NORTHERN ILLINOIS GAS COMPANY

                           NOTICE OF

                    MEETING OF BONDHOLDERS

                       February 27, 1996


    Notice is hereby given that a meeting of holders of all series
of Northern Illinois Gas Company First Mortgage Bonds (the "Bonds")
will be held on February 27, 1996 at the Harris Trust and Savings
Bank, 8th Floor, 111 West Monroe Street, Chicago, Illinois at 11:00
a.m. for the purpose of voting on the adoption of certain proposed
amendments to the Indenture, dated as of January 1, 1954, under
which the Bonds were issued.  The proposed amendments, which are
described in the accompanying Proxy Statement of the Company, are
intended to increase the Company's flexibility when issuing new
series of Bonds, eliminate various obsolete provisions and
otherwise bring the Indenture into greater conformity with modern
debt indentures.


                                   NORTHERN ILLINOIS GAS COMPANY


January 26, 1996


                              IMPORTANT

        In order that there be a proper representation at the meeting, you
are urged to vote, sign, have acknowledged and mail your proxy even though
you plan to attend.  If you attend the meeting you may, if you wish, vote
personally on all matters brought before the meeting.

        Your prompt action in returning your proxy will be greatly
appreciated.  A return envelope, requiring no postage if mailed in the United
States, is enclosed for your convenience.






                 NORTHERN ILLINOIS GAS COMPANY

                     ADJORUNMENT NOTICE TO

                     MEETING OF BONDHOLDERS

                 RESCHEDULED FOR APRIL 11, 1996


    Notice is hereby given that the February 27, 1996 meeting of
holders of all series of Northern Illinois Gas Company First Mortgage
Bonds (the "Bonds") has been adjourned due to the lack of a quorum
and has been rescheduled for April 11, 1996, at the Harris Trust and
Savings Bank, 6th Floor, 111 West Monroe Street, Chicago, Illinois at
3:00 p.m., for the purpose of voting on the adoption of certain proposed
amendments to the Indenture, dated as of January 1, 1954, under
which the Bonds were issued.  The proposed amendments, which are
described in the accompanying Proxy Statement of the Company, are
intended to increase the Company's flexibility when issuing new
series of Bonds, eliminate various obsolete provisions and
otherwise bring the Indenture into greater conformity with modern
debt indentures.

     If you have any questions or need additional documents, please call
Morrow & Co., 1-800-662-5200.



                                   NORTHERN ILLINOIS GAS COMPANY


March 11, 1996


                              IMPORTANT

        In order that there be a proper representation at the meeting, you
are urged to vote, sign, have acknowledged and mail your proxy even though
you plan to attend.  If you attend the meeting you may, if you wish, vote
personally on all matters brought before the meeting.

        Your prompt action in returning your proxy will be greatly
appreciated.  A return envelope, requiring no postage if mailed in the United
States, is enclosed for your convenience.






                        PROXY STATEMENT

    This Proxy Statement is furnished by Northern Illinois Gas
Company ("NI-GAS") in connection with the solicitation of proxies
by NI-GAS for use at the meeting of holders of all series of NI-GAS
First Mortgage Bonds (the "Bonds") to be held on February 27, 1996.
The meeting has been called for the purpose of voting on the
adoption of a resolution approving certain proposed amendments to
the Indenture dated January 1, 1954  (the "Indenture") under which
the Bonds were issued.  There is currently outstanding under the
Indenture an aggregate of $500,000,000 principal amount of Bonds.
The affirmative vote of holders of not less than 66-2/3% in
principal amount of the Bonds is required for adoption of the
resolution.  Accordingly, the failure of a bondholder to vote in
favor of adoption of the proposed amendments will have the same
effect as if such bondholder had voted against their adoption.  The
holders of not less than 66-2/3% in principal amount of the Bonds
must be present in person or by proxy at the meeting in order to
constitute a quorum for the transaction of business.

    Any bondholder giving a proxy will have the right to revoke it
at any time prior to the voting thereof by giving written notice to
the Vice President and Treasurer of NI-GAS.  All Bonds represented
by valid proxies will be voted at the meeting or any adjournment
thereof in accordance with the bondholders directions.  In the
absence of specific direction to the contrary, the Bonds
represented by valid proxies will be voted FOR the adoption of a
resolution approving the proposed amendments to the Indenture.


