<PAGE>  1
                        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, 1997
                                       OR
    / /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from           to

                         Commission file number 1-7530

                              WISCONSIN GAS COMPANY
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                     Wisconsin                      39-0476515
         -------------------------------        -------------------
         (State or other jurisdiction of        (I.R.S. Employer
          incorporation or organization)         Identification No.)

               626 East Wisconsin Avenue
               P.O. Box 334
               Milwaukee, Wisconsin                     53201
      ----------------------------------------       ----------
      (Address of Principal executive offices)       (Zip Code)

  Registrant's telephone number, including area code 414-291-7000

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

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

	Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) 
has been subject to such filing requirements for the past 90 days.
                     /X/  Yes        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 ]

	Aggregate market value of the voting stock held by non-affiliates of the 
registrant:  None

	Number of shares outstanding of each of the registrant's classes of 
common stock, as of February 28, 1998:

Common Stock, $8 par value               1,125 shares

           Documents Incorporated by Reference.
WICOR, Inc. proxy statement dated March 13, 1998 (Part III)

               Reduced Disclosure Format
The registrant meets the conditions set forth in General Instructions 
(J)(1)(a) and (b) of Form 10-K and is therefore filing with the reduced 
disclosure format.

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                                     TABLE OF CONTENTS
                                                                PAGE
PART I.

Forward-Looking Statements                                        1

Item  1.  Business                                                1
  a)  General                                                     1
  b)  Gas Supply, Pipeline Capacity and Storage                   2

    1)  General                                                   2
    2)  Pipeline Capacity and Storage                             3
    3)  Term Gas Supply                                           3
    4)  Spot Market Gas Supply                                    3
    5)  Potential New Pipeline Capacity                           4
  c)  Wisconsin Regulatory Matters                                4
    1)  Rate Matters                                              4
    2)  Gas Cost Recovery Mechanism                               4
    3)  Transition Cost Recovery Policy                           4
    4)  Changing Regulatory Environment                           5
  d)  Employees                                                   5

Item  2.  Properties                                              5

Item  3.  Legal Proceedings                                       5

Item  4.  Submission of Matters to a Vote of Security Holders     6

PART II.                                                          6

Item  5.  Market for Registrant's Common Equity and
            Related Stockholder Matters                           6

Item  6.  Selected Financial Data                                 6

Item  7.  Management's Discussion and Analysis of Results of 
            Operations and Financial Condition                    6

Item 7A.  Quantitative and Qualitative Disclosures About
            Market Risk                                           6

Item  8.  Financial Statements and Supplementary Data             7

Item  9.  Changes in and Disagreements with Accountants on 
            Accounting and Financial Disclosure                   7

Part III.                                                         7

Item 10.  Directors and Executive Officers of the Registrant      7

Item 11.  Executive Compensation                                  7

Item 12.  Security Ownership of Certain 
          Beneficial Owners and Management                        7

Item 13.  Certain Relationships and Related Transactions          7

Part IV.                                                          7

Item 14.  Exhibits, Financial Statement Schedules
            and Reports on Form 8-K                               7

  a)  Documents Filed as Part of the Report                       7
    1.  All Financial Statements and Report of 
          Independent Public Accountants                          7
    2.  Financial Statement Schedules                             7
    3.  Exhibits                                                  8
  b)  Reports on Form 8-K                                         9


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PART I

Forward-Looking Statements

Certain matters discussed in this annual report are "forward-looking 
statements" intended to qualify for the safe harbor from liability 
established by the Private Securities Litigation Reform Act of 1995.  
These forward-looking statements can generally be identified as such 
because the context of the statements will include such words as the 
Company "believes," "anticipates" or "expects," or words of similar 
import.  Similarly, statements that describe the Company's future 
plans, objectives or goals are also forward-looking statements.  Such 
forward-looking statements are subject to certain risks and 
uncertainties which could cause actual results to differ materially 
from those currently anticipated. Such risks and uncertainties include 
general economic conditions; trends in the weather; business conditions 
in the energy industry; the impact of and changes in government 
regulations; changes in environmental remediation costs; and other risk 
factors identified from time to time by the Company in reports filed 
with the Securities and Exchange Commission.  Shareholders, potential 
investors and other readers are urged to consider these factors 
carefully in evaluating the forward-looking statements and are 
cautioned not to place undue reliance on such forward-looking 
statements.

Item  1.  BUSINESS 

  a)  General

	Wisconsin Gas Company (the "Company" or "Wisconsin Gas") is 
a Wisconsin corporation and a wholly-owned subsidiary of WICOR, Inc. 
("WICOR") and  maintains its principal executive offices in Milwaukee, 
Wisconsin.  The Company is the largest natural gas distribution public 
utility in Wisconsin. At December 31, 1997, Wisconsin Gas distributed 
gas to approximately 521,000 residential, commercial and industrial 
customers in 521 communities throughout Wisconsin.  Wisconsin Gas' 
service area has an estimated population of nearly 2,000,000 based on 
the State of Wisconsin's estimates for 1997.  The Company is subject to 
the jurisdiction of the Public Service Commission of Wisconsin ("PSCW") 
as to various phases of its operations, including rates, service and 
issuance of securities.

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<PAGE>  4
	Wisconsin Gas' business is highly seasonal, particularly as 
to residential and commercial sales for space heating purposes, with a 
substantial portion of its sales occurring in the winter heating 
season.  The following table sets forth the volumes of natural gas 
delivered by Wisconsin Gas to its customers. The volumes shown as 
transported represent customer-owned gas that was delivered by 
Wisconsin Gas to such customers.  The sales volumes represent 
quantities sold and delivered to customers by the Company.

<TABLE>
<CAPTION>
Customer Class                              Year Ended
                          ------------------------------------------------
                             December 31, 1997         December 31, 1997
                          --------------------      ----------------------
                          Thousands                 Thousands
Sales                     of Therms*    Percent     of Therms*     Percent
---------------------     ---------     -------     ----------     -------
<S>                       <C>           <C>         <C>            <C>
Residential                 484,330       37.5        529,910        39.1
Commercial                  219,220       17.0        242,570        17.9
Large Volume Commercial
  and Industrial Firm        87,240        6.8        110,780         8.2
Commercial and
  Industrial
  Interruptible              72,770        5.5        196,240        14.5
                          ---------     -------     ----------     ------
Total Sales                 863,560       66.8      1,079,500        79.7
Transportation
--------------
  Transported               428,830       33.2        275,780        20.3
                          ---------     -------     ----------     ------
Total Gas Throughput      1,292,390      100.0      1,355,280       100.0
                          =========     =======     ===========    ======
</TABLE>

*One therm equals 100,000 BTU's

	Federal and state regulators continue to implement 
policies to bring more competition to the gas industry.  The PSCW has 
instituted a proceeding to consider how its regulation of gas distribution 
utilities should change to reflect the changing competitive environment in 
the gas industry.  While the gas utility distribution function is expected 
to remain a heavily regulated, monopoly function, the sales of the natural 
gas commodity and related services, which were formerly utility monopoly 
functions, are expected to become increasingly subject to competition from 
third parties.  Given this regulatory policy and the fact that Wisconsin 
Gas' earnings are substantially the same whether it sells and distributes 
the gas or only distributes it, Wisconsin Gas is pursuing a long-term 
strategy to no longer sell gas.  WICOR Energy Services Company, an 
affiliate of Wisconsin Gas, sells gas on a for-profit basis and will seek 
to replace Wisconsin Gas for a significant number of Wisconsin Gas' 
customers as well as those of other utilities. Wisconsin Gas must obtain 
PSCW approval to implement its strategy.  To date, the PSCW has stated 
that it will permit utilities to discontinue the sale of gas on a market 
segment by market segment basis, when it determines that there is workable 
competition in the particular segment.  The PSCW has a number of work 
groups addressing gas utility restructuring issues.  Work groups 
recommendations to the PSCW are due over the next two years.  The Company 
is unable to determine what impact this proceeding may have on its 
operations or financial position.

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<PAGE>  5
	With PSCW approval, Wisconsin Gas has implemented a small-
customer gas-supplier choice pilot program that is designed to test (1) 
market acceptance of third-party gas sellers, (2) third-party seller 
interest in selling gas in different market segments, and (3) Wisconsin 
Gas' capabilities to administer a distribution-only business.  The pilot 
program began on November 1, 1996, and has 2,114 small commercial and 
residential participants.  Wisconsin Gas expects to continue the pilot 
program, with certain modifications.

	Wisconsin Gas also has taken steps to enable its large 
firm commercial and industrial customers to transfer from sales and 
distribution to distribution-only service.  As a consequence of state 
regulatory policies and Wisconsin Gas' actions, the volume of gas sold by 
third parties and distributed by Wisconsin Gas now constitutes 
approximately one-third of total gas distributed by the Company.  In 1997, 
Wisconsin Gas added over 8,000 new customers and has added more than 
50,000 new customers over the past five years.

  b)  Gas Supply, Pipeline Capacity and Storage

    1)  General

	Prior to the Federal Energy Regulatory Commission's 
("FERC") Order No. 636, which was implemented on November 1, 1993, the 
interstate pipelines serving Wisconsin Gas were the primary sellers of 
natural gas to Wisconsin Gas.  Order No. 636 required the pipelines to 
discontinue the sale of gas on a delivered basis.  During the transition 
period prior to the issuance of Order No. 636, Wisconsin Gas gradually 
assumed responsibility for the acquisition of supply in the production 
areas of North America, as well as the management of transportation and 
storage capacities to deliver that supply to its market area.  On November 
1, 1993, Wisconsin Gas commenced full operation and responsibility for its 
supply and capacity under the requirements of Order No. 636.

	One of the provisions of Order No. 636 is capacity 
release.  Capacity release creates a secondary market for pipeline long-
line and storage capacity and for gas supplies.  Local distribution 
companies, such as Wisconsin Gas, must contract for capacity and supply 
sufficient to meet the firm peak day demand of their customers. Peak or 
near peak days generally occur only a few times each year, so capacity 
release facilitates higher utilization of capacity and supply during those 
times when the capacity and supply are not needed by the utility.  Through 
pre-arranged agreements and day-to-day electronic bulletin board postings, 
interested parties can purchase that excess capacity and supply. The 
proceeds from these transactions are passed-through to the ratepayers, 
thereby helping to offset the costs associated with maintaining peak 
levels of capacity and gas supply.  During 1997, Wisconsin Gas continued 
its active participation in the capacity release market.

