsecured notes
due in 2001 at an initial rate of 6.11% to fund the redemption of $50 million of
unsecured notes at 5.065% due in 2000.

During 1999,  Nicor Gas issued $50 million of First  Mortgage Bonds at 5.37% due
in 2009 and $50 million of unsecured notes at 5.065% due in 2000. Redemptions of
First Mortgage  Bonds during 1999 were as follows:  $50 million at 5.875% due in
2000, $50 million at 7.375% due in 2023 and $50 million at 8.25% due in 2024.

In 1998, Nicor Gas issued First Mortgage Bonds as follows:  $50 million at 5.75%
due in 2003 and $50 million at 6.58% due in 2028.  Redemptions of First Mortgage
Bonds  during  1998 were as  follows:  $25  million at 5.875%  due in 1998,  $25
million at 6.25% due in 1999 and $75 million at 8.25% due in 2022.

Short-term debt. Nicor Gas maintains  short-term lines of credit agreements with
major domestic and foreign banks. At December 31, 2000, these agreements,  which
serve as backup for the issuance of commercial paper,  totaled $315 million. The
company had $315 million and $275 million of  commercial  paper  outstanding  at
year-end 2000 and 1999, respectively.

Common and preferred stock. The company paid dividends of $106.4 million,  $98.1
million and $107.9 million in 2000, 1999 and 1998, respectively.


FACTORS AFFECTING BUSINESS PERFORMANCE

The following  factors can impact  year-to-year  comparisons  and may affect the
future performance of Nicor Gas.

Nicor Gas, a regulated natural gas distribution utility, serves nearly 2 million
customers in a service  territory that encompasses most of the northern third of
Illinois, excluding the city of Chicago. The region's economy is diverse and has
grown steadily over the years,  providing Nicor Gas with a well-balanced  mix of
residential,   commercial  and  industrial  customers.   In  2000,  residential,
commercial and industrial  customers accounted for 43 percent, 25 percent and 32
percent of natural gas deliveries, respectively.

Weather.  Since about  one-half of gas  deliveries  are used for space  heating,
fluctuations in weather have the potential to significantly  impact year-to-year
comparisons  of  operating  income  and cash  flow.  Nicor Gas  entered  into an
agreement with a third party designed to protect the company's 2001 earnings and
cash flow if weather is warmer than 5,700  degree days,  approximately  the same
level as  actual  degree  days in 2000.  To  partially  offset  the cost of this
earnings protection, Nicor Gas has also agreed to pay the third party if weather
for 2001 is colder than 6,100 degree  days,  which is  approximately  normal for
Nicor  Gas'  service  territory.  As a result,  this  weather  hedge  limits the
earnings impact of large variations in weather.

Demand and natural gas prices. In addition to the impact of weather, significant
changes in economic  conditions  or natural gas prices can impact  customer  gas
usage.  However,  Nicor Gas' large  residential  customer base provides relative
stability  during weak economic  periods.  Also,  the  industrial and commercial
customer base is well  diversified,  lessening  the impact of  industry-specific
economic swings.  Nicor Gas' growth in deliveries has traditionally  come from a
combination of customer additions and


Nicor Gas Company                                                       Page 8

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (continued)

increased usage among existing commercial and industrial  customers.  Deliveries
to  power-generation  facilities  have also  contributed  to  growth.  While the
company  anticipates  continued  growth  in  deliveries  attributable  to  these
factors, a partial offset is expected as customers install more energy-efficient
equipment.

Natural gas prices increased  significantly during 2000. Changes in the price of
natural  gas have no direct  impact  on Nicor  Gas'  margin  since gas costs are
passed  directly  through  to  customers  without  markup  under  the  company's
Purchased Gas Adjustment (PGA).  However, the unprecedented level of current gas
prices will likely have an adverse  effect on accounts  receivable  collections,
customer  demand,  company  gas usage  expenses,  financing  costs and  customer
service  expenses.  In  January  2001,  Nicor Gas  announced  its  intention  to
institute a 12-month  budget plan to allow  customers the  opportunity to manage
the effects of high winter bills.  The new plan,  which has been approved,  will
create a temporary lag in collections from participating customers, but provides
for recovery of carrying costs.

Performance-based rate plan. Nicor Gas' PBR plan for natural gas costs went into
effect in 2000.  Under the PBR  plan,  Nicor  Gas'  total gas  supply  costs are
compared to a benchmark tied to a market index.  Savings and losses  relative to
the  benchmark  are shared  equally with  customers.  Assuming a benchmark of $1
billion,  each one-percent  deviation from the benchmark would affect net income
by about $3  million.  After  2001,  the ICC is  required  to  review  the plan.
Transportation  customers,  who are responsible for their own gas supplies,  are
generally not affected by the PBR plan.

Generally,  higher  natural gas prices would not  significantly  affect PBR plan
risk  since  the  PBR  benchmark  is  tied  to  market  prices.   However,   the
unprecedented  high natural gas prices  experienced  at the end of 2000 and into
2001,  combined with demand  variability,  may impact PBR plan results since any
performance  variance  from  the  benchmark  may  be  significantly  greater  in
magnitude.  The company has strategies in place to manage these risk factors. In
addition, PBR plan results are shared equally with customers.

Competition.  Nicor Gas  competes  with  other  energy  suppliers  based on such
factors as price,  service and  reliability.  The company is well  positioned to
deal with the  possibility of fuel  switching by customers  because it has rates
and services  designed to compete against  alternative  fuels. In addition,  the
company has a rate which allows negotiation with potential bypass customers, and
no customer has bypassed since the rate became effective in 1987. Nicor Gas also
offers commercial and industrial customers flexibility and alternatives in rates
and service, increasing its ability to compete in these markets.

Storage  and  supply.  Direct  connection  to  seven  interstate  pipelines  and
extensive   underground   storage   capacity   provide   the   company  and  its
transportation  customers  with  flexibility  and  alternatives  for gas  supply
procurement  and storage  services.  In addition,  in an effort to ensure supply
reliability,  the company purchases gas from several different producing regions
under varied contract terms.

Unbundling. The company's voluntary pilot program, Customer Select(R),  offers a
choice of natural gas suppliers to all commercial  and industrial  customers and
more than 270,000  residential  customers in 16  communities.  In the  program's
first  three  years,  about 37 percent of  eligible  business  customers  and 22
percent  of  eligible  residential  customers  signed  up. The choice of another
natural gas  commodity  supplier  has no direct  impact on Nicor Gas'  operating
income  because  natural  gas costs are passed  directly  through  to  customers
without  markup under the PGA.  Nicor Gas  continues to deliver the natural gas,
maintain its distribution system and respond to emergencies.