                      PROPOSED AMENDMENTS

    The proposed amendments are set forth in the form of
Supplemental Indenture attached as Annex A to the Proxy Statement.
You are urged to review it carefully.  Where modifications of
existing Indenture provisions are proposed, the text of the
provisions are marked to show the changes from the existing
provisions.  Set forth below is a summary of all of the proposed
amendments:

    1.   Definition of Board of Directors.  The term "Board of
Directors" is redefined to include any duly authorized committee of
the Board of Directors. (Section 1.09)

    2.   Definition of Authorized Newspaper.  The term "authorized
newspaper" is redefined to eliminate the requirement that the
newspaper in which notices to bondholders are required to be
included be published in the city in which it is circulated.
(Section 1.31)

    3.   Principal Office of Trustee.  The requirement that the
Trustee under the Indenture have its principal place of business
located in the City of Chicago is eliminated.  (Sections 1.32,
17.05 and 17.06)

    4.   Delegation of Authority to Issue New Bonds to Officers.
The Board of Directors is authorized to delegate to one or more
officers of NI-GAS the authority to issue additional series of
bonds under the Indenture and to establish the terms of such
additional series.  (Sections 4.17 and 6.04)

    5.   Release of Property.  The requirement that the Board of
Directors authorize the release of property mortgaged under the
Indenture is eliminated with respect to property having a fair
value of not more than $300,000.  The remaining provisions of the
Indenture governing property releases, including the requirement
that cash in an amount equal to the fair value of the property to
be released be deposited with the Trustee (subject to reduction in
the manner provided by the Indenture), are not affected.  (Section
10.03)

    6.   Publication of Notice.  The requirement that certain
notices to bondholders be published in an authorized newspaper in
the cities of Chicago and New York is eliminated in those
circumstances where all outstanding bonds are registered bonds.
(Sections 17.06, 17.07 and 19.08)

    7.   Action by Bondholders.  A provision enabling bondholders
to take action under the Indenture, including the approval of
amendments to the Indenture where bondholder approval is required,
without the necessity of calling a formal meeting of bondholders is
included.  (Section 19.11)

    8.   Modifications of Indenture.  The provisions of the
Indenture governing amendments to the Indenture are modified to
permit the Company and the Trustee to make changes in the Indenture
if such changes do not, in the opinion of the Board of Directors,
adversely affect the rights of bondholders.  (Section 20.01)

    Upon adoption of a resolution approving the proposed
amendments, the Company and the Trustee will execute a supplemental
indenture to the Indenture effecting the proposed amendments.

    If you have any questions, please call the following
individual at the Company.

         Gloria K. Anderson (708) 983-8676 ext. 2685


                                   NORTHERN ILLINOIS GAS COMPANY



January 26, 1996




                                PROXY

    The undersigned appoints Donald W. Lohrentz, Richard J. Lannon
or either of them, proxies to vote the entire principal amount of
NI-GAS First Mortgage Bonds registered in the name of the
undersigned at the meeting of bondholders, February 27, 1996, or at
any adjournment thereof, on all matters as set forth in the Proxy
Statement or on all other matters properly presented at the
meeting.


Proxies will be voted as directed.  In the absence of specific
direction, proxies signed and acknowledged will be voted FOR the
adoption of the proposed Indenture amendments.


Adoption of the Resolution        FOR        AGAINST      ABSTAIN
approving the proposed
amendments to the Indenture.


Please vote, date, sign, have
acknowledged and mail promptly
in the enclosed envelope.

                             SIGNATURE OF BONDHOLDER       DATE



PURSUANT TO SECTION 19.04 OF THE INDENTURE, THIS PROXY MUST BE
ACKNOWLEDGED IN ORDER TO BE VALID.  ACKNOWLEDGEMENT FORMS ARE
PROVIDED ON THE REVERSE SIDE OF THIS PROXY.





                               ACKNOWLEDGEMENT

     The signature of the bondholder on the reverse side must be acknowledged
by a notary public or other person authorized under applicable state law to
acknowledge signatures.  Please complete the appropriate acknowledgement form.

IF THE BONDHOLDER IS AN INDIVIDUAL:
State of                    )
                            )    ss.
County of                   )

     I,                          , certify that                           ,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he/she signed and delivered the instrument as his/her free and voluntary
act, for the uses and purposes therein set forth.

Dated                           , 1996


[Seal]



IF THE BONDHOLDER IS A CORPORATION:
State of                    )
                            )    ss.
County of                   )

     I,                    , certify that                           , the
                     of                         , personally known to me to
be the same person whose name is subscribed to the foregoing instrument as
such                   of said corporation, appeared before me this day in
person and acknowledged that he/she signed and delivered the instrument as
his/her free and voluntary act as such                           of said
corporation, and as the free and voluntary act of said corporation, for the
uses and purposes therein set forth.