	Operating under Order No. 636, Wisconsin Gas has been able 
to meet its contractual obligations with both its suppliers and its 
customers despite periods of severe cold and unseasonably warm weather.

<PAGE>
<PAGE>  6
    2)  Pipeline Capacity and Storage

	Interstate pipelines serving Wisconsin originate in three 
major gas producing areas of North America:  the Oklahoma and Texas 
basins, the Gulf of Mexico and western Canada.  Wisconsin Gas has 
contracted for long-term firm capacity on a relatively equal basis from 
each of these areas.  This strategy reflects management's belief that 
overall supply security is enhanced by geographic diversification of the 
Company's supply portfolio and that Canada represents an important long-
term source of reliable, competitively-priced gas.

	Because of the seasonal variations in gas usage in 
Wisconsin, Wisconsin Gas has also contracted with ANR and NNG for 
substantial underground storage capacity, primarily in Michigan.  There 
are no known underground storage formations in Wisconsin capable of 
commercialization.  Storage enables Wisconsin Gas to optimize its overall 
gas supply and capacity costs.  In summer, gas in excess of market demand 
is transported into the storage fields, and in winter, gas is withdrawn 
from storage and combined with gas purchased in or near the production 
areas ("flowing gas") to meet the increased winter market demand.  As a 
result, Wisconsin Gas can contract for less long-line pipeline capacity 
than would otherwise be necessary, and it can purchase gas on a more 
uniform daily basis from suppliers year-round.  Each of these capabilities 
enables Wisconsin Gas to reduce its overall costs.

	Wisconsin Gas also maintains high deliverability storage 
in the mid-continent and Southeast production areas as well as the market 
area.  This storage capacity is designed to deliver gas when other 
supplies cannot be delivered during extremely cold weather in the 
producing areas, which can reduce long-line supply.

	Wisconsin Gas' firm winter daily transportation and 
storage capacity entitlements from pipelines under long-term contracts are 
set forth below.

                                        Maximum
                                      (Thousands
                 Pipeline              of Therms*)
                 -------------        ------------
                 ANR
                   Mainline               2,821
                   Storage                4,826
                 NNG
                   Mainline               1,048
                   Storage                  228
                 Viking
                   Mainline                  77
                   Peaking Facilities        76
                                      ------------
                  Total                   9,076

*One therm equals 100,000 BTU's.

<PAGE>
<PAGE>  7
    3)  Term Gas Supply

	Wisconsin Gas has contracts for firm supplies with terms 
in excess of 30 days with approximately 20 gas suppliers for gas produced 
in each of the three producing areas discussed above.  The term contracts 
have varying durations so that only a portion of the Company's gas supply 
expires in any year.  Management believes the volume of gas under contract 
is sufficient to meet its forecasted firm peak day demand. The following 
table sets forth Wisconsin Gas' winter season maximum daily firm total gas 
supply.

                                                      Maximum
                                                     (Thousands
                                                     of Therms*)
                                                     -----------
               Domestic flowing gas                     1,937
               Canadian flowing gas                     1,628
               Storage withdrawals                      5,054
               Peaker withdrawals                          76
                                                     -----------
                     Total                              8,695

*One therm equal 100,000 BTU's.

    4)  Spot Market Gas Supply

	Wisconsin Gas expects to continue to make gas purchases in 
the 30-day spot market as price and other circumstances dictate.  The 
Company has purchased spot market gas since 1985 and has supply 
relationships with a number of sellers from whom it purchases spot gas.

    5)  Potential New Pipeline Capacity

	Viking Voyageur Gas Transmission LLC has filed an 
application with the FERC to construct a 775-mile, 42-inch, high-pressure 
natural gas pipeline from the United States - Canada border at Emerson, 
Manitoba, Canada, to the Chicago area near Joliet, Illinois ("Viking 
Voyageur").  The pipeline would run generally east from the Minneapolis 
area to Marshfield, Wisconsin and then generally south to Chicago.  The 
pipeline would have a capacity of 1.4 billion cubic feet of gas per day.  
The pipeline is proposed to be in service by November 1, 1999.  

	Wisconsin Gas is in the process of negotiating contracts 
for the purchase of Canadian gas which the sellers would deliver to 
various points in Wisconsin along the Viking Voyageur route.  Wisconsin 
Gas would file applications with the PSCW to construct one or more lateral 
lines to connect the utility's distribution system on the Viking Voyageur.

	The Viking Voyageur pipeline would provide benefits to 
Wisconsin Gas and its customers in two major ways.  First, it would 
provide ongoing competition with ANR and NNG, which is likely to cause 
overall gas bills to decline.  Second, it would provide additional 
capacity which will be necessary to meet future demand for gas and to 
ensure gas service remains reliable.

	Management cannot predict if or when Viking Voyageur will 
be approved and constructed, nor if and when Wisconsin Gas will receive 
approval for or construct laterals to connect to Viking Voyageur.

<PAGE>
<PAGE>  8
  d)  Wisconsin Regulatory Matters

    1)  Rate Matters 

	Wisconsin Gas is subject to the jurisdiction of the PSCW 
as to various phases of its operations, including rates, customer service 
and issuance of securities. 

	Wisconsin Gas' rates were made subject to a three-year 
total margin rate cap (through October 1997) based on the rates in effect 
in November 1994.  The PSCW order also specified margin rate floors for 
each rate class.  Wisconsin Gas has the ability to raise or lower margin 
rates within the specified range on a quarterly basis.  The rates at 
December 31, 1997, were $9.0 million below the cap because of annualized 
rate reductions of $9.0 million beginning in 1995.  On October 10, 1997, 
the PSCW approved a one-year extension, to November 1, 1999, of the margin 
cap mechanism.

    2)  Gas Cost Recovery

	Wisconsin Gas' rates traditionally contained clauses 
providing for periodic adjustment, with PSCW approval, to reflect changes 
in purchased gas costs including the recovery of transition costs passed 
through by pipeline suppliers.  See "Wisconsin Regulatory Matters - 
Transition Cost Recovery Policy." 

	The PSCW approved an incentive gas cost recovery mechanism 
for Wisconsin Gas effective November 1, 1997.  Under the mechanism, 
monthly targeted gas supply costs, including upstream capacity costs, are 
set.  At the end of each 12-months, Wisconsin Gas' actual gas supply costs 
are compared with the aggregate annual targeted costs.  If Wisconsin Gas' 
actual costs are written 1-1/2% (either above or below) the target costs, 
Wisconsin Gas recovers its actual costs.  If Wisconsin Gas' actual costs 
are between 1-1/2% and 4% below the target, Wisconsin Gas and its 
customers share the benefits equally.  Similarly, if actual gas costs are 
between 1-1/2% and 4% above the target, Wisconsin Gas and its customers 
share the additional costs equally.  If actual costs are outside the 4% 
band either side of the target, the benefits and additional costs, as the 
case may be, accrue to or are borne by customers.

    3)  Transition Cost Recovery Policy

	Under Order No. 636, interstate pipelines are permitted to 
recover certain costs incurred in the transition from the bundled sales 
service to the unbundled Order No. 636 regime.  ANR and NNG have filed to 
recover transition costs and may file in the future to recover additional 
transition costs.  Wisconsin Gas will bear a portion of such additional 
costs approved by the FERC.  The PSCW has permitted Wisconsin Gas to 
recover transition costs from customers through its rates.

	In the judgment of management, the incurrence of these 
transition costs will have no material effect on Wisconsin Gas' operations 
or financial condition under current PSCW policy. See Note 8a to Notes to 
Consolidated Financial Statements contained in Exhibit 13, consisting of 
portions of the Company's 1997 Annual Report to Shareholders, which note 
is hereby incorporated herein by reference.

<PAGE>
<PAGE>  9
    4)  Changing Regulatory Environment

	The PSCW has instituted a proceeding to consider how its 
regulation of gas distribution utilities should change to reflect the 
changing competitive environment in the gas industry.  To date, the PSCW 
has made a policy decision to deregulate gas prices for customer segments 
with workably competitive market choices.  The PSCW has identified 
numerous issues which must be resolved before its policy can be 
implemented. The PSCW has a number of work groups addressing these issues.  
Work group recommendations to the PSCW are due over the next two years.  
The Company is unable to determine what impact this proceeding may have on 
Wisconsin Gas' operations or financial position.

  e)  Employees

	The Company had 964 full-time equivalent active employees 
at December 31, 1997

Item  2.  PROPERTIES

	Wisconsin Gas owns a distribution system which, on 
December 31, 1997, included approximately 8,700 miles of distribution and 
transmission mains, 435,700 services and 523,700 active meters.  The 
Company's distribution system consists almost entirely of plastic and 
coated steel pipe.  The Company owns its main office building in 
Milwaukee, office buildings in certain other communities in which it 
serves, gas regulating and metering stations, peaking facilities and its 
major service centers, including garage and warehouse facilities.  The 
Milwaukee and other office buildings, the principal service facilities and 
the gas distribution systems of Wisconsin Gas are owned by it in fee 
subject to the lien of its Indenture of Mortgage and Deed of Trust, dated 
as of November 1, 1950, under which its first mortgage bonds are issued, 
and to permissible encumbrances as therein defined.

Item  3.  LEGAL PROCEEDINGS

	There are no material legal proceedings pending, other 
than ordinary routine litigation incidental to the Company's business, to 
which the Company is a party, except as discussed below.  There are no 
material legal proceedings to which any officer or director is a party or 
has a material interest adverse to the Company's.  There are no material 
administrative or judicial proceedings arising under environmental quality 
or civil rights statutes pending or known to be contemplated by 
governmental agencies to which the Company is or would be a party.