Nicor Gas Company                                                       Page 9

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (continued)

Nicor Gas received  approval in November  2000 to continue the current  Customer
Select pilot program for another year. The company's August 2000 filing with the
ICC to  permanently  expand the  Customer  Select  program to include all of its
customers is currently in the public  hearing  process,  which may take up to 11
months.

Nontraditional  activities.  In order to generate  additional  contributions  to
earnings   growth,   Nicor  Gas  continues  to  pursue  several   nontraditional
activities,   including   the  Chicago   Hub,   which   provides   interruptible
transportation  and storage service to interstate natural gas pipeline shippers.
The Chicago  area has become a major  market hub for natural gas, and demand for
storage- and transmission-related  services by marketers, other gas distribution
companies  and  electric  power-generation  facilities  is  expected to increase
significantly.

Nicor  Gas  is  also   developing   the  property   surrounding   its  corporate
headquarters,  and the company  continues to assess its other  nonstrategic real
estate holdings.  The gas distribution  property development project is expected
to continue for a number of years.

Regulation.  Nicor Gas is regulated by the ICC, which  establishes the rules and
regulations  governing  utility  rates  and  services  in  Illinois.  Rates  are
generally  designed  to allow the  company to recover  its costs and  provide an
opportunity to earn a fair return for its investors.  Significant changes in the
regulatory environment could affect the longer-term performance of Nicor Gas.





Nicor Gas Company                                                  Page 10


Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations (continued)

Operating Statistics

                                              2000       1999       1998
                                            ---------  ---------  ---------
Operating revenues (millions)
   Sales
     Residential                            $1,353.9   $  899.8    $ 813.6
     Commercial                                236.0      172.3      189.4
     Industrial                                 37.0       24.5       27.5
                                            ---------  ---------  ---------
                                             1,626.9    1,096.6    1,030.5
                                            ---------  ---------  ---------
   Transportation
     Residential                                 6.7        1.7          -
     Commercial                                 78.9       70.3       57.2
     Industrial                                 47.5       43.7       39.2
     Other                                       6.2        4.2        1.6
                                            ---------  ---------  ---------
                                               139.3      119.9       98.0
                                            ---------  ---------  ---------
   Other revenues
     Revenue taxes                             101.7       84.6       79.8
     Chicago Hub                                 6.3        6.0        4.1
     Other                                       9.5       19.1       16.6
                                            ---------  ---------  ---------
                                               117.5      109.7      100.5
                                            ---------  ---------  ---------
                                            $1,883.7   $1,326.2   $1,229.0
                                            =========  =========  =========

Deliveries (Bcf)
   Sales
     Residential                               219.0      209.0      192.4
     Commercial                                 38.4       39.8       44.3
     Industrial                                  6.2        6.1        7.1
                                            ---------  ---------  ---------
                                               263.6      254.9      243.8
                                            ---------  ---------  ---------
   Transportation
     Residential                                 4.4         .9          -
     Commercial                                 94.0       82.1       67.5
     Industrial                                163.9      170.2      175.7
                                            ---------  ---------  ---------
                                               262.3      253.2      243.2
                                            ---------  ---------  ---------
                                               525.9      508.1      487.0
                                            =========  =========  =========

Year-end customers (thousands)
   Sales
     Residential                             1,746.3    1,753.0    1,737.6
     Commercial                                 98.9      108.9      127.9
     Industrial                                  6.6        7.4        9.1
                                            ---------  ---------  ---------
                                             1,851.8    1,869.3    1,874.6
                                            ---------  ---------  ---------
   Transportation
     Residential                                52.8       16.2          -
     Commercial                                 68.7       57.2       35.9
     Industrial                                  7.4        6.6        5.0
                                            ---------  ---------  ---------
                                               128.9       80.0       40.9
                                            ---------  ---------  ---------
                                             1,980.7    1,949.3    1,915.5
                                            =========  =========  =========

Other statistics
   Degree days (normal 6,116)                  5,717      5,272      4,834
   Colder (warmer) than normal                    (7)%      (14)%      (21)%
   Average gas cost per Mcf sold              $ 4.80     $ 2.93     $ 2.76





<PAGE>



Nicor Gas Company                                                      Page 11

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of  Operations (concluded)


Market risk. Nicor Gas is generally not exposed to market risk caused by changes
in commodity prices.  This is due to current Illinois rate regulation  governing
the recovery of all prudently  incurred natural gas supply costs from customers.
Although  the company  has a PBR plan for  natural gas costs,  the plan does not
expose the company to commodity price risk because actual gas costs are compared
to a  market-based  benchmark  as  opposed  to  a  fixed  benchmark.  Additional
information  about  the  PBR  plan is  presented  on page  8.  The  company  has
established  policies and procedures governing the management of commodity price
risks and the use of derivative  commodity  instruments to hedge its exposure to
such risks. A risk management  committee exists to oversee  compliance with such
policies and procedures.

The company is exposed to changes in interest  rates,  primarily  as a result of
its short- and  long-term  debt.  The  company  manages its  interest  rate risk
primarily  by issuing  long-term  fixed-rate  debt with varying  maturities  and
refinancing  certain  debt.  For  further  information  about  debt  securities,
interest   rates  and  fair  values,   see  the   Consolidated   Statements   of
Capitalization on page 17 and Fair Value of Financial Instruments and Short- and
Long-Term Debt on page 20.

New accounting pronouncements.  In June 1998, the Financial Accounting Standards
Board issued  Statement  No. 133,  Accounting  for  Derivative  Instruments  and
Hedging  Activities.  Nicor adopted this  statement,  as amended,  on January 1,
2001.  The initial  application  of the statement had no impact on the company's
results of operations  and no material  impact on its financial  condition.  For
further information, see Derivative Instruments beginning on page 20.

Mercury  program.  Future  operating  results may be impacted by  adjustments to
estimated mercury program costs or recoveries, and any such adjustments could be
material.  Additional  information  about this  program is  presented  under the
heading  Mercury Program  beginning on page 24, which is incorporated  herein by
reference.  One of the lawsuits referred to therein involves five previous class
actions that have been consolidated before a single judge. On March 7, 2001, the
Circuit  Court  of  Cook  County   entered  an  order   dismissing  the  pending
consolidated class action complaint without prejudice and allowing plaintiffs to
file an amended consolidated class action complaint.


Other  contingencies.  The  company  is  involved  in  legal  or  administrative
proceedings  before various courts and agencies with respect to rates, taxes and
other   matters.   In  addition,   the  company  is   conducting   environmental
investigations and remedial  activities at former  manufactured gas plant sites.
Although  unable to  determine  the outcome of these  contingencies,  management
believes that  appropriate  accruals have been  recorded.  Final  disposition of
these  matters  is not  expected  to have a  material  impact  on the  company's
financial condition or results of operations. For further information, see Other
beginning on page 25, which is incorporated herein by reference.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

For disclosures about market risk, see Market Risk above,  which is incorporated
herein by reference.