Dated                          , 1996


[Seal]



IF THE BONDHOLDER IS A PARTNERSHIP:
State of                    )
                            )    ss.
County of                   )

     I,                          , certify that                           , a
partner of                                      ,  personally known to me to
be the same person whose name is subscribed to the foregoing instrument as
partner of said partnership, appeared before me this day in person and
acknowledged that he/she signed and delivered the instrument as his/her free
and voluntary act as partner of said partnership, and as the free and
voluntary act of said partnership, for the uses and purposes therein set
forth.

Dated                          , 1996


[Seal]



                                                         ANNEX A

                                  The tags     and      indicate
                            additions and deletions to the text.


THIS SUPPLEMENTAL INDENTURE, dated the ____ day of _________, 1996,
between NORTHERN ILLINOIS GAS COMPANY, a corporation organized
and existing under the laws of the State of Illinois
(hereinafter called the "Company"), and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation (hereinafter
called the "Trustee"), as Trustee under an Indenture dated as
of January 1, 1954, as supplemented by  Supplemental
Indentures dated, respectively, February 9, 1954, April 1,
1956, June 1, 1959, July 1, 1960, June 1, 1963, July 1, 1963,
August 1, 1964, August 1, 1965, May 1, 1966, August 1, 1966,
July 1, 1967, June 1, 1968, December 1, 1969, August 1, 1970,
June 1, 1971, July 1, 1972, July 1, 1973, April 1, 1975, April
30, 1976, April 30, 1976, July 1, 1976, August 1, 1976,
December 1, 1977, January 15, 1979, December 1, 1981, March 1,
1983, October 1, 1984, December 1, 1986, March 15, 1988, July
1, 1988, July 1, 1989, July 15, 1990, August 15, 1991, July
15, 1992, February 1, 1993, March 15, 1993, May 1, 1993, July
1, 1993, August 15, 1994 and October 15, 1995, such Indenture
dated as of January 1, 1954, as so supplemented, being
hereinafter called the "Indenture."

WITNESSETH:

     WHEREAS, the Company desires to amend the Indenture and has
requested that the Trustee join it in the execution and delivery of
this Supplemental Indenture in order to amend the Indenture as set
forth herein; and

     WHEREAS, this Supplemental Indenture is being entered into
pursuant to Section 20.01(d) of the Indenture which provides that
supplemental indentures may be entered into by the Company and the
Trustee to modify any of the provisions of the Indenture for the
purpose of relieving the Company from any of the obligations,
conditions or restrictions contained therein, subject to the
provisions of Section 19.07 of the Indenture relating to approval
of such modification by a vote of bondholders; and

     WHEREAS, all acts and things necessary to make this
Supplemental Indenture, when duly executed and delivered, a valid,
binding and legal instrument in accordance with its terms and for
the purposes herein expressed, have been done and performed, and
the execution and delivery of this Supplemental Indenture have in
all respects been duly authorized;

     NOW, THEREFORE, in consideration of the premises and of the
sum of one dollar paid by the Trustee to the Company, and for other
good and valuable considerations, the receipt of which is hereby
acknowledged, it is agreed by and between the Company and the
Trustee as follows:




                           ARTICLE ONE

                   MODIFICATIONS OF INDENTURE

     SECTION 1.  The definition of "Board of Directors" in Section
1.09 of the Indenture is hereby deleted in its entirety and
replaced by the following:

   
          The term "Board of Directors" shall mean either the Board
     of Directors of the Company or any duly authorized committee
     of the Board of Directors.
    

     SECTION 2.  The definition of "authorized newspaper" in
Section 1.31 of the Indenture is hereby deleted in its entirety and
replaced by the following:

   
          The term "authorized newspaper", when used in connection
     with the name of a particular city, shall mean a newspaper
     printed in the English language, of general circulation in
     such city and customarily published at least once in each of
     five days (except in case of legal holidays) in each calendar week.
    

     SECTION 3.  The definition of "office of the Trustee" in
Section 1.32 of the Indenture is hereby deleted in its entirety and
replaced by the following:

   
          The term "office of the Trustee" shall mean the principal
     office of the Trustee at which at any particular time its
     corporate trust business shall be administered.
    

     SECTION 4.  Article IV of the Indenture is hereby amended by
adding a new Section 4.17 to read as follows:

           Section 4.17.  All determinations and authorizations
     required or permitted by this Article IV to be made by the
     Board of Directors may be made by any duly authorized officer
     or officers of the Company if a resolution permitting such
     officer or officers to make such determinations or
     authorizations in lieu of the Board of Directors is delivered
     to the Trustee.  Any determination or authorization made by
     such officer or officers pursuant to such resolution shall be
     evidenced by a written instrument signed by such officer or
     officers and delivered to the Trustee.