	Wisconsin Gas has identified two previously owned sites on 
which it operated manufactured gas plants that are of environmental 
concern.  Such plants ceased operations prior to the mid-1950's.  The 
Company completed a comprehensive review of its potential environmental 
liabilities stemming from these two former manufactured gas plant sites.  
Significant technological developments, lower unit costs and the 
recognition of the "brown fields" concept by regulatory agencies have all 
resulted in a reduction in 1997 in the estimate of the probable liability 
for cleanup to $12 million.  This cleanup estimate considered a number of 
factors, including the estimated extent and volume of contaminated soil 
and/or groundwater and is based on current undiscounted costs.  In 
addition, management believes it is possible, but not likely, that 
approximately $5 million in additional remediation costs may be incurred.  
Expenditures over the next three years are expected to total approximately 
$8 million.

<PAGE>
<PAGE>  10
The cleanup estimate discussed above includes the costs of feasibility 
studies, data collection, soil and groundwater remediation activities and 
ongoing monitoring activities through 2017.  Environmental remediation 
work for one of the sites was commenced in the first quarter of 1998 and 
will continue through 1999.  It is reasonably possible that, due to 
uncertainties associated with defining the nature and extent of 
environmental contamination, application of laws and regulations by 
regulatory authorities and changes in remediation technology, the ultimate 
cost of remediation could change in the future.  The Company periodically 
reviews its accrued liabilities for such remediation costs as evidence 
becomes available indicating that its remediation liability has changed.

Due to anticipated regulatory treatment, changes in the recorded cleanup 
liability for manufactured gas plant sites do not immediately impact net 
income.  Under the current ratemaking treatment approved by the PSCW, the 
costs expended in the environmental remediation of these sites, net of any 
insurance proceeds, are deferred and recovered from gas customers.

	On February 21, 1997, Wisconsin Gas was named by the 
defendant in an environmental cleanup lawsuit as a co-defendant.  The suit 
involves contamination of a Milwaukee area industrial site by wood chips 
characteristic of those used in the manufactured gas process.  Wisconsin 
Gas believes it is not the source of the contaminated wood chips and 
intends to vigorously defend the suit.  Although the Company is unable to 
predict the outcome of the litigation, management believes that amounts 
recovered from its insurance carriers and through rate relief will be 
sufficient to cover any such liability.

	Wisconsin Gas also owns a service center that is 
constructed on a site that was previously owned by the City of Milwaukee 
and was used by the City as a public dump site.  The Company has conducted 
a site assessment at the request of the WDNR and has sent the report of 
its assessment to the WDNR.  Management cannot predict whether or not the 
WDNR will require any remediation action, nor the extent or cost of any 
remediation actions that may be required.  In the judgment of management, 
any remediation costs incurred by the Company will be recoverable from the 
City of Milwaukee or in Wisconsin Gas' rates under the PSC orders 
discussed above.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	Omitted pursuant to General Instruction J (2) (c).

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<PAGE>  11
                            PART II

Item  5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                        STOCKHOLDER MATTERS

	WICOR owns all the issued and outstanding common stock of 
the Company.  The Wisconsin Business Corporation Law, the Company's 
Indenture of Mortgage and Deed of Trust and the indentures supplemental 
thereto, and the agreements under which debt is outstanding each contain 
certain restrictions on the payment of dividends on common stock.  By 
order of the PSCW, Wisconsin Gas is generally permitted to pay dividends 
up to the amount projected in its rate case ($16 million).  The Company 
may pay dividends in excess of $16 million so long as the payment will not 
cause its common equity ratio to fall below 48.43%.  If payment of 
projected dividends would cause its common equity ratio to fall below 43% 
of total capitalization (including short-term debt), or if payment of 
additional dividends would cause its common equity ratio to fall below 
48.43%, Wisconsin Gas must obtain PSCW approval to pay such dividends.  
Wisconsin Gas has projected the payment of $23.5 million of dividends 
during the 12 months ending October 31, 1998.  See Note 7 of Notes to 
Financial Statements contained in Exhibit 13, consistency of portions of 
the WICOR 1997 Annual Report to Shareholders, which note is incorporated 
herein by reference.  For the year ended December 31, 1997, the Company's 
average common equity level was 53.3%.

	The Company paid cash dividends of $22,000,000 and 
$20,000,000 on common stock to WICOR in 1997 and 1996, respectively.

Item  6.  SELECTED FINANCIAL DATA

	Omitted pursuant to General Instruction J(2)(a).

Item  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
               OF OPERATIONS AND FINANCIAL CONDITION

	Reference is made to the section entitled "Management's 
Discussion and Analysis" set forth in the WICOR 1997 Annual Report to 
Shareholders.  Such section is included in Exhibit 13, which, insofar as 
it pertains to the Company, is hereby incorporated herein by reference.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

	Not applicable.

Item  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Financial statements for the Company together with the 
report of independent public accountants are included in Part IV of this 
report.

Item  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
             ON ACCOUNTING AND FINANCIAL DISCLOSURE

	There has been no change in or disagreement with the 
Company's independent accountants on any matter of accounting principles 
or practices or financial statement disclosure required to be reported 
pursuant to this item.

<PAGE>
<PAGE>  12
PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

	Omitted pursuant to General Instruction J(2)(c).

Item 11.  EXECUTIVE COMPENSATION

	Omitted pursuant to General Instruction J(2)(c).

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

	Omitted pursuant to General Instruction J(2)(c).

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

	Omitted pursuant to General Instruction J(2)(c).


                                  PART IV 

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                             ON FORM 8-K

  a)  The following documents are filed as part of this Annual Report on 
Form 10-K:

    1.  All Financial Statements and Report of Independent Public 
Accountants.

      Statement of Income.

      Balance Sheet.

      Statement of Cash Flows. 

      Statement of Common Equity.

      Statement of Capitalization.

      Notes to Financial Statements.

    2.  Financial Statement Schedules.

        Not required.

<PAGE>
<PAGE>  13
    3.  Exhibits

3.1  Wisconsin Gas Company Restated Articles of Incorporation, as amended 
(incorporated by reference to Exhibit 3.1 to the Company's Annual Report 
on Form 10-K for 1988).

3.2  Amendment to Wisconsin Gas Company By-laws, effective February 28, 
1995 (incorporated by reference to Exhibit 3.2 to the Company's Annual 
Report on Form 10-K for 1994).

3.3  Wisconsin Gas Company By-laws, as amended (incorporated by reference 
to Exhibit 3.3 to the Company's Annual Report on Form 10-K for 1994).

4.1  Indenture of Mortgage and Deed of Trust, dated as of November 1, 
1950, between Milwaukee Gas Light Company and Mellon National Bank and 
Trust Company and D. A. Hazlett, Trustees (incorporated by reference to 
Exhibit 7-E to the Company's Registration Statement No. 2-8631).

4.2  Bond Purchase Agreement, dated December 31, 1981, between Wisconsin 
Gas Company and Teachers Insurance and Annuity Association of America 
relating to the issuance and sale of $30,000,000 principal amount of First 
Mortgage Bonds, Adjustable Rate Series due 2002 (incorporated by reference 
to Exhibit 4-6 to the Company's Form S-3 Registration Statement No. 33-
43729).

4.3  Indenture, dated as of September 1, 1990, between Wisconsin Gas 
Company and First Wisconsin Trust Company, Trustee (incorporated by 
reference to Exhibit 4.11 to the Company's Form S-3 Registration Statement 
No. 33-36639).

4.4  Officers' Certificate, dated as of November 19, 1991, setting forth 
the terms of Wisconsin Gas Company's 7-1/2% Notes due 1998 (incorporated 
by reference to Exhibit 4.1 to Wisconsin Gas Company's Form 8-K Current 
Report dated November 19, 1991).

4.5  Officers' Certificate, dated as of September 15, 1993, setting forth 
the terms of the Company's 6.60% debentures due 2013 (incorporated by 
reference to Exhibit 4.1 to the Company's Form 8-K Current Report for 
September, 1993).

4.6  Officers' Certificate, dated as of November 7, 1995, setting forth 
the terms of the Company's 6-3/8% Notes due 2005 (incorporated by 
reference to the Company's Form 8-K Current Report dated November 7, 
1995).

4.7  Revolving Credit Agreement, dated as of August 6, 1997, among 
Wisconsin Gas Company and Citibank, N.A., as Agent, Firstar Bank 
Milwaukee, N. A., Harris Trust & Savings Bank and M&I Marshall & Ilsley 
Bank (incorporated by reference to Exhibit 4.1 to the Company's Quarterly 
Report on Form 10-Q dated as of October 31, 1997).

4.8  WICOR, Inc. Master Savings Trust Agreement, dated as of October 1, 
1996, between WICOR, Inc. and Marshall & Ilsley Trust Company 
(incorporated by reference to Exhibit 4.1 to the Company's Quarterly 
Report on Form 10-Q dated as of October 30, 1996).

<PAGE>
<PAGE>  14
4.9  Loan Agreement, dated as of March 29, 1996, by and among ABN AMRO 
Bank N.V., Wisconsin Gas Company Employee's Savings Plans Trust and WICOR, 
Inc. (incorporated by reference to Exhibit 4.1 to the Company's Quarterly 
Report on Form 10-Q dated as of April 26, 1996).

4.10  First Amendment, dated as of November 27, 1996, to Loan Agreement, 
dated as of March 29, 1996, by and among WICOR, Inc. Master Savings Trust 
(formerly the Wisconsin Gas Company Employees' Savings Plans Trust), 
WICOR, Inc. and ABN AMRO Bank, N.V. (incorporated by reference to Exhibit 
4.16 to the Company's Annual Report on Form 10-K for 1996).

10.1  Service Agreement, dated as of June 1, 1994, among WICOR, Inc., 
Wisconsin Gas Company, WEXCO of Delaware, Inc., Sta-Rite Industries, Inc. 
and SHURflo Pump Manufacturing Co. (incorporated by reference to Exhibit 
10.1 to the Company's Annual Report on Form 10-K for 1995).

10.2#  WICOR, Inc. 1992 Director Stock Option Plan (incorporated by 
reference to Exhibit 4.1 to WICOR, Inc.'s Form S-8 Registration No. 33-
67132).

10.3#  Form of nonstatutory stock agreement used in conjunction with the 
WICOR, Inc. 1992 Director Stock Option Plan (incorporated by reference to 
Exhibit 4.2 to WICOR, Inc.'s Form S-8 Registration Statement No. 37-
67132).