<PAGE>



Nicor Gas Company                                                      Page 12

Item 8.     Financial Statements and Supplementary Data


                                                                          Page

Report of Independent Public Accountants................................... 13

Financial Statements:

   Consolidated Statements of Operations................................... 14

   Consolidated Statements of Cash Flows................................... 15

   Consolidated Balance Sheets............................................. 16

   Consolidated Statements of Capitalization............................... 17

   Consolidated Statements of Retained Earnings............................ 18

   Notes to the Consolidated Financial Statements.......................... 19


<PAGE>


Nicor Gas Company                                                      Page 13

Report of Independent Public Accountants


To Northern Illinois Gas Company (Doing business as Nicor Gas Company):

We have audited the accompanying  consolidated  balance sheets and statements of
capitalization of Nicor Gas Company (an Illinois  corporation and a wholly owned
subsidiary  of Nicor Inc.) and  subsidiary  company as of December  31, 2000 and
1999, and the related consolidated  statements of operations,  retained earnings
and cash flows for each of the three  years in the  period  ended  December  31,
2000.  These  financial  statements  and the schedule  referred to below are the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Nicor  Gas  Company  and
subsidiary  company as of  December  31,  2000 and 1999,  and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2000, in conformity with accounting  principles  generally accepted
in the United States.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The financial statement schedule on page
28 is  presented  for  purposes of complying  with the  Securities  and Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures applied in the audits of
the  basic  financial  statements  and,  in our  opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.





ARTHUR ANDERSEN LLP
Chicago, Illinois
January 22, 2001




Nicor Gas Company                                                      Page 14


Consolidated Statements of Operations
(millions)


                                                   Year ended December 31
                                               --------------------------------
                                                 2000        1999       1998
                                               ---------   ---------  ---------

Operating revenues                             $1,883.7    $1,326.2   $1,229.0
                                               ---------   ---------  ---------

Operating expenses
   Cost of gas                                  1,277.1       756.2      681.5
   Operating and maintenance                      160.3       153.3      144.8
   Depreciation                                   128.1       123.9      120.8
   Taxes, other than income taxes                 117.5       101.1       96.4
   Other                                          148.0           -          -
   Income taxes                                    (1.0)       56.4       52.1
                                               ---------   ---------  ---------
                                                1,830.0     1,190.9    1,095.6
                                               ---------   ---------  ---------

Operating income                                   53.7       135.3      133.4
                                               ---------   ---------  ---------

Other income (expense)
   Other, net                                      20.3         (.9)       8.5
   Income taxes on other income                    (7.9)         .5       (3.2)
                                               ---------   ---------  ---------
                                                   12.4         (.4)       5.3
                                               ---------   ---------  ---------

Interest expense
   Interest on debt, net of amounts capitalized    43.3        40.4       43.4
   Other                                             .6        (1.6)       1.2
                                               ---------   ---------  ---------
                                                   43.9        38.8       44.6
                                               ---------   ---------  ---------

Net income                                         22.2        96.1       94.1

Dividends on preferred stock                         .4          .4         .4
                                               ---------   ---------  ---------

Earnings applicable to common stock              $ 21.8      $ 95.7     $ 93.7
                                               =========   =========  =========


The accompanying notes are an integral part of these statements.










Nicor Gas Company                                                      Page 15


Consolidated Statements of Cash Flows
(millions)


                                                   Year ended December 31
                                               --------------------------------
                                                 2000        1999       1998
                                               ---------   ---------  ---------
Operating activities
   Net income                                    $ 22.2      $ 96.1     $ 94.1
   Adjustments to reconcile net income to
     net cash flow provided from operating
     activities:
       Depreciation                               128.1       123.9      120.8
       Deferred income tax expense (benefit)      (42.6)          -        8.3
       Changes in assets and liabilities:
         Receivables, less allowances            (254.3)      (80.4)      85.3
         Gas in storage                             2.8        83.4       22.3
         Deferred/accrued gas costs               (33.3)      (45.8)       4.8
         Accounts payable                         303.6          .2       28.9
         Postretirement benefits                  (26.6)      (16.5)     (19.2)
         Accrued mercury-related costs             78.0           -          -
         Other                                     25.0        10.0      (30.4)
                                               ---------   ---------  ---------
   Net cash flow provided from operating
     activities                                   202.9       170.9      314.9
                                               ---------   ---------  ---------

Investing activities
   Capital expenditures                          (124.6)     (127.4)    (112.6)
   Other                                            5.3         1.7        8.4
                                               ---------   ---------  ---------
   Net cash flow used for investing activities   (119.3)     (125.7)    (104.2)
                                               ---------   ---------  ---------

Financing activities
   Net proceeds from issuing long-term debt        49.9        99.5       98.9
   Disbursements to retire long-term debt         (50.0)     (155.7)    (129.5)
   Short-term borrowings (repayments), net         52.8        88.3      (40.1)
   Dividends paid                                (106.4)      (98.1)    (107.9)
   Other                                            (.5)        (.4)       (.6)
                                               ---------   ---------  ---------
   Net cash flow used for financing activities    (54.2)      (66.4)    (179.2)
                                               ---------   ---------  ---------

Net increase (decrease) in cash and cash
   equivalents                                     29.4       (21.2)      31.5

Cash and cash equivalents, beginning of year       10.3        31.5          -
                                               ---------   ---------  ---------

Cash and cash equivalents, end of year           $ 39.7      $ 10.3     $ 31.5
                                               =========   =========  =========

Supplemental information
   Income taxes paid, net of refunds             $ 43.4      $ 57.3     $ 50.7
   Interest paid, net of amounts capitalized       44.0        40.0       61.2


The accompanying notes are an integral part of these statements.



Nicor Gas Company                                                    Page 16


Consolidated Balance Sheets
(millions)

                                                             December 31
                                                         --------------------
                                                           2000       1999
                                                         ---------  ---------
                         Assets

Gas distribution plant, at cost                          $3,292.8   $3,200.3
   Less accumulated depreciation                          1,692.0    1,589.6
                                                         ---------  ---------
                                                          1,600.8    1,610.7
                                                         ---------  ---------

Current assets
   Cash and cash equivalents                                 39.7       10.3
   Receivables, less allowances of $13.4 and $6.1,
     respectively                                           570.8      316.5
   Gas in storage, at last-in, first-out cost                19.3       22.1
   Deferred gas costs                                        49.2       15.9
   Deferred income taxes                                     60.8       14.6
   Other                                                      9.7        8.4
                                                         ---------  ---------
                                                            749.5      387.8
                                                         ---------  ---------
Other assets                                                170.3      138.7
                                                         ---------  ---------

                                                         $2,520.6   $2,137.2
                                                         =========  =========