     SECTION 5.  Section 6.04 of the Indenture is hereby deleted in
its entirety and replaced by the following:

          Upon application by the Company to the Trustee for the
     authentication and delivery of bonds under the provisions of
     Section 6.05, 6.06 or 6.07, the Company shall deliver to the
     Trustee the following:

                                  -2-



   
               (a)  a resolution authorizing the execution and
          issuance of and requesting the Trustee to authenticate
          and deliver bonds, specifying the principal amount and
          series thereof, and any other matters with respect
          thereto required or permitted by this Indenture or a
          resolution permitting one or more officers of the Company
          to authorize the execution and issuance of bonds together
          with a written instrument signed by such officer or
          officers requesting the Trustee to authenticate and
          deliver bonds;
    

               (b)  if an interim certificate is not filed in
          connection with the particular application for the
          authentication and delivery of bonds, an officers'
          certificate stating that to the knowledge of the signers
          the Company is not in default under any of the provisions
          of this Indenture, and that all conditions precedent
          provided for in this Indenture relating to the
          authentication and delivery of the bonds applied for have
          been complied with;

               (c)  an opinion of counsel stating, in the signer's
          opinion, (1) that the issuance of such bonds has been
          duly authorized by the necessary corporate action and by
          any and all governmental authorities the consent of which
          is required for the legal issuance of such bonds, and
          specifying any officially authenticated orders or other
          documents by which such consent is or may be evidenced,
          or that no such consent is required; (2) that, since the
          date of the last previous opinion of counsel filed with
          the Trustee pursuant to the provisions of this Article
          VI, or since the actual date of execution and delivery of
          this Indenture in the case of the first such opinion
          filed under this Article VI, none of the mortgaged
          property has become subject to any lien or encumbrance
          prior to the lien of this Indenture as security for the
          additional bonds then applied for, except (i) permitted
          liens and (ii) prior liens on property, including
          additions thereto, acquired by the Company after January
          31, 1954; and (3) if an interim certificate is not filed
          in connection with the particular application for the
          authentication and delivery of bonds, that all conditions
          precedent provided for in this Indenture relating to the
          authentication and delivery of the bonds applied for have
          been complied with;

               (d)  the officially authenticated orders or other
          documents, if any, specified in such opinion of counsel;
          and

               (e)  in case such bonds constitute the initial issue
          of bonds of a particular series, a supplemental indenture
          of the character referred to in Section 4.02.

     SECTION 6.  Section 10.03 of the Indenture is hereby deleted
in its entirety and replaced by the following:

          Unless the Company is in default under any of the
     provisions of this Indenture, the Company may, if deemed
     desirable in the conduct of its gas utility business, sell or

                                  -3-



     otherwise dispose of at any time, under and subject to the
     provisions of this Section 10.03, any part of the mortgaged
     property, and the Trustee shall from time to time release from
     the lien hereof any part of the mortgaged property so sold or
     otherwise disposed of, or contracted to be so sold or
     otherwise disposed of, upon receipt by the Trustee of the
     following:

   
               (a)  a resolution requesting such release and
          stating that such release is, in the opinion of the Board
          of Directors, desirable in the conduct of the gas utility
          business of the Company (provided that no such resolution
          need be furnished if the fair value of the property to be
          released, as stated in the engineer's certificate
          specified under (f) of this Section 10.03, is not more
          than $300,000);
    

               (b)  an officers' certificate stating:

                    (1)  that the property to be released has been
               sold or otherwise disposed of or contracted to be
               sold or otherwise disposed of, such property to be
               described in reasonable detail;

                    (2)  the amount of the consideration received
               or to be received for the property to be released
               which shall be the sum of (i) the amount of any
               cash received or to be received, (ii) the principal
               amount of any purchase money obligations received
               or to be received, (iii) the principal amount of
               any obligations assumed or to be assumed by the
               purchaser, (iv) the fair value, as stated in an
               independent appraiser's certificate, of any
               securities, other than purchase money obligations,
               received or to be received, and (v) the fair value,
               as stated in an independent engineer's certificate,
               of any property, other than securities, received or
               to be received, after deducting from such sum, at
               the election of the Company, the fair value, as
               stated in an independent engineer's certificate, of
               any property excepted from the lien of this
               Indenture and sold or otherwise disposed of or
               contracted to be sold or otherwise disposed of in
               the same transaction but not for a separate
               consideration; and

                    (3)  that to the knowledge of the signers the
               Company is not in default under any of the
               provisions of this Indenture, and that all
               conditions precedent provided for in this Indenture
               relating to such release have been complied with;

               (c)  in case the determination of the amount of the
          consideration received or to be received for the property
          to be released shall require the stating of the fair
          value of securities received or to be received, an
          independent appraiser's certificate stating, in the
          signer's opinion, the fair value, as of a date within
          sixty days of the date of such application, of such
          securities;