10.4#  WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by 
reference to Exhibit 4.1 to the WICOR, Inc. Form S-8 Registration 
Statement No. 33-55755).

10.5#  Form of nonstatutory stock option agreement used in connection with 
the WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by reference 
to Exhibit 4.2 to the WICOR, Inc. Form S-8 Registration Statement No. 33-
55755).

10.6#  Form of restricted stock agreement used in connection with the 
WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by reference to 
Exhibit 4.3 to the WICOR, Inc. Form S-8 Registration Statement No. 33-
55755).

10.7#  Form of Key Executive Employment and Severance Agreement between 
the Company and certain of its executive officers (incorporated by 
reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q 
dated June 30, 1997).

10.8#  Wisconsin Gas Company Principal Officers' Supplemental Retirement 
Income Program (incorporated by reference to Exhibit 10.6 to the Company's 
Annual Report on Form 10-K for 1993).

10.9#  Wisconsin Gas Company 1998 Officers' Incentive Compensation Plan.

10.10#  Wisconsin Gas Company Group Travel Accident Plan (incorporated by 
reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for 
1992).

10.11#  Form of Deferred Compensation Agreement between Wisconsin Gas 
Company and certain of its officers (incorporated by reference to Exhibit 
10.25 to the Company's Annual Report on Form 10-K for 1991).

<PAGE>
<PAGE>  15
10.12#  WICOR, Inc. 1987 Stock Option Plan, as amended (incorporated by 
reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement 
No. 33-67134).

10.13#  Form of nonstatutory stock option agreement used in connection 
with the WICOR, Inc. 1987 Stock Option Plan (incorporated by reference to 
Exhibit 10.20 to the Company's Annual Report on Form 10-K for 1991).

13  "Financial Review" portions of WICOR, Inc. 1997 Annual Report to 
Shareholders.  

27  Financial Data Schedule. (EDGAR version only)

  b)  Reports on Form 8-K.

            No reports on Form 8-K were filed during the fourth quarter of 
1997.

<PAGE>
<PAGE>  16

                             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.






                                  WISCONSIN GAS COMPANY



Date:  March 18, 1998     By              /s/  JOSEPH P. WENZLER
                                             -----------------------
                                               Joseph P. Wenzler
                                               Vice President and
                                             Chief Financial Officer




<PAGE>
<PAGE>  17
	Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed below by the following persons in 
behalf of the registrant and in the capacities and in the dates 
indicated.



    Signature                     Title                         Date

BRONSON J. HAASE
Bronson J. Haase          President and Chief Executive
                          Officer
                          (Principal Executive Officer)      March 18, 1998

JOSEPH P. WENZLER
Joseph P. Wenzler          Vice President and Chief          March 18, 1998
                           Financial Officer 
                           (Principal Financial and
                           Principal Accounting Officer)

WENDELL F. BUECHE
Wendell F. Bueche          Director                          March 18, 1998

WILLIE D. DAVIS
Willie D. Davis            Director                          March 18, 1998

JERE D. MCGAFFEY
Jere D. McGaffey           Director                          March 18, 1998

DANIEL F. MCKEITHAN, JR.
Daniel F. McKeithan, Jr.   Director                          March 18, 1998

GUY A. OSBORN
Guy A. Osborn              Director                          March 18, 1998

THOMAS F. SCHRADER
Thomas F. Schrader         Director                          March 18, 1998

STUART W. TISDALE
Stuart W. Tisdale          Director                          March 18, 1998

GEORGE E. WARDEBERG
George E. Wardeberg        Director                          March 18, 1998

ESSIE M. WHITELAW
Essie M. Whitelaw          Director                          March 18, 1998

WILLIAM B. WINTER
William B. Winter          Director                          March 18, 1998

<PAGE>
<PAGE>  18

                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Wisconsin Gas Company:

We have audited the accompanying balance sheet and statements of 
capitalization of WISCONSIN GAS COMPANY (a Wisconsin corporation and a 
wholly owned subsidiary of WICOR, Inc.) as of December 31, 1997 and 
1996, and the related statements of income, common equity and cash 
flows for each of the three years in the period ended December 31, 
1997.  These financial statements are the responsibility of the 
Company's management. Our responsibility is to express an opinion on 
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  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 Wisconsin 
Gas Company as of December 31, 1997 and 1996, and the results of its 
operations and its cash flows for each of the three years in the 
period ended December 31, 1997, in conformity with generally accepted 
accounting principles.






Milwaukee, Wisconsin,              ARTHUR ANDERSEN LLP
March 13, 1998.


<PAGE>
<PAGE>  19
                              WISCONSIN GAS COMPANY
                               Statements of Income

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                          ----------------------------------
                                             1997        1996        1995 
                                          ----------  ----------  ----------
                                                (Thousands of Dollars)
<S>                                       <C>         <C>         <C>
Operating Revenues                        $ 536,720   $ 573,255   $ 519,179
                                          ----------  ----------  ----------
Operating Expenses:
  Cost of gas sold                          342,749     365,398     318,728
  Operations                                 84,647      91,436      95,042
  Maintenance                                 8,535       8,767       6,932
  Depreciation                               31,714      32,848      28,950
   Taxes, other than income taxes             9,600       9,230       9,331
                                          ----------  ----------  ----------
                                            477,245     507,679     458,983
                                          ----------  ----------  ----------

Operating Income                             59,475      65,576      60,196
                                          ----------  ----------  ----------

Interest expense                             12,698      12,934      14,312
Other income and expenses                      (366)       (662)        176
                                          ----------  ----------  ----------
Income Before Income Taxes                   47,143      53,304      45,708

Income Taxes                                 17,808      20,580      17,311
                                          ----------  ----------  ----------
Net Income                                $  29,335   $  32,724   $  28,397
                                          ==========  ==========  ==========

</TABLE>
The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  20
                              WISCONSIN GAS COMPANY
                                  Balance Sheet

<TABLE>
<CAPTION>
                                                    As of December 31,
                                                  ----------------------
                                                     1997        1996
                                                  ----------  ----------
                                                  (Thousands of Dollars)
<S>                                               <C>         <C>
Assets
------
 Property, Plant and Equipment, at cost           $ 801,069   $ 786,486
  Less - Accumulated depreciation                   421,098     409,151
                                                  ----------  ----------
                                                    379,971     377,335
                                                  ----------  ----------
Current Assets:
  Cash and cash equivalents                           7,854       8,960
   Accounts receivable, less allowance for
     doubtful accounts of $12,363
     and $7,955, respectively                        72,238      73,540
   Accounts receivable, intercompany, net               233         238
  Accrued revenues                                   39,986      54,382
   Gas in storage, at weighted average cost          40,657      32,684
  Deferred income taxes                              17,667      17,879
  Prepaid taxes                                       6,162       6,411
   Materials and supplies, weighted average cost      3,192       3,098
  Other                                               1,984       1,668
                                                  ----------  ----------
                                                    189,973     198,860
                                                  ----------  ----------
Deferred Charges and Other:
  Regulatory assets                                  53,910      82,259
  Systems development costs                          17,424      23,052
  Prepaid pension costs                              35,212      30,112
  Other                                               7,398       7,372
                                                  ----------  ----------
                                                    113,944     142,795
                                                  ----------  ----------
                                                  $ 683,888   $ 718,990
                                                  ==========  ==========

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  21
                              WISCONSIN GAS COMPANY
                                  Balance Sheet

<TABLE>
<CAPTION>
                                                 As of December 31,
                                               ----------------------
                                                  1997        1996
                                               ----------  ----------
                                               (Thousands of Dollars)
<S>                                            <C>         <C>
Capitalization and Liabilities
------------------------------
Capitalization  (See accompanying statement):
  Long-term debt                               $ 110,657   $ 152,453
  Preferred stock                                      -           -
  Common equity                                  215,249     206,568
                                               ----------  ----------
                                                 325,906     359,021
                                               ----------  ----------
Current Liabilities:
  Accounts payable                                43,491      64,548
  Short-term borrowings                           78,671      65,500
  Current portion of long-term debt               42,000       2,000
  Refundable gas costs                            24,776      31,545
  Accrued payroll and benefits                     8,066       8,116
  Accrued taxes                                    5,537         874
  Other                                            3,829       4,334
                                               ----------  ----------
                                                 206,370     176,917
                                               ----------  ----------
Deferred Credits and Other:
  Regulatory liabilities                          36,533      43,406
  Postretirement benefit obligation               48,942      51,359
  Deferred income taxes                           37,689      35,569
  Environmental remediation costs                 12,084      36,222
  Unamortized investment tax credit                6,808       7,265
  Other                                            9,556       9,231
                                               ----------  ----------
                                                 151,612     183,052
                                               ----------  ----------
Commitments and Contingencies (Note 7)
                                               ----------  ----------
                                               $ 683,888   $ 718,990
                                               ==========  ==========

</TABLE>


The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  22
                              WISCONSIN GAS COMPANY
                             Statements of Cash Flow

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                             ----------------------------------
          (Thousands of Dollars)                1997        1996        1995 
                                             ----------  ----------  ----------
<S>                                          <C>         <C>         <C>
Operations:
  Net income                                 $  29,335   $  32,724   $  28,397
  Adjustments to reconcile net income to
   cash provided by operating activities:
    Depreciation and amortization               39,820      41,111      36,646
    Deferred income taxes                        2,332      (2,183)     (6,946)
    Change in:
     Receivables                                15,698     (15,680)    (29,253)
     Gas in storage                             (7,973)     (8,756)     14,121
     Other current assets                         (410)     (4,711)        688
     Accounts payable                          (21,057)     23,469      (3,566)
     Accrued taxes                               5,266      (1,327)      8,546
     Refundable gas costs                       (6,769)     (2,802)     16,289
     Other current liabilities                    (899)       (950)      1,134
     Other noncurrent assets and liabilities   (11,228)     (7,350)     (1,100)
                                             ----------  ----------  ----------
                                                44,115      53,545      64,956
                                             ----------  ----------  ----------
Investment Activities:
  Capital expenditures                         (35,017)    (36,586)    (42,726)
   Other,net                                       293         285         365
                                             ----------  ----------  ----------
                                               (34,724)    (36,301)    (42,361)
                                             ----------  ----------  ----------
Financing Activities:
  Change in short-term borrowings               13,171       8,000     (27,500)
  Issuance of long-term debt                         -           -      65,000
  Reduction of long-term debt                   (2,000)     (4,000)    (54,000)
   Cash dividends paid to WICOR, Inc.          (22,000)    (20,000)    (16,000)
  Other                                            332         253          89
                                             ----------  ----------  ----------
                                               (10,497)    (15,747)    (32,411)
                                             ----------  ----------  ----------