             Capitalization and liabilities

Capitalization
   Long-term debt                                        $  347.1   $  421.7
   Preferred stock                                            8.0        8.5
   Common equity                                            586.1      675.3
                                                         ---------  ---------
                                                            941.2    1,105.5
                                                         ---------  ---------

Current liabilities
   Long-term obligations due within one year                125.5       50.5
   Short-term borrowings-Affiliates                          40.6       26.1
                        -Other                              315.0      276.7
   Accounts payable                                         546.7      243.1
   Accrued mercury-related costs                             78.0          -
   Other                                                     75.0       49.1
                                                         ---------  ---------
                                                          1,180.8      645.5
                                                         ---------  ---------

Deferred credits and other liabilities
   Deferred income taxes                                    210.2      202.3
   Regulatory income tax liability                           70.4       74.8
   Unamortized investment tax credits                        41.1       42.7
   Other                                                     76.9       66.4
                                                         ---------  ---------
                                                            398.6      386.2
                                                         ---------  ---------

                                                         $2,520.6   $2,137.2
                                                         =========  =========


The accompanying notes are an integral part of these statements.





Nicor Gas Company                                                      Page 17

Consolidated Statements of Capitalization
(millions, except share data)


                                                     December 31
                                        ---------------------------------------
                                               2000                 1999
                                        ------------------  -------------------

First Mortgage Bonds
   Maturity Interest rate
   -------  ---------
     2001     6.45%                      $ 75.0               $ 75.0
     2002     6.75                         50.0                 50.0
     2003     5.75                         50.0                 50.0
     2009     5.37                         50.0                 50.0
     2021     8.875                        50.0                 50.0
     2025     7.26                         50.0                 50.0
     2027     7.375                        50.0                 50.0
     2028     6.58                         50.0                 50.0
                                        --------            ---------
                                          425.0                425.0
   Less:  Amount due within one year       75.0                    -
          Unamortized debt discount,
            net of premium                  2.9                  3.3
                                        --------            ---------
                                          347.1    36.9 %      421.7    38.2 %
                                        --------            ---------

Other long-term debt
   Notes payable due 2000, 5.065%             -                 50.0
   Notes payable due 2001, at variable
     interest rate                         50.0                    -
   Less:  Amount due within one year       50.0                 50.0
                                        --------            ---------
                                              -       -            -       -
                                        --------            ---------

Preferred stock, cumulative, $100 par
 value, 800,000 shares authorized
     Redeemable preferred stock, 4.48%
       and 5.00% series, 71,000 shares
       outstanding in 2000 and 76,000
       shares outstanding in 1999           7.1                  7.6
     Less:  Amount due within one year       .5                   .5
                                        --------            ---------
                                            6.6      .7          7.1      .6
                                        --------            ---------

     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
     conversion and 15,232,414 shares
     outstanding                           76.1                 76.1
   Paid-in capital                        108.0                108.0
   Retained earnings                      402.0                491.2
                                        --------            ---------
                                          586.1    62.3        675.3    61.1
                                        --------   ----     ---------   ----
                                        $ 941.2   100.0 %   $ 1,105.5  100.0 %
                                        ========  ========  ========= =========


The accompanying notes are an integral part of these statements.


<PAGE>




Nicor Gas Company                                                      Page 18


Consolidated Statements of Retained Earnings
(millions)


                                                   Year ended December 31
                                               --------------------------------
                                                 2000        1999       1998
                                               ---------   ---------  ---------

Balance at beginning of year                    $ 491.2     $ 495.1    $ 497.4

Net income                                         22.2        96.1       94.1
Dividends declared on common stock               (111.0)      (99.6)     (96.0)
Dividends declared on preferred stock               (.4)        (.4)       (.4)
                                               ---------   ---------  ---------

Balance at end of year                          $ 402.0     $ 491.2    $ 495.1
                                               =========   =========  =========


The accompanying notes are an integral part of these statements.





Nicor Gas Company                                                      Page 19

Notes to the Consolidated Financial Statements

Nicor Gas is one of the nation's  largest  distributors of natural gas,  serving
nearly 2 million  customers in a service  territory that encompasses most of the
northern third of Illinois, excluding the city of Chicago.

ACCOUNTING POLICIES

General.  Nicor Gas is a wholly owned  subsidiary of Nicor Inc.  Nicor Gas and
its affiliates reimburse each other for transactions between the companies.

Consolidation.  The consolidated  financial statements include the accounts of
Nicor  Gas and its  subsidiary.  All  significant  intercompany  balances  and
transactions have been eliminated.

Use  of  estimates.   The  preparation  of  the  financial  statements  requires
management to make estimates that affect reported amounts.  Actual results could
differ from those estimates.

Reclassifications.  Certain  reclassifications  have been made to conform  the
prior years' financial statements to the current year's presentation.

Regulation.  Nicor Gas is regulated by the Illinois  Commerce  Commission  (ICC)
which establishes the rules and regulations governing utility rates and services
in  Illinois.  The company  applies  accounting  standards  that  recognize  the
economic effects of rate regulation and,  accordingly,  has recorded  regulatory
assets  and  liabilities.  The  company  had net  regulatory  assets of about $4
million at December 31, 2000 and net regulatory liabilities of about $40 million
at December 31, 1999.

Operating  revenues and gas costs.  Operating  revenues are recorded when gas is
delivered to  customers.  Revenue  taxes billed to customers  are  classified as
operating revenues and related taxes due as operating expenses.  The cost of gas
purchased,  adjusted for inventory activity,  is reflected in volumetric charges
to customers  through  operation of the  Purchased  Gas  Adjustment  (PGA).  Any
difference between PGA revenues and recoverable gas costs is deferred or accrued
with a  corresponding  decrease or increase to cost of gas.  This  difference is
amortized as it is collected from or refunded to customers through the PGA.

Depreciation.  Property,  plant and equipment are  depreciated  over estimated
useful lives on a  straight-line  basis.  The composite  depreciation  rate is
4.1 percent.

Income  taxes.  Deferred  income taxes are provided  for  temporary  differences
between the tax basis of an asset or liability  and its  reported  amount in the
financial statements.  Nicor Gas amortizes prior deferred income tax credits and
excess  deferred  income  taxes  to  income  over the  lives  of the  applicable
properties.

Cash and cash equivalents.  The company considers  investments  purchased with a
maturity of three months or less to be cash equivalents.

Receivable credit risk. The company has a diversified  customer base and prudent
credit policies which mitigate risk.


<PAGE>


Nicor Gas Company                                                      Page 20

Notes to the Consolidated Financial Statements (continued)

DERIVATIVE INSTRUMENTS

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting  for  Derivative  Instruments  and  Hedging  Activities.  The company
adopted the statement,  as amended,  on January 1, 2001. The initial application
of the  statement had no impact on the  company's  results of operations  and no
material impact on its financial condition.