                                  -4-



               (d)  in case the determination of the amount of the
          consideration received or to be received for the property
          to be released shall require the stating of the fair
          value of property, other than securities, received or to
          be received, an independent engineer's certificate
          stating, in the signer's opinion, the fair value, as of
          a date within sixty days of the date of such application,
          of such property;

               (e)  in case the determination of the amount of the
          consideration received or to be received for the property
          to be released shall require the stating of the fair
          value of property excepted from the lien of this
          Indenture and sold or otherwise disposed of or contracted
          to be sold or otherwise disposed of in the same
          transaction but not for a separate consideration, an
          independent engineer's certificate stating, in the
          signer's opinion, the fair value, as of a date within
          sixty days of the date of such application, of such
          excepted property;

               (f)  an engineer's certificate stating, in the
          signer's opinion, the fair value, as of a date within
          sixty days of the date of such application, of the
          property to be released, which fair value, as stated in
          such certificate, shall not be less than the amount of
          the consideration received or to be received for the
          property to be released, and that such release will not
          impair the security under this Indenture in contravention
          of the provisions hereof;

               (g)  in case the fair value of the property to be
          released, as shown by the engineer's certificate
          specified under (f) of this Section 10.03, is 1% or more
          of the aggregate principal amount of the bonds
          outstanding at the time of such application, an
          independent engineer's certificate stating, in the
          signer's opinion, the fair value, as of a date within
          sixty days of the date of such application, of the
          property to be released, which fair value, as stated in
          such certificate, shall not be less than the amount of
          the consideration received or to be received for the
          property to be released, and that such release will not
          impair the security under this Indenture in contravention
          of the provisions hereof;

               (h)  cash in an amount, subject to reduction as
          permitted under Section 10.04, equal to the fair value of
          the property to be released as stated in the engineer's
          certificate specified under (f) of this Section 10.03, or
          as stated in the independent engineer's certificate, if
          any, filed pursuant to (g) of this Section 10.03 if such
          fair value as stated in such independent engineer's
          certificate shall be greater than such fair value as
          stated in such engineer's certificate; and

               (i)  an opinion of counsel stating, in the signer's
          opinion, that all conditions precedent provided for in
          this Indenture relating to such release have been
          complied with.

          All cash deposited with the Trustee pursuant to the
     provisions of this Section 10.03 shall be held by the Trustee
     as a part of the mortgaged property, and shall be paid

                                  -5-



     over, withdrawn, used or applied in the manner, to the extent,
     for the purposes and subject to the conditions set forth in
     Section 11.03.

     SECTION 7.  Section 17.05 of the Indenture is hereby deleted
in its entirety and replaced by the following:

   
          If the Trustee shall at any time cease to be a bank or
     trust company in good standing organized and doing business
     under the laws of the United States or of any State and having
     a combined capital and surplus of not less than $5,000,000,
     which is authorized under the laws of the jurisdiction of
     incorporation to exercise corporate trust powers and is subject
     to supervision or examination by Federal or State authority,
     then the Trustee shall resign within thirty days thereafter,
     such resignation to become effective upon the appointment of
     a successor Trustee and such successor's acceptance of such
     appointment.  If the Trustee publishes reports of condition
     at least annually, pursuant to law or to the requirements of
     the aforesaid supervising or examining authority, the combined
     capital and surplus of the Trustee shall be deemed to be its
     combined capital and surplus as set forth in its most recent
     report of condition so published.  If the Trustee shall fail
     or refuse to resign within such period, or if the Trustee has
     or shall acquire any conflicting interest of the character
     specified in Section 17.04 and shall fail or refuse either to
     eliminate such conflicting interest or to resign within the
     period in Section 17.04 provided in respect of such resignation,
     then (a) the Trustee shall, within ten days after the expiration
     of such period, transmit notice of such failure or refusal to the
     bondholders in the manner and to the extent provided under
     Section 17.10(c); and (b) any bondholder who has been the bona
     fide holder of a bond for at least six months may, subject to
     the provisions of Section 13.20, on behalf of himself and all
     others similarly situated, petition any court of competent
     jurisdiction for the removal of the Trustee and the
     appointment of a successor, if the Trustee fails, after
     written request therefor by such bondholder, to comply with
     the provisions of Section 17.04.
    