Change in Cash and Cash Equivalents             (1,106)      1,497      (9,816)
Cash and Cash Equivalents at beginning
  of year                                        8,960       7,463      17,279
                                             ----------  ----------  ----------
Cash and Cash Equivalents at end of year     $   7,854   $   8,960   $   7,463
                                             ==========  ==========  ==========

</TABLE>
The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  23
                               WISCONSIN GAS COMPANY
                            Statements of Common Equity
<TABLE>
<CAPTION>
                                                                            Accumulated
                                                                               Other
                                                      Other                   Compre-
                                           Common    Paid-In     Retained     hensive
                                 Total      Stock    Capital     Earnings      Income
                               ----------  -------  ----------  ----------  ------------
<S>                            <C>         <C>      <C>         <C>         <C>
Balance at December 31, 1994   $ 181,688   $    9   $ 118,753   $  64,233   $    (1,307)
  Net income                      28,397        -           -      28,397             -
  Other comprehensive income
    Minimum pension
      liability adjustment           408        -           -           -           408
                               ----------  -------  ----------  ----------  ------------
Comprehensive income              28,805        -           -      28,397           408
                               ----------  -------  ----------  ----------  ------------
Cash dividends paid
  to WICOR, Inc.                 (16,000)       -           -     (16,000)            -
Other                                 89        -          89           -             -
                               ----------  -------  ----------  ----------  ------------
Balance at December 31, 1995     194,582        9     118,842      76,630          (899)
  Net income                      32,724        -           -      32,724             -
  Other comprehensive income
    Minimum pension
      liability adjustment          (307)       -           -           -          (307)
                               ----------  -------  ----------  ----------  ------------
Comprehensive income              32,417        -           -      32,724         (307)
                               ----------  -------  ----------  ----------  ------------
Cash dividends paid
  to WICOR, Inc.                 (20,000)       -           -     (20,000)           -
Other                               (431)       -         253        (684)           -
                               ----------  -------  ----------  ----------  -----------

Balance at December 31, 1996     206,568        9     119,095      88,670       (1,206)
  Net income                      29,335        -           -      29,335            -
  Other comprehensive income
    Minimum pension
      liability adjustment          (236)       -           -           -         (236)
                               ----------  --------  ---------  ----------  -----------
Comprehensive income              29,099        -           -      29,335         (236)
                               ----------  -------  ----------  ----------  -----------
Cash dividends paid
  to WICOR, Inc.                 (22,000)       -           -     (22,000)           -
Other                              1,582        -       1,582           -            -
                               ----------  -------  ----------  ----------  -----------

Balance at December 31, 1997   $ 215,249   $    9   $ 120,677   $  96,005   $   (1,442)
                               ==========  =======  ==========  ==========  ===========

</TABLE>
The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  24
                              WISCONSIN GAS COMPANY
                           Statements of Capitalization
<TABLE>
<CAPTION>
                                                  As of December 31,
                                                ----------------------
                                                   1997        1996
                                                ----------  ----------
                                                (Thousands of dollars)
<S>                                             <C>         <C>
Long-Term Debt
  First mortgage bonds
     Adjustable Rate Series, 9.3% and 7.4%,
       respectively, due 1999                   $   2,000   $   4,000
  7-1/2% Notes due 1998                                 -      40,000
  6.6% Notes due 2013                              45,000      45,000
  6-3/8% Notes due 2005                            65,000      65,000
  Unamortized debt discount and expense            (1,343)     (1,547)
                                                ----------  ----------
                                                  110,657     152,453
                                                ----------  ----------
Preferred Stock
   Without par value, cumulative; authorized 
     1,500,000 shares, none outstanding                 -           -
                                                ----------  ----------

Common Equity
   Common Stock, $8 par value, authorized
     5,000,000 shares, 1,125 shares outstanding         9           9
  Other paid-in capital                           120,677     119,095
  Retained earnings                                96,005      88,670
  Accumulated other comprehensive income           (1,442)     (1,206)
                                                ----------  ----------
                                                  215,249     206,568
                                                ----------  ----------
                                                $ 325,906   $ 359,021
                                                ==========  ==========

</TABLE>
The accompanying notes are an integral part of these statements.

<PAGE>
<PAGE>  25
                         Wisconsin Gas Company
                     Notes to Financial Statements

1.  ACCOUNTING POLICIES

  a.  Business

Wisconsin Gas Company (Wisconsin Gas), the oldest and largest 
natural gas distribution utility in Wisconsin, is a public utility 
engaged in the distribution of natural gas throughout Wisconsin. Most of 
its revenues, however, are derived from gas delivered in southeastern 
Wisconsin. Wisconsin Gas is subject to regulation by the Public Service 
Commission of Wisconsin (PSCW) and gives recognition to ratemaking 
policies substantially in accordance with the Federal Energy Regulatory 
Commission (FERC) System of Accounts.  At December 31, 1997, Wisconsin 
Gas served approximately 521,000 customers in 521 communities.

  b.  Gas Distribution Revenues and Purchased Gas Costs

Utility billings are rendered on a cycle basis. Revenues include 
estimated amounts accrued for service provided but not yet billed.
Wisconsin Gas's rate schedules contain purchased gas adjustment 
(PGA) provisions which permit the recovery of actual purchased gas costs 
incurred. The difference between actual gas costs incurred and costs 
recovered through rates, adjusted for inventory activity, is deferred as 
a current asset or liability. The deferred balance is returned to or 
recovered from customers at intervals throughout the year and any 
residual balance at the annual October 31 reconciliation date is 
subsequently refunded to or recovered from customers.
The PSCW is currently permitting Wisconsin Gas to recover pipeline 
supplier take-or-pay settlement costs, allocating a portion of the 
direct-billed costs to each customer class, including transportation 
customers.
In October 1997, the PSCW approved Wisconsin Gas's proposed Gas 
Cost Incentive Mechanism (GCIM) which became effective November 1, 1997.  
The GCIM establishes a reference for the cost of gas, including pipeline 
capacity and storage costs.  The reference price is based on a current 
month index of prices from the supply basins where the gas is purchased.  
If the actual costs deviate from the reference by more than 1-1/2% but 
less than 4%, the Company and its customers share equally in the amount 
within the band.  If actual costs deviate from the reference cost by 
more than plus or minus 4%, Wisconsin Gas customers bear all the costs 
above 4% and receive all the benefits of the costs below 4%.

  c.  Plant and Depreciation

Gas distribution property, plant and equipment is stated at 
original cost, including overhead allocations. Upon ordinary retirement 
of plant assets, original cost plus cost of removal, net of salvage, is 
charged to accumulated depreciation, and no gain or loss is recognized.
The depreciation of Wisconsin Gas' assets is computed using 
straight-line rates over estimated useful lives and considers salvage 
value. These rates have been consistently used for ratemaking purposes. 
The composite rates are 4.3%, 4.5% and 4.2% for 1997, 1996 and 1995, 
respectively.
The Company also owns equipment that it leases to customers and is 
included in property, plant and equipment. This equipment is depreciated 
on a straight line basis over its estimated useful life.

<PAGE>
<PAGE>  26

  d.  Regulatory Accounting

Wisconsin Gas accounts for its regulated operations in accordance 
with Statement of Financial Accounting Standards (SFAS) No. 71, 
"Accounting for the Effects of Certain Types of Regulation." This 
statement sets forth the application of generally accepted accounting 
principles to those companies whose rates are determined by an 
independent third-party regulator. The economic effects of regulation 
can result in regulated companies recording costs that have been or are 
expected to be allowed in the ratemaking process in a period different 
from the period in which the costs would be charged to expense by an 
unregulated enterprise. When this occurs, costs are deferred as assets 
in the balance sheet (regulatory assets) and recorded as expenses as 
those same amounts are reflected in rates. Additionally, regulators can 
impose liabilities upon a regulated company for amounts previously 
collected from customers and for amounts that are expected to be 
refunded to customers (regulatory liabilities).

The amounts recorded as regulatory assets and regulatory 
liabilities in the balance sheet at December 31, 1997 and 1996 are as 
follows:

(Thousands of Dollars)                       1997        1996
                                          ----------  ----------
Regulatory assets:
  Postretirement benefit costs (Note 8)   $  39,498   $  42,275
  Deferred environmental costs                   76      23,025
  Deferred uncollectible expenses            11,056      10,152
  Income tax-related amounts
    due from customers (Note 3)               2,648       3,003
  Other                                         632       5,010
                                          ----------  ----------
                                          $  53,910   $  83,465
                                          ==========  ==========
Regulatory liabilities:
  Income tax-related amounts
    due to customers (Note 3)             $  19,725   $  21,369
  Unrecognized pension income (Note 8)       13,780      16,631
  Other                                       3,028       5,406
                                          ----------  ----------
                                          $  36,533   $  43,406 
                                          ==========  ==========

	In the fourth quarter of 1997, Wisconsin Gas completed a 
comprehensive review of its environmental clean-up liability which 
ultimately resulted in a reduction of the liability to $12 million as of 
December 31, 1997.  The regulatory asset previously recorded was also 
adjusted to reflect the results of this review.  (See Note 7 for a more 
detailed description of this matter.)