Derivative  instruments  are primarily  utilized in the natural gas  procurement
function.  Realized  gains or losses are passed  directly  through to  customers
through operation of the company's PGA. As such,  beginning in 2001,  changes in
the fair value of these derivative  instruments are being deferred or accrued as
a regulatory asset or liability until realized.

The company  also holds  weather  derivative  instruments  to limit the earnings
impact of weather  fluctuations.  For 2001, these instruments hedge the earnings
impact  related to weather  warmer  than 5,700  degree days or colder than 6,100
degree  days.  These  weather  derivative  instruments  are  recorded  using the
intrinsic value method.

GAS IN STORAGE

Based on the  average  cost of gas  purchased  in  December  2000 and 1999,  the
estimated  replacement cost of inventory at December 31, 2000 and 1999, exceeded
the last-in, first-out cost by $491.7 million and $172.4 million, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The recorded amount of short-term borrowings  approximates fair value because of
the short maturity of the  instruments.  Based on quoted market  interest rates,
the recorded amount of long-term debt outstanding, including current maturities,
also approximates fair value.

SHORT- AND LONG-TERM DEBT

The company maintains short-term lines of credit with major domestic and foreign
banks.  These lines, which serve as backup for the issuance of commercial paper,
totaled $315 million at December 31, 2000.  Commitment fees of up to .07 percent
per annum were paid on these lines.  All lines of credit have variable  interest
rate options tied to short-term markets.

The company had $315 million and $275 million of  commercial  paper  outstanding
with a weighted average interest rate of 6.5 percent and 5.9 percent at December
31, 2000 and 1999, respectively.

Bank cash  balances  averaged  about $2 million  during  2000,  which  partially
compensated  for the cost of  maintaining  accounts and other banking  services.
Such demand balances may be withdrawn at any time.

First Mortgage Bonds are secured by liens on substantially all property.

Interest on debt was net of amounts capitalized of $.4 million,  $.1 million and
$.3 million in 2000, 1999 and 1998, respectively.


<PAGE>


Nicor Gas Company                                                      Page 21

Notes to the Consolidated Financial Statements (continued)

INCOME TAXES

The components of income tax expense (benefit) are presented below:

(millions)                                   2000       1999       1998
                                           ---------  --------  ----------
Current
    Federal                                $   44.8   $  47.7   $   40.3
    State                                       6.2       9.7        8.8
                                           ---------  ---------  ---------
                                               51.0      57.4       49.1
                                           ---------  ---------  ---------
Deferred
    Federal                                   (37.7)      (.4)       6.5
    State                                      (4.9)       .4        1.8
                                           ---------  ---------  ---------
                                              (42.6)        -        8.3
                                           ---------  ---------  ---------

Amortization of investment tax credits, net    (1.5)     (1.5)      (2.1)
                                           ---------  ---------  ---------

Income tax expense, net                    $    6.9   $  55.9    $  55.3
                                           =========  =========  =========

The temporary  differences  which gave rise to the net deferred tax liability at
December 31, 2000 and 1999, are as follows:

(millions)                                             2000       1999
                                                      --------  ---------
Deferred tax liabilities
    Property, plant and equipment                     $ 215.1   $  221.3
    Employee benefits                                    24.1       15.2
    Other                                                12.5       11.8
                                                      --------   --------
                                                        251.7      248.3
                                                      --------   --------
Deferred tax assets
    Unamortized investment tax credits                   26.6       27.8
    Regulatory income tax liability                      17.4       18.6
    Accrued mercury-related costs                        30.9          -
    Other                                                27.4       14.2
                                                      --------   --------
                                                        102.3       60.6
                                                      --------   --------
Net deferred tax liability                            $ 149.4   $  187.7
                                                      ========   ========

The effective combined federal and state income tax rate was 23.6 percent,  36.8
percent and 37 percent in 2000, 1999 and 1998, respectively. Differences between
federal income taxes  computed using the statutory rate and reported  income tax
expense are shown below:

(millions)                                   2000       1999       1998
                                           ---------- --------  ---------
Federal income taxes using statutory rate  $   10.1   $  53.2   $   52.3
State income taxes, net                         1.5       7.3        7.2
Tax credits                                    (2.4)     (2.4)      (2.4)
Excess deferred tax adjustment                 (2.4)     (2.1)      (1.8)
Other, net                                       .1       (.1)         -
                                           ---------- --------  ----------
Income tax expense, net                    $    6.9   $  55.9   $   55.3
                                           ========== ========  ==========



<PAGE>


Nicor Gas Company                                                      Page 22

Notes to the Consolidated Financial Statements (continued)

POSTRETIREMENT BENEFITS

Nicor Gas maintains  noncontributory  defined  benefit  pension  plans  covering
substantially  all employees  hired prior to January 1, 1998 and provides health
care  and  life  insurance  benefits  to  eligible  retired  employees.  Certain
employees'  postretirement  health care  benefits  have been capped to a defined
annual per capita medical cost. The following table sets forth the components of
the changes in the plans'  benefit  obligations  and assets,  and reconciles the
funded  status to the prepaid  (accrued)  benefit cost recorded in the financial
statements at December 31:


                                Pension benefits         Other benefits
                              ----------------------  ---------------------
(millions)                       2000       1999        2000       1999
                               ---------- ----------  ---------- ----------
Change in benefit obligation
Benefit obligation at
  beginning of period         $   214.8   $  242.3    $  116.1   $  118.3
Service cost                        5.4        6.4         1.2        1.3
Interest cost                      15.3       15.7         8.4        7.7
Actuarial loss (gain)               7.3      (25.8)       (5.3)      (1.0)
Participant contributions             -          -          .7         .6
Plan amendments                     4.2          -           -          -
Benefits paid                     (29.7)     (23.8)       (8.5)     (10.8)
                               ---------- ----------  ---------- ----------
Benefit obligation at end of
  period                          217.3      214.8       112.6      116.1
                               ---------- ----------  ---------- ----------

Change in plan assets
Fair value of plan assets at
  beginning of period             445.3      401.7        19.4       16.6
Actual return on plan assets       72.1       67.1         3.2        2.8
Employer contributions              1.5         .3         7.8       10.2
Participant contributions             -          -          .7         .6
Benefits paid                     (29.7)     (23.8)       (8.5)     (10.8)
                               ----------- ----------  ---------- ----------
Fair value of plan assets at
  end of period                   489.2      445.3        22.6       19.4
                               ----------- ----------  ---------- ----------