     SECTION 8.  Section 17.06 of the Indenture is hereby deleted
in its entirety and replaced by the following:

   
          The Trustee and any successor to the Trustee may resign
     and be discharged from the trust created by this Indenture by
     giving notice thereof in writing to the Company, specifying
     the date when such resignation shall take effect, and by
     giving notice thereof to the bondholders, in the manner and to
     the extent provided under Section 17.10(c), and, unless all
     bonds then outstanding are registered bonds without coupons,
     by publishing such notice at least once a week for three
     successive calendar weeks (the first such publication to be
     not less than thirty days nor more than sixty days prior to
     the effective date of such resignation) in one authorized
     newspaper in the City of Chicago, State of Illinois, and in
     one authorized newspaper in the Borough of Manhattan, The City
     of New York, State of New York.  Subject to the provisions of
     Sections 17.04 and 17.05, such resignation shall take effect
     on the date specified in such notice unless previously a

                                  -6-



     successor Trustee shall have been appointed as hereinafter
     provided, in which event such resignation shall take effect
     upon the appointment of such successor Trustee.
    

          The Trustee or any successor Trustee may be removed at
     any time by the holders of a majority in principal amount of
     the bonds at the time outstanding, upon payment to the Trustee
     so removed of all moneys then due to it hereunder, by an
     instrument or concurrent instruments in writing, signed in
     duplicate by such holders.  One copy shall be filed with the
     Company and the other with the Trustee so removed.

   
          In case at any time the Trustee or any successor Trustee
     shall resign, be dissolved or be removed or otherwise shall
     become disqualified to act or incapable of acting, or in case
     control of the Trustee or of any successor Trustee, or of its
     officers shall be taken over by any public officer or
     officers, the Company, by an instrument in writing, executed
     by order of the Board of Directors, shall appoint a successor
     Trustee.  Every successor Trustee shall be a bank or trust
     company in good standing organized and doing business under
     the laws of the United States or of any State, and (a) which
     shall be a corporation having a combined capital and surplus of
     not less than $5,000,000, (b) which shall be authorized under
     the laws of the jurisdiction of incorporation to exercise corporate
     trust powers, and (c) which shall be subject to supervision or
     examination by a Federal or State authority.  If such successor
     Trustee publishes reports of condition at least annually, pursuant
     to law or to the requirements of such supervising or examining
     authority, the combined capital and surplus of such successor
     Trustee shall be deemed to be its combined capital and surplus
     as set forth in its most recent report of condition so published.
    

          If in a proper case no appointment of a successor Trustee
     shall be made pursuant to the foregoing provisions of this
     Article XVII within six months after a vacancy shall have
     occurred in the office of Trustee, the holder of any bond or
     the retiring Trustee may apply to any court, State or Federal,
     having jurisdiction to appoint a successor Trustee, and such
     court may thereupon, after such notice, if any, as such court
     may deem proper and prescribe, appoint a successor Trustee.

     SECTION 9.  Section 17.07 of the Indenture is hereby deleted
in its entirety and replaced by the following:

   
          Any successor Trustee appointed hereunder shall execute,
     acknowledge and deliver to its predecessor Trustee and also to
     the Company, an instrument in writing accepting such
     appointment hereunder, and thereupon such successor Trustee,
     without any further act, deed or conveyance shall become fully
     vested with all the estates, authority, rights, trusts,
     powers, duties and obligations of its predecessor Trustee and
     be entitled to the immediate delivery by such predecessor
     Trustee of any part of the mortgaged property in the hands or
     under the control of such predecessor Trustee and all the
     estate, right, title and interest of such predecessor Trustee
     in the mortgaged property shall wholly cease and determine;
     but the Trustee ceasing to act shall

                                  -7-



     nevertheless, on the written request of the Company or of the
     successor Trustee, execute, acknowledge and deliver an appropriate
     instrument in writing transferring to such successor Trustee
     upon the trusts herein expressed, all the estates, properties,
     rights, powers and trusts of the predecessor Trustee so ceasing
     to act (but may retain and reserve its lien upon the mortgaged
     property for its reasonable compensation and expenses, if any thereof
     remain unpaid), and shall duly assign, transfer and deliver
     all property and cash held by such Trustee to the successor
     Trustee, it being understood that all securities, cash and
     other pledged property the custody of which is given to the
     Trustee shall always be in its custody or in that of its
     proper successor in trust.  Should any deed, conveyance or
     instrument in writing from the Company be required by the
     successor Trustee for more fully and certainly vesting in, and
     confirming to, such successor Trustee such estates, rights,
     powers and duties, any and all such deeds, conveyances and
     instruments in writing shall be executed, acknowledged and
     delivered by the Company to the successor Trustee upon the
     latter's request.  The Company shall promptly give notice of
     the appointment of any successor Trustee to the bondholders in
     the manner and to the extent provided under Section 17.10(c)
     and ,unless all bonds then outstanding are registered bonds
     without coupons, by publishing such notice at least once in
     each week for two successive calendar weeks in one authorized
     newspaper in the City of Chicago, State of Illinois, and in
     one authorized newspaper in the Borough of Manhattan, The City
     of New York, State of New York.
    