<PAGE>
<PAGE>  27

Wisconsin Gas is precluded from discontinuing service to 
residential customers within its service area during the heating season. 
Any differences between doubtful account provisions based on actual 
experience and provisions allowed for ratemaking purposes by the PSCW 
are deferred for later recovery in rates as a cost of service. The most 
recent PSCW rate order provides for a $13.9 million allowable annual 
provision for doubtful accounts, including amortization of prior 
deferred amounts. In the fourth quarter of 1996, the PSCW staff approved 
a one-time charge of $3.0 million relating to uncollectible accounts 
receivable expense. See Notes 7 and 8 for discussion of additional 
deferred charges.

  e.  Income Taxes

Wisconsin Gas is a wholly-owned subsidiary of WICOR, Inc. (WICOR) 
and has elected to be included in WICOR's consolidated Federal income 
tax return. WICOR allocates Federal current tax expense or credits to 
Wisconsin Gas  based on its respective separate tax computation.
Investment tax credits were recorded as a deferred credit on the 
balance sheet and are being amortized to income over the applicable 
service lives of the related properties in accordance with regulatory 
treatment.

  f.  Cash Flows

Wisconsin Gas considers all highly liquid debt instruments 
purchased with an original maturity of three months or less to be cash 
equivalents. Due to the short maturity of these instruments, market 
value approximates cost.
For purposes of the Consolidated Statements of Cash Flows, income 
taxes paid (net of refunds) and interest paid were as follows for each 
of the years ended December 31:

(Thousands of Dollars)         1997        1996        1995
-----------------------     ----------  ----------  ----------
Income taxes paid           $  11,814   $  29,048   $  19,928
Interest paid               $  11,886   $  11,763   $  13,636

  g.  Derivative Financial Instruments

Wisconsin Gas has a limited involvement with derivative financial 
instruments and does not use them for trading or speculative purposes.  
Wisconsin Gas purchased derivatives in 1997 and 1996 to hedge a portion 
of gas costs incurred for resale.  The cost of options and any gains or 
losses realized do not affect income since they are accounted for under 
the PGA clause.

  h.  Use of Estimates

The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to make 
estimates and assumptions that affect the amounts reported in the 
financial statements and accompanying notes.  Actual results could 
differ from those estimates.

<PAGE>
<PAGE>  28
  i.  Non-Regulated Activities

	Revenues and expenses associated with Wisconsin Gas's nonregulated 
equipment leasing and other activities are recorded net in other income 
and expense.

  j.  Reclassifications

Certain prior year financial statement amounts have been 
reclassified to conform to their current year presentation.

2.  NEW ACCOUNTING STANDARDS

During 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standard No. 130 (SFAS No. 130), 
"Reporting Comprehensive Income," which became effective in fiscal year 
1997.  SFAS No. 130 establishes standards for the reporting and 
displaying of comprehensive income and its components. Wisconsin Gas has 
reported comprehensive income in the Statements of Common Equity.
American Institute of Certified Public Accountants Statement of 
Position No. 96-1, "Environmental Remediation Liabilities," establishes 
specific criteria for the recognition and measurement of environmental 
remediation liabilities. The adoption of the statement in 1997 did not 
have a significant effect on Wisconsin Gas's financial condition or 
results of operation.

3.  INCOME TAXES

The current and deferred components of income tax expense for each 
of the years ended December 31 are as follows:

(Thousands of Dollars)           1997        1996        1995
------------------------      ----------  ----------  ----------
Current
  Federal                     $  13,198   $  19,202   $  23,645
  State                           3,216       4,724       5,851
                              ----------  ----------  ----------
Total Current                    16,414      23,926      29,496
                              ----------  ----------  ----------
Deferred
  Federal                           707      (3,040)    (10,101)
  State                             687        (306)     (2,084)
                              ----------  ----------  ----------
Total Deferred                    1,394      (3,346)    (12,185)
                              ----------  ----------  ----------
Total Provision               $  17,808   $  20,580   $  17,311
                              ==========  ==========  ==========

<PAGE>
<PAGE>  29

The provision for income taxes differs from the amount of income 
tax determined by applying the applicable U.S. statutory Federal income 
tax rate to pre-tax income as a result of the following differences:

(Thousands of Dollars)

<TABLE>
<CAPTION>
Year ended December 31,            1997             1996             1995
------------------------      ---------------	 --------------- 	---------------
<S>                           <C>       <C>    <C>       <C>    <C>       <C>
Statutory U.S. tax rates      $16,500   35.0%  $18,656   35.0%  $15,998   35.0%
State income taxes, net         2,629    5.6     2,948    5.5     2,542    5.6
Investment credit restored       (451)  (1.0)     (453)  (0.9)     (457)  (1.0)
Excess deferred
   tax amortization              (630)  (1.3)     (556)  (1.0)     (507)  (1.1)
Other, net                       (240)  (0.5)      (15)     -      (265)  (0.6)
                              --------------- 	--------------- 	---------------
Effective Tax Rates           $17,808 	 37.8%  $20,580   38.6%  $17,311   37.9%
                              =============== 	=============== 	===============
</TABLE>


The components of deferred income tax assets and liabilities at 
December 31, 1997 and 1996 are as follows:

(Thousands of Dollars)                           1997        1996
--------------------------                    ----------  ----------
Current Deferred Income Tax Assets
Recoverable gas costs                       $   9,712  $   12,658
Inventory                                       4,036       2,080
Deferred compensation                           1,907       2,011
Other                                           2,012       1,130
                                            ----------  ----------
                                            $  17,667   $  17,879
                                            ==========  ==========
Long-term Deferred Income Tax Liabilities
Property related                            $  38,945   $  37,692
Systems development costs                       6,993       9,252
Pension benefits                                8,649       5,458
Investment tax credit                          (4,503)     (4,806)
Environmental                                  (4,819)     (5,297)
Postretirement benefits                        (3,791)     (3,646)
Deferred compensation                          (2,921)     (2,590)
Other                                            (864)       (494)
                                            ----------  ----------
                                            $  37,689   $  35,569 
                                            ==========  ==========

<PAGE>
<PAGE>  30
4.  SHORT-TERM BORROWINGS

During the third quarter of 1997, Wisconsin Gas renegotiated its 
existing revolving credit agreement.  Restrictive covenants under the 
new five-year $30 million credit agreement which expires in August, 
2002, include leverage and interest coverage ratios.
As of December 31, 1997 and 1996, Wisconsin Gas had total 
unsecured lines of credit available from banks of $120.0 million and 
$145.0 million, respectively.  The credit lines may be used for, among 
other purposes, the support of commercial paper issued by Wisconsin Gas.  
At December 31, 1997, $78.7 million of commercial paper was outstanding 
at a weighted average interest rate of 5.8%.  At December 31, 1996, 
$65.5 million of commercial paper was outstanding at a weighted average 
interest rate of 5.7%.
These borrowing arrangements may require the maintenance of 
average compensating balances which are generally satisfied by balances 
maintained for normal business operations and may be withdrawn at any 
time.

5.  LONG-TERM DEBT

In November 1995, Wisconsin Gas issued $65 million of 6 3/8% Notes 
due in 2005. A portion of the proceeds were used to redeem $50 million 
of 9 1/8% Notes due in 1997. The notes issued by Wisconsin Gas are 
unsecured.  In addition to the unsecured notes, Wisconsin Gas has 
previously issued first mortgage bonds.  Substantially all gas 
distribution property acquired prior to January 1, 1993, is subject to a 
first mortgage lien relating to the first mortgage bonds.  At December 
31, 1997, Wisconsin Gas had outstanding $2 million in first mortgage 
bonds.  Wisconsin Gas has no plans to issue any additional first 
mortgage bonds.  Maturities and sinking fund requirements during the 
succeeding five years on all long-term debt total $42.0 million and $2.0 
million in 1998 and 1999, respectively and zero in 2000, 2001 and 2002.

6.  RESTRICTIONS

A November 1993 rate order issued by the PSCW sets a 13-month 
average equity range of 43% to 50% for Wisconsin Gas and also requires 
it to request PSCW approval prior to the payment of dividends on its 
common stock to WICOR if the payment would reduce its common equity (net 
assets) below 43% of total capitalization (including short-term debt). 
Under this requirement, $41.8 million of Wisconsin Gas's net assets at 
December 31, 1997, plus future earnings, were available for such 
dividends without PSCW approval. In addition, the PSCW must also approve 
any dividends in excess of $16 million for any 12-month period beginning 
November 1 if such dividends would reduce Wisconsin Gas's 13-month 
average equity below 48.43% of its total capitalization. Wisconsin Gas 
paid $5.5 million in dividends in November 1997 and expects to pay $23.5 
million in dividends for the 12 months ending October, 1998. At December 
31, 1997, Wisconsin Gas's equity was 53.3% of its total capitalization.

7.  COMMITMENTS AND CONTINGENCIES

<PAGE>
<PAGE>  31
  a.  Gas Supply

Wisconsin Gas has agreements for firm pipeline and storage 
capacity that expire at various dates through 2008.  The aggregate 
amount of required payments under such agreements total approximately 
$640 million, with annual required payments of $110 million in 1998 and 
1999, $106 million in 2000, $101 million in 2001 and $97 million in 
2002.  Wisconsin Gas's total payments for firm pipeline and storage 
capacity prior to recovery from sales of excess capacity were $126.6 
million in 1997, $129.6 million in 1996 and $128.1 million in 1995.  The 
purchased gas adjustment provisions of Wisconsin Gas's rate schedules 
permit the recovery of gas costs from its customers subject to the GCIM 
sharing mechanism. FERC Order No. 636 permits pipeline suppliers to pass 
through to Wisconsin Gas any prudently incurred transition costs, such 
as unrecovered gas costs, gas supply realignment costs and stranded 
investment costs. Wisconsin Gas estimates its portion of such costs from 
all of its pipeline suppliers would approximate $4.2 million at December 
31, 1997 based upon prior filings with FERC by the pipeline suppliers. 
The pipeline suppliers will continue to file quarterly with the FERC for 
recovery of actual costs incurred.
The FERC has allowed ANR Pipeline Company (ANR) to recover 
capacity and "above market" supply costs associated with quantities 
purchased from Dakota Gasification Company ("Dakota") under a long-term 
contract expiring in the year 2009. Consistent with guidelines set forth 
in Order No. 636, ANR has allocated 90% of Dakota costs to firm 
transportation service.  Based on its contracted quantities with ANR, 
Wisconsin Gas is currently paying approximately $100,000 per month of 
Dakota costs.
Transition costs billed to Wisconsin Gas are being recovered from 
customers under the purchased gas provisions within its rate schedules.

  b.  Capital Expenditures

Certain commitments have been made in connection with 1998 capital 
expenditures. Wisconsin Gas capital expenditures for 1998 are estimated 
at $45 million.

  c.  Environmental Matters

On February 21, 1997, Wisconsin Gas was named as a co-defendant in 
an environmental cleanup lawsuit.  The suit involves contamination of a 
Milwaukee area industrial site by wood chips characteristic of those 
used in the manufactured gas process.  Wisconsin Gas believes it is not 
the source of the contaminated wood chips and is vigorously defending 
the suit.  Although Wisconsin Gas is unable to predict the outcome of 
the litigation, management believes that amounts recovered from its 
insurance carriers or through rate recovery will be sufficient to cover 
any such liability.