Funded status                     271.9      230.5       (90.0)     (96.7)
Unrecognized net actuarial
  (gain) loss                    (134.1)    (114.4)       (4.7)       1.3
Unrecognized transition
  (asset) obligation               (4.8)      (8.6)       37.1       40.2
Unrecognized prior service cost     6.8        3.0           -          -
Other                                .1         .1         1.2        1.5
                               ---------- ----------  ---------- ----------
Prepaid (accrued) benefit cost $  139.9   $  110.6    $  (56.4)  $  (53.7)
                               ========== ==========  ========== ==========

Assumptions used in the computations included the following:

                                 Pension benefits           Other benefits
                              -----------------------  ----------------------
                                 2000        1999         2000       1999
                              ----------- -----------  ----------  ----------
Discount rate                     7.75%       7.50%       7.75%       7.50%
Expected return on plan assets    9.25        9.00        9.25        9.00
Rate of compensation increase     4.00        4.00        4.00        4.00



<PAGE>


Nicor Gas Company                                                      Page 23

Notes to the Consolidated Financial Statements (continued)

For  measurement  purposes,  the health  care cost  trend rate for  pre-Medicare
benefits was assumed to be 6.5 percent for 2001,  declining to 5 percent by 2004
and  remaining  at that level  thereafter.  The health  care cost trend rate for
post-Medicare benefits was assumed to be 5 percent.

Net periodic benefit cost (credit) included the following components:

                                   Pension benefits         Other benefits
                               -----------------------  ---------------------
(millions)                       2000    1999    1998    2000    1999    1998
                               ------- ------- ------- -------  ------ -------
Service cost                    $ 5.4   $ 6.4   $ 6.7   $ 1.2   $ 1.3   $ 1.3
Interest cost                    15.3    15.7    16.0     8.4     7.7     8.3
Expected return on plan
  assets                        (39.2)  (35.3)  (35.1)   (1.8)   (1.6)   (1.4)
Recognized net actuarial
  gain                           (5.8)   (1.8)   (4.7)      -       -       -
Amortization of unrecognized
  transition (asset) obligation  (3.8)   (3.8)   (3.8)    3.1     3.1     3.1
Amortization of prior
  service cost                     .4      .3      .4       -       -       -
                               ------- ------- ------- -------  ------ -------
Net periodic benefit cost
(credit)                       $(27.7) $(18.5) $(20.5) $ 10.9  $ 10.5  $ 11.3
                               ======= ======= ======= ======= ======= =======

Assumed  health  care  cost  trend  rates can have a  significant  effect on the
amounts reported for the health care plans. A one-percentage-point change in the
assumed health care cost trend rates would have the following effects:

                                                          One-percent
                                                      ---------------------
(millions)                                            Increase  Decrease
                                                      --------  ---------
Effect on total of service and interest cost
  components                                          $   1.1   $    (.9)
Effect on benefit obligation                             11.3       (9.5)

The company also sponsors defined contribution plans covering  substantially all
employees.  These plans provide for employer matching  contributions.  The total
cost of these plans was $3.9  million,  $3.7  million and $3.4  million in 2000,
1999 and 1998, respectively.

RELATED PARTY TRANSACTIONS`

At December 31, 2000,  Nicor Gas had $40 million of short-term notes payable due
to an affilliated  financing company,  Tropical Bahamas, LTD. Nicor Gas recorded
$1 million of interest  expense  related to short-term  borrowings from Tropical
Bahamas,  LTD in 2000.  The Company  also had $.6  million and $26.1  million of
short-term  notes  payable  due to Nicor Inc.  at  December  31,  2000 and 1999,
respectively.

Nicor  Gas  enters  into  transactions  to buy  and  sell  natural  gas  with an
affiliated wholesale natural gas marketing company, Nicor Enerchange,  LLC. Such
transactions  are in the  ordinary  course  of  business  at  negotiated  prices
comparable  to those  available on the open market.  Nicor Gas  purchased  $14.9
million of  natural  gas from and sold  $24.2  million  of natural  gas to Nicor
Enerchange, LLC in 2000.

REGULATORY MATTERS

Performance-based  rate plan. On January 1, 2000,  Nicor Gas'  performance-based
rate (PBR) plan for  natural  gas costs  went into  effect.  Under the PBR plan,
Nicor Gas' total gas supply costs are compared to a market-sensitive  benchmark.
Savings and losses  relative to the benchmark are shared equally with customers.
Nicor Gas  recorded  $12.2  million of PBR plan results as other income in 2000.
After 2001, the plan will be subject to ICC review.


Nicor Gas Company                                                      Page 24

Notes to the Consolidated Financial Statements (continued)

Customer choice of commodity supplier.  All industrial and commercial  customers
and about 14 percent of residential  customers are able to acquire their natural
gas  supplies  from  third-party  marketers.  The choice of another  natural gas
commodity  supplier has no impact on Nicor Gas' operating income because natural
gas costs are passed  directly  through to customers  without a markup under the
PGA.

Nicor Gas continues to deliver the natural gas, maintain its distribution system
and respond to  emergencies.  The  company's  August 2000 filing with the ICC to
permanently expand its customer choice program to include all of its residential
customers is currently in the public  hearing  process,  which may take up to 11
months.

CONTINGENCIES

Mercury  program.  Nicor Gas has  incurred,  and  expects to  continue to incur,
significant  costs related to its  historical use of mercury in various kinds of
company equipment.

Prior to 1961,  gas  regulators  containing  small  quantities  of mercury  were
installed in homes. These gas regulators reduce the pressure of natural gas flow
from the  service  line to the inside of the home.  During the third  quarter of
2000, the company learned that in certain  instances some mercury was spilled or
left in residences.

As a result,  in September  2000,  Nicor Gas was named as a defendant in a civil
lawsuit brought by the Illinois  Attorney  General and the State's  Attorneys of
Cook,  DuPage and Will  Counties  seeking,  among  other  things,  to compel the
company  to  inspect  and clean up all homes and other  sites that may have been
affected by mercury from  company  equipment.  The Circuit  Court of Cook County
hearing  this action has entered two agreed  preliminary  injunctions  requiring
Nicor Gas, among other things, to conduct  inspections and, where necessary,  to
clean up mercury,  to pay for relocating  residents  until cleanup is completed,
and to pay for medical  screening of  potentially  affected  persons.  It is not
possible to determine the likelihood  that the  plaintiffs  will seek and obtain
fines or penalties.

Nicor Gas is also the  subject  of an  Administrative  Order,  and an  amendment
thereto,  issued  during  the third  quarter  of 2000 by the U.S.  Environmental
Protection   Agency  (EPA)   pursuant  to  Section  106  of  the   Comprehensive
Environmental Response, Compensation and Liabilities Act. The order requires the
company,  among other  things,  to develop and  implement  work plans to address
mercury  spills at recycling  centers  where  mercury  regulators  may have been
taken,  at  company  facilities  where  regulators  and  mercury  may have  been
temporarily stored and at  commercial/industrial  sites where mercury-containing
equipment may have been used in metering facilities.