     SECTION  10.  Section 19.08 of the Indenture is hereby deleted
in its entirety and replaced by the following:

   
          A record in duplicate of the proceedings of each meeting
     of bondholders shall be prepared by the permanent Secretary of
     the meeting and shall have attached thereto the original
     reports of the inspectors of votes, and an affidavit by a
     person having knowledge of the facts setting forth a copy of
     the notice or waiver of notice of the meeting and, in the case
     of any adjournment for more than fourteen days, a copy of the
     notice or waiver of notice of adjournment thereof, and showing
     that such notice or notices, unless waived, were given as
     hereinabove provided.  Such record shall be signed and
     verified by the affidavits of the permanent Chairman and the
     permanent Secretary of the meeting, and by a duly authorized
     representative of the Trustee if such a representative shall
     have been present at the meeting, and one copy thereof shall
     be delivered to the Company and the other to the Trustee for
     preservation by the Trustee.  Any record so signed and
     verified shall be proof of the matters therein stated until
     the contrary is proved, and the meeting to which such record
     relates shall be deemed conclusively to have been duly
     convened and held, and any resolution or proceeding stated in
     such record to have been adopted or taken shall be deemed
     conclusively to have been duly adopted or taken at such
     meeting.  No resolution adopted at such meeting shall be
     binding unless the subject matter of such resolution is within
     the scope of the business stated in the notice, if any, of
     such meeting given pursuant to the provisions of Section
     19.02, and unless and until such resolution shall have been
     approved by resolution of the Board of Directors.  Such
     resolution, if adopted by the Board of Directors, shall be
     filed by the Company with the

                                  -8-



     Trustee and from and after the date of such filing such resolution
     shall be deemed conclusively to be binding upon the Company, the
     Trustee and the bondholders; provided, however, that no such
     resolution adopted at a meeting of the bondholders and no such
     resolution of approval adopted by the Board of Directors shall in any
     manner be construed so as to change or modify any of the
     rights, immunities or obligations of the Trustee without its
     written assent thereto.  Copies of any resolution, or of a
     summary thereof, adopted at such meeting of bondholders, if
     approved by resolution of the Board of Directors as above
     provided, shall be mailed by the Trustee to bondholders in the
     manner and to the extent provided under Section 17.10(c), and
     proof of such mailing by the affidavit of a person having
     knowledge of the facts shall be filed with the Trustee, and ,
     unless all of the bonds then outstanding are registered bonds
     without coupons, a copy or summary of such resolution shall be
     published by the Company in one authorized newspaper in the
     City of Chicago, State of Illinois, and in one authorized
     newspaper in the Borough of Manhattan, The City of New York,
     State of New York, at least once in each of two successive
     calendar weeks, the first publication to be not more than
     fifteen days after the approval of such resolution by the
     Board of Directors; provided, however, that the mailing of
     copies of such resolution or of such summary shall in no case
     be a condition precedent to the validity or effectiveness of
     such resolution, and neither failure to mail such copies nor
     any imperfection or defect therein shall affect the validity
     or effectiveness of such resolution.
    

     SECTION 11.  Article XIX of the Indenture is hereby amended by
adding a new Section 19.11 to read as follows:

          Section 19.11.  Any request, demand, authorization,
     direction, notice, consent, waiver or other action provided by
     this Indenture to be given or taken by bondholders (including
     any action required or permitted by the provisions of this
     Article XIX to be taken at a meeting of bondholders) may be
     given or taken without a meeting of bondholders if embodied in
     and evidenced by one or more written instruments of
     substantially similar tenor signed by such bondholders in
     person or by agent or proxy duly appointed in writing; and
     except as herein otherwise expressly provided, such action
     shall become effective when such instrument or instruments are
     delivered to the Trustee.  Subject to the provisions of
     Section 17.02, proof of the execution of any instrument by a
     bondholder or the agent or proxy for such bondholder shall be
     sufficient if made in accordance with such reasonable rules
     and regulations as may be prescribed by the Trustee or in such
     manner as shall be satisfactory to the Trustee.