<PAGE>
<PAGE>  32
Wisconsin Gas has identified two previously owned sites on which 
it operated manufactured gas plants. Such plants ceased operations prior 
to the mid-1950's. Wisconsin Gas completed a comprehensive review of its 
potential environmental liabilities stemming from these two former 
manufactured gas plant sites.  Significant technological developments, 
lower unit costs and the recognition of the "brown fields" concept by 
regulatory agencies resulted in a reduction in 1997 in the estimate of 
the probable liability for cleanup to $12 million. This cleanup estimate 
considered a number of factors, including the estimated extent and 
volume of contaminated soil and/or groundwater and is based on current 
undiscounted costs. In addition, management believes it is possible, but 
not likely, that approximately $5 million in additional remediation 
costs may be incurred. Expenditures over the next three years are 
expected to total approximately $8 million. These new estimates have 
been reflected in Wisconsin Gas's Balance Sheet as of December 31, 1997.
The cleanup estimate discussed above includes the costs of 
feasibility studies, data collection, soil and groundwater remediation 
activities and ongoing monitoring activities through 2017. Environmental 
remediation work for one of the sites commenced in the first quarter of 
1998 and will continue through 1999. It is reasonably possible that, due 
to uncertainties associated with defining the nature and extent of 
environmental contamination, application of laws and regulations by 
regulatory authorities and changes in remediation technology, the 
ultimate cost of remediation could change in the future. Wisconsin Gas 
periodically reviews its accrued liabilities for such remediation costs 
as evidence becomes available indicating that its remediation liability 
has changed.
Due to anticipated regulatory treatment, changes in the recorded 
liability do not immediately impact net income. Under the current 
ratemaking treatment approved by the PSCW, the costs expended in the 
environmental remediation of these sites, net of any insurance proceeds, 
would be deferred and recovered from gas customers.

  d.  Other

The Company is party to various legal proceedings arising in the 
ordinary course of business which are not expected to have a material 
effect on Wisconsin Gas's financial position or results of operation.

8.  BENEFIT PLANS

  a.  Pension Plans

Wisconsin Gas has non-contributory pension plans which cover 
substantially all its employees. Employer contributions and funding 
policies are consistent with funding requirements of Federal law and 
regulations. Commencing November 1, 1992, Wisconsin Gas pension costs or 
credits included in the utility cost of service have been calculated in 
accordance with SFAS No. 87 and are recoverable from customers. Prior to 
this date, pension costs were recoverable in rates as funded. The 
cumulative difference between the amounts funded and the amounts based 
on SFAS No. 87 through November 1, 1992, is recorded as a regulatory 
liability and is being amortized as a reduction of pension expense over 
an eight-year period effective November 1, 1994.

<PAGE>
<PAGE>  33
Subsequent to the 1997 measurement date, WICOR's Board of 
Directors approved certain amendments to the plan for non-represented 
employees of Wisconsin Gas, effective January 1, 1998.  Such amendments 
change the manner in which benefits accrue and the time at which 
benefits become payable under the non-represented plan. Based on the 
requirements of SFAS No. 87, Wisconsin Gas will measure plan assets and 
liabilities at the January 1, 1998 amendment effective date. Wisconsin 
Gas expects this interim 1998 measurement will result in an approximate 
$14 million decrease to the accumulated benefit obligation compared to 
obligations measured prior to the plan amendment. Based on this interim 
measurement, Wisconsin Gas expects that 1998 pension income will 
increase compared to the 1997 reported amount.

The following table sets forth the funded status of pension plans at 
December 31, 1997 and 1996.

<TABLE>
<CAPTION>
                                         Assets Exceed        Accumulated Benefits
                                      Accumulated Benefits        Exceed Assets
                                     ----------------------  ----------------------
(Thousands of Dollars)                  1997        1996        1997        1996
-------------------------------      ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>
Accumulated benefit obligation
  Vested benefits                    $ (71,527)  $ (65,835)  $  (4,139)  $  (3,317)
  Nonvested benefits                   (16,997)    (15,379)       (339)     (1,400)
                                     ----------  ----------  ----------  ----------
                                       (88,524)    (81,214)     (4,478)     (4,717)
Effect of projected future
  compensation levels                  (34,385)    (30,793)       (627)       (581)
                                     ----------  ----------  ----------  ----------
Projected benefit obligation          (122,909)   (112,007)     (5,105)     (5,298)
Plan assets at fair value              209,160     176,991           -           -
                                     ----------  ----------  ----------  ----------
Plan assets greater (less) than
  projected benefit obligation          86,251      64,984      (5,105)     (5,298)
Unrecognized net (asset)
  liability at September 30,
  1985 being recognized over
  approximately 16 years                (9,907)    (11,380)        286         498
Unrecognized prior service costs         3,018       3,358         128         137
Unrecognized net (gain) loss           (44,150)    (26,850)      1,655       1,132
Additional minimum liability recorded        -           -      (1,442)     (1,206)
                                     ----------  ----------  ----------  ----------
Accrued pension asset (liability)    $  35,212   $  30,112   $  (4,478)  $  (4,737)
                                     ==========  ==========  ==========  ==========
</TABLE>

	The weighted average discount rate assumptions used in determining 
the actuarial present value of the projected benefit obligation were 
7.25%, 7.75% and 7.5% for 1997, 1996 and 1995, respectively.  The 
expected long-term rate of return on assets was 9.0% for 1997 and 1996 
and 8.5% for 1995.  The expected long-term rate of compensation growth 
was 4.5% for 1997 and 1996 and 5.0% for 1995.

<PAGE>
<PAGE>  34
	Net pension costs for each of the years ended December 31, include 
the following (income) expense items:

(Thousands of Dollars)              1997        1996        1995
---------------------------      ----------  ----------  ----------
Service costs                    $   3,139   $   3,732   $   3,529
Interest costs on projected
  benefit obligations                9,046       9,269       9,305
Actual (gain) on plan assets       (40,067)    (21,576)    (21,057)
Net amortization and deferral       23,450       6,114       7,232
Amortization of
  regulatory liability              (2,851)     (2,851)     (2,851)
                                 ----------  ----------  ----------
Net pension income               $  (7,283)  $  (5,312)  $  (3,842)
                                 ==========  ==========  ==========

  b.  Postretirement Health Care and Life Insurance

In addition to providing pension benefits, Wisconsin Gas provides 
certain health care and life insurance benefits for retired employees 
when they reach normal retirement age while working for Wisconsin Gas.  
Wisconsin Gas funds the accrual annually based on the maximum tax 
deductible amount.
Commencing January 1, 1992, Wisconsin Gas postretirement benefit 
costs have been calculated in accordance with SFAS No. 106 and are 
recoverable from customers.  The cumulative difference between the 
amounts funded and the amounts based on SFAS No. 106 through January 1, 
1992, is recorded as a regulatory asset and is being amortized over a 
twenty-year period effective January 1, 1992.
Subsequent to the 1997 measurement date, WICOR's Board of 
Directors approved certain amendments to the plan for non-represented 
employees of Wisconsin Gas, effective January 1, 1998. Such amendments 
change the manner in which benefits accrue and the time at which 
benefits become payable under the non-represented plan and impose a 
limitation on the dollar amount of the employer's share of the cost of 
covered benefits incurred by a plan participant. Wisconsin Gas expects 
this interim 1998 measurement will result in an approximate $15 million 
decrease to the accumulated benefit obligation compared to obligations 
measured prior to the plan amendment. Based on this interim measurement, 
the Company expects that the 1998 postretirement benefit cost will 
decrease compared to the 1997 reported amount.

Net postretirement health care and life insurance costs for each 
of the years ended December 31 consisted of the following components:

(Thousands of Dollars)               1997        1996        1995
----------------------            ----------  ----------  ----------
Service cost                      $   1,920   $   2,507   $   1,847
Interest cost on projected
  benefit obligation                  5,388       5,836       5,336
Actual (gain) on plan assets        (11,356)     (4,695)     (6,185)
Amortization of regulatory asset      2,778       2,778       2,778
Net amortization and deferral         5,579         460       2,477
                                  ----------  ----------  ----------
Net postretirement benefit cost   $   4,309   $   6,886   $   6,253
                                  ==========  ==========  ==========


<PAGE>
<PAGE>  35
The following table sets forth the plans' funded status, 
reconciled with amounts recognized in Wisconsin Gas's Balance Sheet at 
December 31, 1997 and 1996, respectively.