Pursuant to the  injunctions  and the EPA  Administrative  Order,  Nicor Gas has
completed  the work  described  above for all  affected  recycling  centers  and
commercial/industrial  sites,  and  cleaning is underway at company  facilities.
Potentially affected homes are being inspected using mercury vapor analyzers. By
December 31, 2000, Nicor Gas had called on every such home, although it has been
unable to gain access to some homes.  Approximately  1,100 homes have been found
to have traces of mercury requiring cleanup.

As of December  31, 2000,  Nicor Gas accrued $78 million as a current  liability
for estimated obligations related to the previously described work and for legal
defense costs.  Including amounts already incurred,  $148 million was charged to
the company's income statement as other operating expense in the third



Nicor Gas Company                                                      Page 25

Notes to the Consolidated Financial Statements (continued)

quarter of 2000.  The accrual  represents  management's  best estimate of future
costs based on an  evaluation  of currently  available  information,  and actual
costs may vary from this  estimate.  The company  will  continue to reassess its
estimated  obligation and will record any necessary  adjustment,  which could be
material to operating results in the period recorded.

In addition to the matters described above, Nicor Gas has been named a defendant
in several private lawsuits, all in the Circuit Court of Cook County, claiming a
variety of unquantified damages (including bodily injury,  property and punitive
damages) allegedly caused by mercury-containing  regulators. One of the lawsuits
involves five previous class actions that have been consolidated before a single
judge.  At this early stage in the  litigation,  it is not  possible to estimate
what liability, if any, may result to the company from these lawsuits.  While no
amount has been recorded for this potential liability, a loss contingency for an
unfavorable outcome of these lawsuits will be accrued if it becomes probable and
can be  reasonably  estimated.  Any such accrual  could be material to operating
results in the period in which it is recorded.

The company has certain insurance policies,  has notified its insurers, and will
vigorously  pursue recovery of  mercury-related  costs pursuant to its insurance
coverage.  In January 2001,  the company filed suit in the Circuit Court of Cook
County  against  certain of its insurance  carriers for a  declaration  that the
company's  mercury-related  losses are  covered,  and for the  recovery of those
losses. In addition, some of the removals of mercury-containing  regulators were
conducted by independent  contractors working for the company. In November 2000,
the  company   filed  suit  in  the  Circuit   Court  of  Cook  County   seeking
indemnification and contribution from these contractors. At this early stage, it
is not possible to estimate  the  likelihood  that costs will be recovered  from
insurance  carriers or other third parties  related to the mercury  spills,  and
therefore Nicor Gas has not recorded any such amounts as assets in its financial
statements.

Nicor Gas will not seek  recovery  of the costs  associated  with these  mercury
spills from its  customers,  and any proceeds from  insurance  carriers or third
parties will be retained by the company to offset costs incurred.

It is  management's  opinion,  taking  into  account the above  information  and
uncertainties,   including  currently  available   information   concerning  the
company's  existing and  potential  obligations,  insurance  coverage,  possible
recoveries  from other third parties and  available  financial  resources,  that
costs associated with the mercury spills will not have a material adverse effect
on the liquidity or financial position of the company.

Other. The company is involved in legal or administrative  proceedings  before
various courts and agencies with respect to rates, taxes and other matters.

Current   environmental   laws  may  require  the  cleanup  of  certain   former
manufactured  gas plant sites.  To date,  Nicor Gas has identified  more than 40
properties for which it may, in whole or in part, be  responsible.  The majority
of  these  properties  are  not  presently  owned  by the  company.  Information
regarding preliminary site reviews has been presented to the Illinois EPA, which
oversees the  company's  investigations  and  remedial  actions.  More  detailed
investigations  and  remedial  activities  have  either been  completed,  are in
progress or are being  planned at many of these sites.  The results of continued
testing and analysis should determine to what extent  additional  remediation is
necessary and may provide a basis for  estimating  any  additional  future costs
which could be significant.  In accordance with ICC  authorization,  the company
has been recovering these costs from its customers.

In  December  1995,  Nicor Gas filed suit in the  Circuit  Court of Cook  County
against certain  insurance  carriers seeking  recovery of environmental  cleanup
costs of certain former manufactured gas plant sites.

Nicor Gas Company                                                      Page 26

Notes to the Consolidated Financial Statements (concluded)

Nicor Gas has  reached  a  settlement  with one of the  insurance  carriers.  In
February  2000,  the court  dismissed  the  company's  case on summary  judgment
motions  by  certain  defendants.  The  company  filed an appeal in March  2000.
Management  cannot  predict  the outcome of the  lawsuit  against the  remaining
insurance carriers. Any recoveries will be refunded to the company's customers.

Although  unable  to  determine  the  outcome  of  these  other   contingencies,
management  believes  that  appropriate  accruals  have  been  recorded.   Final
disposition of these other matters is not expected to have a material  impact on
the company's financial condition or results of operations.

QUARTERLY RESULTS (UNAUDITED)

Quarterly  results  fluctuate  due  mainly  to the  seasonal  nature  of the gas
distribution business.

                                              Quarter ended
                                -------------------------------------------
(millions)                       Mar. 31    June 30   Sept. 30    Dec. 31
                                ---------- ---------- ---------- ----------
2000
    Operating revenues          $  572.4   $  262.1   $  197.6   $  851.6
    Operating income (loss)         44.2       32.5      (62.4)      39.4
    Net income (loss)               34.1       24.7      (67.0)      30.4

1999
    Operating revenues          $  512.6   $  203.4   $  161.8   $  448.3
    Operating income                42.9       28.6       25.8       38.0
    Net income                      31.9       20.5       16.7       27.0




<PAGE>


Nicor Gas Company                                                      Page 27

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None.


PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  1)  Financial Statements:

         See Item 8,  Financial  Statements and  Supplementary  Data, on page 12
         filed herewith, for a list of financial statements.

     2)  Financial Statement Schedules:

         Schedule
          Number                                                         Page

                    Report of Independent Public Accountants              13
             II     Valuation and Qualifying Accounts                     28

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

     3)  Exhibits Filed:

         See Exhibit Index beginning on page 31 filed herewith.

(b)      The  company  did not file a report  on Form 8-K  during  the  fourth
         quarter of 2000.



<PAGE>






Nicor Gas Company                                                      Page 28


Schedule II

VALUATION AND QUALIFYING ACCOUNTS
(millions)

                                        Additions
                                   --------------------
                       Balance at  Charged to  Charged to              Balance
                       beginning   costs and    other        (a)       at end
   Description         of period   expenses    accounts    Deductions  of period
-------------------    --------    --------    --------    --------    --------

2000
-------

 Allowance
   for uncollectible
   accounts receivable  $ 6.1      $ 16.6         $ -       $ 9.3      $ 13.4


1999
-------

 Allowance
   for uncollectible
   accounts receivable  $ 6.1      $ 11.8         $ -      $ 11.8       $ 6.1


1998
-------

 Allowance
   for uncollectible
   accounts receivable  $ 7.6      $ 12.6         $ -      $ 14.1       $ 6.1


(a)  Accounts receivable written off, net of recoveries.