     SECTION 12.  Section 20.01 of the Indenture is hereby deleted
in its entirety and replaced by the following:

     The Company, when authorized by resolution of the Board of
Directors, and the Trustee, from time to time and at any time,
subject to the conditions, limitations and provisions in this
Indenture contained, may enter into indentures supplemental hereto,

                                  -9-



in addition to the supplemental indentures required or permitted by
any of the other provisions of this Indenture, for any one or more
of the following purposes:

               (a)  to correct the description of any of the
          mortgaged property, or to convey, transfer and assign to
          the Trustee and to subject to the lien of this Indenture,
          with the same force and effect as though specifically
          described herein, additional property of the Company
          acquired by it through purchase, consolidation, merger or
          otherwise;

               (b)  to add to the conditions and limitations
          specified herein with respect to the issue and purposes
          of issue of the bonds, or of any series thereof, other
          conditions and limitations thereafter to be observed,
          including any conditions or limitations upon the
          authorized principal amount of such bonds (as well as the
          method or measure of determining such limitations) that
          the Company may deem to be advisable;

               (c)  to add to the covenants of the Company in this
          Indenture contained such further covenants as the Board
          of Directors shall consider to be for the protection of
          the mortgaged property and of the holders of the bonds
          issued or to be issued under this Indenture, and to make
          the occurrence and continuance of a default in the
          performance and observance of any of such additional
          covenants a completed default permitting the enforcement
          of any or all of the several remedies provided in this
          Indenture; provided, however, that in respect of any such
          additional covenant, such supplemental indenture may
          provide for a particular period of grace after default
          (which period may be shorter or longer than that allowed
          in the case of other defaults) or may provide for an
          immediate enforcement upon such default, or may limit the
          remedies available to the Trustee upon such default;

               (d)  to modify any of the provisions of this
          Indenture for the purpose of relieving the Company from
          any of the obligations, conditions or restrictions herein
          contained; provided, however, that, subject to the
          provisions of Section 19.07, no such modification shall
          be or become operative or effective, or in any manner
          impair any of the rights of the bondholders or of the
          Trustee, while any bonds of any series established prior
          to the execution of such supplemental indenture shall
          remain outstanding; and provided, further, that the
          Trustee may in its uncontrolled discretion decline to
          enter into any such supplemental indenture which, in its
          opinion, may not afford adequate protection to the
          Trustee when such supplemental indenture shall become
          operative;

               (e)  to cure any ambiguity or correct or supplement
          any inconsistent or defective provision contained herein
          or in any indenture supplemental hereto;

                                  -10-



   
               (f)  to make such provision in regard to matters or
          questions arising under this Indenture as may be
          necessary or desirable and not inconsistent with any of
          the provisions hereof;
    

   
               (g)  for any other purpose not inconsistent with the
          provisions of this Indenture; or
    

   
               (h)  to modify any of the provisions of the
          Indenture if, in the opinion of the Board of Directors,
          such modification does not adversely affect the rights of
          any bondholder.
    


          Each supplemental indenture entered into pursuant to the
     provisions of this Indenture shall conform to the provisions
     of Sections 310 to 317, inclusive, and of Section 318(a) of
     the Trust Indenture Act of 1939, and no supplemental indenture
     so entered into shall eliminate, nor contain any provision in
     contravention of, any provision of this Indenture which is
     required to be included in an indenture to be qualified under
     said Act by any of the provisions of said sections thereof.


                           ARTICLE TWO

                    MISCELLANEOUS PROVISIONS

     SECTION 1.  This Supplemental Indenture is executed by the
Company and the Trustee pursuant to provisions of Section 20.01 of
the Indenture and the terms and conditions hereof shall be deemed
to be a part of the terms and conditions of the Indenture for any
and all purposes.  The Indenture, as heretofore supplemented and as
supplemented by this Supplemental Indenture, is in all respects
ratified and confirmed.

     SECTION 2.  This Supplemental Indenture shall bind and,
subject to the provisions of Article XVI of the Indenture, inure to
the benefit of the respective successors and assigns of the parties
hereto.

     SECTION 3.  This Supplemental Indenture may be simultaneously
executed in any number of counterparts, and all such counterparts
executed and delivered, each as an original, shall constitute but
one and the same instrument.

                                  -11-



IN WITNESS WHEREOF, Northern Illinois Gas Company has caused
this Supplemental Indenture to be executed in its name by its
President or a Vice President, and its corporate seal to be
hereunto affixed and attested by its Secretary or its Assistant
Secretary, and Harris Trust and Savings Bank, as Trustee under the
Indenture, has caused this Supplemental Indenture to be executed in
its name by one of its Vice Presidents, and its seal to be hereunto
affixed and attested by one of its Assistant Vice Presidents, all
as of the day and year first above written.

NORTHERN ILLINOIS GAS COMPANY

By
                 Vice President

                                   ATTEST:


                                             Assistant Secretary


HARRIS TRUST AND SAVINGS BANK,
     as Trustee

By
                 Vice President

                                   ATTEST:


                                             Assistant Vice President