(Thousands of Dollars)                    1997        1996
-----------------------------------    ----------  ----------
Retirees                               $ (40,981)  $ (36,748)
Active employees                         (45,005)    (43,179)
                                       ----------  ----------
Accumulated benefit obligation           (85,986)    (79,927)
Plan assets at fair value                 58,907      46,562
                                       ----------  ----------
Accumulated benefit obligation
  in excess of plan assets               (27,079)    (33,365)
Unrecognized prior service costs         (13,475)    (14,432)
Unrecognized actuarial (loss)             (8,388)     (3,562)
                                       ----------  ----------
Postretirement benefit obligation      $ (48,942)  $ (51,359)
                                       ==========  ==========

The postretirement benefit cost components for 1997 were 
calculated assuming health care cost trend rates beginning at 11% in 
1997 and decreasing to 5% in 17 years. The health care cost trend rate 
has a significant effect on the amounts reported. Increasing the assumed 
health care cost trend rates by one percentage point in each year would 
increase the accrued postretirement benefit as of December 31, 1997, by 
$12.3 million and the aggregate of the service and interest cost 
components of postretirement expense by $1.3 million.
The assumed discount rate used in determining the actuarial 
present value of the accrued postretirement benefit obligation was 
7.25%, 7.75% and 7.5% in 1997, 1996 and 1995, respectively.  Plan assets 
are primarily invested in equities and fixed income securities.

  c.  Retirement Savings Plans

Wisconsin Gas maintains various employee savings plans, which 
provide employees a mechanism to contribute amounts up to 16% of their 
compensation for the year. Wisconsin Gas matching contributions may be 
made for up to 5% of eligible compensation including 1% for the Employee 
Stock Ownership Plan (ESOP). See Note 9.d.  Total contributions were 
valued at $1.2 million in 1997, 1996 and 1995.

  d.  Employee Stock Ownership Plan

In November 1991, WICOR established an ESOP covering non-union 
employees of Wisconsin Gas. The ESOP funds employee benefits of up to 1% 
of compensation with WICOR common stock distributed through the ESOP.
The ESOP used the proceeds from a $10 million, 3-year adjustable 
rate loan (6.2% interest rate at December 31, 1997), guaranteed by 
WICOR, to purchase 431,266 shares of WICOR common stock. The ESOP has 
extended the adjustable rate loan, with similar terms, until May 31, 
2002.  Because WICOR has guaranteed the loan, the unpaid balance ($3.6 
million) is shown as long-term debt with a like amount of unearned 
compensation being recorded as a reduction of common equity on WICOR's 
balance sheet.
The ESOP trustee is repaying the $10 million loan with dividends 
on shares of WICOR common stock held by the ESOP and with Wisconsin Gas 
contributions to the ESOP.

<PAGE>
<PAGE>  36
9.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts 
receivable and short-term borrowings approximates fair value due to the 
short-term maturities of these instruments.
The fair value of Wisconsin Gas's long-term debt is estimated 
based on the quoted market prices of U.S. Treasury issues having a 
similar term to maturity, adjusted for Wisconsin Gas's bond rating and 
the present value of future cash flows.
Because Wisconsin Gas operates in a regulated environment, the 
Company would probably not be affected by realization of gains or losses 
on extinguishment of its  outstanding fixed-rate debt. Realized gains 
would be refunded to and losses would be recovered from Wisconsin Gas 
customers through gas rates.
The estimated fair value of Wisconsin Gas's long-term debt at 
December 31 is as follows:

                                       1997                 1996
                                ------------------   ------------------
                                Carrying   Fair      Carrying   Fair
                                 Amount    Value      Amount    Value
                                --------  --------   --------  --------
Cash and cash equivalents       $  7,854  $  7,854   $  8,960  $  8,960
Accounts receivable             $ 72,238  $ 72,238   $ 73,540  $ 73,540
Short-term debt                 $ 78,671  $ 78,671   $ 65,500  $ 65,500
Long-term debt                  $110,657  $111,999   $152,453  $152,154

10.	QUARTERLY FINANCIAL DATA (Unaudited)

Because seasonal factors significantly affect Wisconsin Gas 
operations, the following data is not comparable between quarters:

(Thousands of dollars)      First      Second      Third      Fourth 
-----------------------   ---------  ----------  ---------  ----------
1997
Operating Revenues        $226,242   $  93,280   $ 58,537   $ 158,661
Operating Income (Loss)   $ 41,671   $   3,353   $ (7,835)  $  22,286
Net Income (Loss)         $ 23,916   $     331   $ (6,576)  $  11,664

1996
Operating Revenues        $216,111   $ 107,269   $ 71,610   $ 178,265
Operating Income (Loss)   $ 46,753   $   2,734   $ (8,139)  $  24,228
Net Income (Loss)         $ 26,502   $       1   $ (6,612)  $  12,833

<PAGE>
<PAGE>  37
                        INDEX TO Exhibits

3.1  Wisconsin Gas Company Restated Articles of Incorporation, as 
amended (incorporated by reference to Exhibit 3.1 to the Company's 
Annual Report on Form 10-K for 1988).

3.2  Amendment to Wisconsin Gas Company By-laws, effective February 
28, 1995 (incorporated by reference to Exhibit 3.2 to the Company's 
Annual Report on Form 10-K for 1994).

3.3  Wisconsin Gas Company By-laws, as amended (incorporated by 
reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K 
for 1994).

4.1  Indenture of Mortgage and Deed of Trust, dated as of November 1, 
1950, between Milwaukee Gas Light Company and Mellon National Bank 
and Trust Company and D. A. Hazlett, Trustees (incorporated by 
reference to Exhibit 7-E to the Company's Registration Statement No. 
2-8631).

4.2  Bond Purchase Agreement, dated December 31, 1981, between 
Wisconsin Gas Company and Teachers Insurance and Annuity Association 
of America relating to the issuance and sale of $30,000,000 principal 
amount of First Mortgage Bonds, Adjustable Rate Series due 2002 
(incorporated by reference to Exhibit 4-6 to the Company's Form S-3 
Registration Statement No. 33-43729).

4.3  Indenture, dated as of September 1, 1990, between Wisconsin Gas 
Company and First Wisconsin Trust Company, Trustee (incorporated by 
reference to Exhibit 4.11 to the Company's Form S-3 Registration 
Statement No. 33-36639).

4.4  Officers' Certificate, dated as of November 19, 1991, setting 
forth the terms of Wisconsin Gas Company's 7-1/2% Notes due 1998 
(incorporated by reference to Exhibit 4.1 to Wisconsin Gas Company's 
Form 8-K Current Report dated November 19, 1991).

4.5  Officers' Certificate, dated as of September 15, 1993, setting 
forth the terms of the Company's 6.60% debentures due 2013 
(incorporated by reference to Exhibit 4.1 to the Company's Form 8-K 
Current Report for September, 1993).

4.6  Officers' Certificate, dated as of November 7, 1995, setting 
forth the terms of the Company's 6-3/8% Notes due 2005 (incorporated 
by reference to the Company's Form 8-K Current Report dated November 
7, 1995).

4.7  Revolving Credit Agreement, dated as of August 6, 1997, among 
Wisconsin Gas Company and Citibank, N.A., as Agent, Firstar Bank 
Milwaukee, N. A., Harris Trust & Savings Bank and M&I Marshall & 
Ilsley Bank (incorporated by reference to Exhibit 4.1 to the 
Company's Quarterly Report on Form 10-Q dated as of October 31, 
1997).

4.8  WICOR, Inc. Master Savings Trust Agreement, dated as of October 
1, 1996, between WICOR, Inc. and Marshall & Ilsley Trust Company 
(incorporated by reference to Exhibit 4.1 to the Company's Quarterly 
Report on Form 10-Q dated as of October 30, 1996).

<PAGE>
<PAGE>  38
4.9  Loan Agreement, dated as of March 29, 1996, by and among ABN 
AMRO Bank N.V., Wisconsin Gas Company Employee's Savings Plans Trust 
and WICOR, Inc. (incorporated by reference to Exhibit 4.1 to the 
Company's Quarterly Report on Form 10-Q dated as of April 26, 1996).

4.10  First Amendment, dated as of November 27, 1996, to Loan 
Agreement, dated as of March 29, 1996, by and among WICOR, Inc. 
Master Savings Trust (formerly the Wisconsin Gas Company Employees' 
Savings Plans Trust), WICOR, Inc. and ABN AMRO Bank, N.V. 
(incorporated by reference to Exhibit 4.16 to the Company's Annual 
Report on Form 10-K for 1996).

10.1  Service Agreement, dated as of June 1, 1994, among WICOR, Inc., 
Wisconsin Gas Company, WEXCO of Delaware, Inc., Sta-Rite Industries, 
Inc. and SHURflo Pump Manufacturing Co. (incorporated by reference to 
Exhibit 10.1 to the Company's Annual Report on Form 10-K for 1995).

10.2#  WICOR, Inc. 1992 Director Stock Option Plan (incorporated by 
reference to Exhibit 4.1 to WICOR, Inc.'s Form S-8 Registration No. 
33-67132).

10.3#  Form of nonstatutory stock agreement used in conjunction with 
the WICOR, Inc. 1992 Director Stock Option Plan (incorporated by 
reference to Exhibit 4.2 to WICOR, Inc.'s Form S-8 Registration 
Statement No. 37-67132).

10.4#  WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by 
reference to Exhibit 4.1 to the WICOR, Inc. Form S-8 Registration 
Statement No. 33-55755).

10.5#  Form of nonstatutory stock option agreement used in connection 
with the WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by 
reference to Exhibit 4.2 to the WICOR, Inc. Form S-8 Registration 
Statement No. 33-55755).

10.6#  Form of restricted stock agreement used in connection with the 
WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by 
reference to Exhibit 4.3 to the WICOR, Inc. Form S-8 Registration 
Statement No. 33-55755).

10.7#  Form of Key Executive Employment and Severance Agreement 
between the Company and certain of its executive officers 
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly 
Report on Form 10-Q dated June 30, 1997).

10.8#  Wisconsin Gas Company Principal Officers' Supplemental 
Retirement Income Program (incorporated by reference to Exhibit 10.6 
to the Company's Annual Report on Form 10-K for 1993).

10.9#  Wisconsin Gas Company 1998 Officers' Incentive Compensation 
Plan.

10.10#  Wisconsin Gas Company Group Travel Accident Plan 
(incorporated by reference to Exhibit 10.23 to the Company's Annual 
Report on Form 10-K for 1992).

10.11#  Form of Deferred Compensation Agreement between Wisconsin Gas 
Company and certain of its officers (incorporated by reference to 
Exhibit 10.25 to the Company's Annual Report on Form 10-K for 1991).

<PAGE>
<PAGE>  39
10.12#  WICOR, Inc. 1987 Stock Option Plan, as amended (incorporated 
by reference to Exhibit 4.1 to the Company's Form S-8 Registration 
Statement No. 33-67134).

10.13#  Form of nonstatutory stock option agreement used in 
connection with the WICOR, Inc. 1987 Stock Option Plan (incorporated 
by reference to Exhibit 10.20 to the Company's Annual Report on Form 
10-K for 1991).

13  "Financial Review" portions of WICOR, Inc. 1997 Annual Report to 
Shareholders.  

27  Financial Data Schedule. (EDGAR version only)