Nicor Gas Company                                                      Page 29

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                           Nicor Gas Company

Date  March 12, 2001                       By   KATHLEEN L. HALLORAN
                                                Kathleen L. Halloran
                                                Executive Vice President Finance
                                                and Administration

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 March 12, 2001.

             Signature                                    Title
-------------------------------------      ------------------------------------

          THOMAS L. FISHER
-------------------------------------
          Thomas L. Fisher                 Chairman, President and
   (Principal Executive Officer)           Chief Executive Officer

        KATHLEEN L. HALLORAN
-------------------------------------
        Kathleen L. Halloran               Executive Vice President Finance
(Principal Financial and Accounting        and Administration
              Officer)




ROBERT M. BEAVERS, JR.*                    Director

BRUCE P. BICKNER*                          Director

THOMAS A. DONAHOE*                         Director

JOHN E. JONES*                             Director

DENNIS J. KELLER*                          Director

WILLIAM A. OSBORN*                         Director

SIDNEY R. PETERSEN*                        Director

JOHN RAU*                                  Director

PATRICIA A. WIER*                          Director

                                         * By       JEFFREY L. METZ     .
                                                    Jeffrey L. Metz
                                                    (Attorney-in-fact)





Nicor Gas Company                                                      Page 30

Supplemental Information

Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:

No annual report or proxy material has been sent to security holders as Nicor
Gas is a wholly owned subsidiary of Nicor Inc.


<PAGE>


Nicor Gas Company                                                      Page 31

Exhibit Index

Exhibit
Number                              Description of Document

  1.01      Underwriting agreement, dated January 25, 2001, between the
            company and ABN AMRO Incorporated.

  3.01    * Articles of Incorporation of the company. (File  No.
            1-7296, Form 10-K for 1980, Exhibit 3-01.)

  3.02    * Amendment to Articles of Incorporation of the company.
            (File No. 1-7296, Form 10-Q for June 1994, Exhibit 3.01.)

  3.03    * By-Laws of the company as amended by the company's Board of
            Directors on May 3, 1995. (File No. 1-7296, Form 10-Q for March
            1995, Exhibit 3(ii).01.)

  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 June 1, 1963, of the company to
            Continental Illinois National Bank and Trust Company of Chicago,
            Trustee, under Indenture dated as of January 1, 1954.
            (File No. 2-21490, Form S-9, Exhibit 2-8.)

  4.04    * Supplemental Indenture, dated May 1, 1966, of the company to
            Continental Illinois National Bank and Trust Company of Chicago,
            Trustee, under Indenture dated as of January 1, 1954.
            (File No. 2-25292, Form S-9, Exhibit 2-4.)

  4.05    * Supplemental Indenture, dated June 1, 1971, of the company
            to Continental Illinois National Bank and Trust Company of
            Chicago, Trustee, under Indenture dated as of January 1, 1954.
            (File No. 2-44647, Form S-7, Exhibit 2-03.)

  4.06    * Supplemental Indenture, dated April 30, 1976, between Nicor
            Inc. and Continental Illinois National Bank and Trust Company of
            Chicago, Trustee, under Indenture dated as of January 1, 1954.
            (File No. 2-56578, Form S-9, Exhibit 2-25.)

  4.07    * Supplemental Indenture, dated April 30, 1976, of  the
            company to Continental Illinois National Bank and Trust Company
            of Chicago, Trustee, under Indenture dated as of  January  1,
            1954. (File No. 2-56578, Form S-9, Exhibit 2-21.)

  4.08    * Supplemental Indenture, dated August 15, 1991, of the
            company to Continental Bank, National Association, Trustee, under
            Indenture dated as of January 1, 1954. (File No.
            1-7296, Form 8-K for August 1991, Exhibit 4-01.)

  4.09    * Supplemental Indenture, dated October 15, 1995, of the
            company to Bank of America Illinois, Trustee, under Indenture
            dated as of January 1, 1954. (File No.  1-7296,  Form 10-Q for
            September 1995, Exhibit 4.01.)


<PAGE>


Nicor Gas Company                                                      Page 32

Exhibit Index (continued)

Exhibit
Number                              Description of Document

  4.10    * Supplemental Indenture, dated May 10, 1996, of the company
            to Harris Trust and Savings Bank,  Trustee, under Indenture dated
            as of January 1, 1954. (File No. 1-7296, Form 10-Q for June
            1996, Exhibit 4.01.)

  4.11    * Supplemental Indenture, dated August 1, 1996, of the
            company to Harris Trust and Savings Bank, Trustee, under
            Indenture dated as of January 1, 1954. (File No. 1-7296,  Form
            10-Q for June 1996, Exhibit 4.02.)

  4.12    * Supplemental Indenture, dated June 1, 1997, of the company
            to Harris Trust and Savings Bank, Trustee, under Indenture dated
            as of January 1, 1954. (File No. 1-7296, Form
            10-Q for June 1997, Exhibit 4.01.)

  4.13    * Supplemental Indenture, dated October 15, 1997, of the
            company to Harris Trust  and  Savings  Bank, Trustee, under
            Indenture dated as of January 1, 1954. (File No.  1-7296,  Form
            10-Q for September 1997, Exhibit 4.01.)

  4.14    * 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.)

  4.15    * Supplemental Indenture, dated June 1, 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-Q for June 1998, Exhibit 4.01.)

  4.16    * Supplemental Indenture, dated February 1, 1999, 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 1998, Exhibit 4.19.)

  4.17      Supplemental Indenture, dated February 1, 2001, of the company to
            BNY Midwest Trust Company, Trustee, under  Indenture dated as of
            January 1, 1954.

            Other debt instruments are omitted in accordance with Item
            601(b)(4)(iii)(A) of Regulation S-K. Copies of such agreements will
            be furnished to the Commission upon request.

 12.01      Computation of Consolidated Ratio of Earnings to Fixed Charges.

 23.01      Consent of Independent Public Accountants.

 24.01      Powers of Attorney.


<PAGE>


Nicor Gas Company                                                      Page 33

Exhibit Index (concluded)

Exhibit
Number                              Description of Document

*  These  exhibits have been  previously  filed with the Securities and Exchange
   Commission  as exhibits to  registration  statements or to other filings with
   the Commission 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 such exhibit.

   Upon written  request,  the company will furnish free of charge a copy of any
   exhibit.  Requests  should be sent to  Investor  Relations  at the  corporate
   headquarters.