INDIANA GAS CO INC, 10-K405/A, 2000-05-15

INDIANA GAS CO INC
10-K405/A, 2000-05-15
NATURAL GAS DISTRIBUTION

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May 15, 2000

Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413

Gentlemen:

We are transmitting herewith Indiana Gas Company, Inc.'s
Revised Annual Report on Form 10-K for the year ended
December 31, 1999, pursuant to the requirements of Section 13
of the Securities Exchange Act of 1934.

Very truly yours,

/s/James A. Hummel, II
James A. Hummel, II

JAH:tmw

Enclosures

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549

FORM 10-K/A

(Mark One)
[ ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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

For the transition period from October 1, 1999 to December 31,
1999

Commission File Number 1-6494

INDIANA GAS COMPANY, INC.
(Exact name of Registrant as specified in its charter)

INDIANA 35-0793669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)

1630 North Meridian Street,
Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code 317-926-3351

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which
registered
None None

Securities registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

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. Yes [X] No [ ]__

Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date.

Common Stock-Without par value 9,080,770 April 30, 2000
Class Number of shares Date

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ( 229.405 of this
chapter) is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in
Part III of this Form 10-K/A or any amendment to this Form 10-
K/A.[ ]

Table of Contents

Part I
Business
Property
Legal Proceedings
Submission of Matters to a Vote of Security Holders
Executive Officers of the Company
Part II
Market for the Registrant's Common Equity and Related
Stockholder Matters
Selected Financial Data
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants
Part III
Directors and Executive Officers of the Registrant
Executive Compensation
Securities Ownership of Certain Beneficial Owners and
Management
Certain Relationships and Related Transactions
Part IV
Exhibits, Financial Statements Schedules, and Reports on
Form 8-K

Part I

Item 1. Business

a) General Development of the Business.

Indiana Gas Company, Inc. (Indiana Gas or the
company) is an operating public utility engaged in
the business of providing gas utility service in
the state of Indiana. It was incorporated under
the laws of the state of Indiana on July 16, 1945.
Prior to March 31, 2000, all of the outstanding
shares of common stock of the company were owned
by Indiana Energy, Inc. (Indiana Energy), a public
utility holding company.

On June 14, 1999, Indiana Energy and SIGCORP, Inc.
(SIGCORP) jointly announced the signing of a
definitive agreement to combine into a new holding
company named Vectren Corporation (Vectren). SIGCORP
was an investor-owned energy and telecommunications
company that through its subsidiaries provided
electric and gas service to southwest Indiana and
energy and telecommunication products and services
throughout the Midwest and elsewhere.

The merger was conditioned, among other things, upon
the approvals of the shareholders of each company and
customary regulatory approvals. On December 17, 1999,
the merger was approved by the shareholders of each
company. On December 20, 1999, the Federal Energy
Regulatory Commission (FERC) issued an order
approving the proposed merger. In approving the
merger, the FERC concluded that the merger was in the
public interest and would not adversely affect
competition, rates or regulation. On January 18,
2000, the Department of Justice informed the
Companies that it had concluded its review of their
Hart Scott Rodino notification filings and would take
no further action. On March 8, 2000, approval was
received from the (SEC) under the Public Utility
Holding Company Act to consummate the merger. The
merger was therefore completed on March 31, 2000.

As provided for in the merger agreement, Indiana
Energy shareholders received one share of Vectren
common stock for each share of Indiana Energy held at
the March 31, 2000 closing date. SIGCORP shareholders
received 1.333 shares of Vectren common stock for
each share of SIGCORP held at the March 31, 2000
closing date. The transaction was accounted for as a
pooling of interests. The
transaction was a tax-free exchange of shares.

Indiana Gas Company, Inc. and Southern Indiana Gas
and Electric Company, Inc. (SIGECO), are operating as
subsidiaries of Vectren.

Vectren has a December 31 fiscal year end. In order
to report Indiana Gas's financial operations on a
consistent basis with Vectren Corporation, Indiana
Gas changed its year end from September 30 to
December 31. This was reported in a Form 8-K filed
on April 14, 2000. Indiana Gas is reporting its
transition period of October 1, 1999 to December 31,
1999 in this amended Form 10-K. This amended 10-K
has been prepared to reflect the entire fiscal years
ended December 31, 1999, 1998 and 1997.

During 1999, Indiana Gas supplied gas to
about 503,000 residential, small commercial and
contract (large commercial and industrial)
customers in 311 communities in 49 of the 92
counties in the state of Indiana. The service
area has a population of approximately 2 million
and contains diversified manufacturing and
agriculture-related enterprises. The principal
industries served include automotive parts and
accessories, feed, flour and grain processing,
metal castings, aluminum products, gypsum
products, electrical equipment, metal specialties
and glass.

The largest communities served include
Muncie, Anderson, Lafayette-West Lafayette,
Bloomington, Terre Haute, Marion, New Albany,
Columbus, Jeffersonville, New Castle and
Richmond. While Indiana Gas does not serve in
Indianapolis, it does serve the counties and
communities which border that city.

For the year ended December 31, 1999,
residential customers provided 66 percent of
revenues, small commercial 22 percent and
contract 12 percent. Approximately 99 percent of
Indiana Gas' customers used gas for space
heating, and revenues from these customers for
the year were approximately 96 percent of total
operating revenues. Sales of gas are seasonal
and strongly affected by variations in weather
conditions. During the year ended December 31,
1999, Indiana Gas added approximately 11,600
residential and commercial customers.

Indiana Gas sells gas directly to
residential, small commercial and contract
customers at approved rates. Indiana Gas also
transports gas through its pipelines at approved
rates to contract customers which have purchased
gas directly from producers or through brokers
and marketers. The total volumes of gas provided
to both sales and transportation customers is
referred to as throughput.

Gas transported on behalf of end-use customers in 1999
represented 44 percent (51,878 MDth) of throughput
compared to 43 percent (46,794 MDth) in 1998 and 35
percent (43,579 MDth) in 1997. Although revenues are
lower, rates for transportation generally provide the same
margins as would have been earned had the gas been sold
under normal sales tariffs.

Effective April 1, 1996, Indiana Gas
purchases all of its natural gas and winter
delivery service from ProLiance Energy, LLC, a
gas marketing affiliate of Indiana Energy (see
Item 7, ProLiance Energy, LLC). Prices for gas
and related services purchased by Indiana Gas are
determined primarily by market conditions and
rates established by the Federal Energy
Regulatory Commission. Indiana Gas' rates and
charges, terms of service, accounting matters,
issuance of securities, and certain other
operational matters are regulated by the Indiana
Utility Regulatory Commission (IURC).

Adjustments to Indiana Gas' rates and
charges related to the cost of gas are made
through gas cost adjustment (GCA) procedures
established by Indiana law and administered by
the IURC. The IURC has applied the statute
authorizing the GCA procedures to reduce rates
when necessary so as to limit net operating
income, after adjusting to normal weather, to the
level authorized in the last general rate order.
The earnings test provides that no refund be paid
to the extent a utility has not earned its
authorized utility operating income over the
previous 60 months (or during the period since
the utility's last rate order, if longer).

Information regarding environmental matters
affecting the company is incorporated herein by
reference to Item 7, Environmental Matters.

Indiana Gas had 735 full-time employees and 31
part-time employees as of December 31, 1999.

During 1997, the Indiana Gas Board of Directors
authorized management to undertake the actions
necessary and appropriate to restructure Indiana
Gas' operations. These actions by Indiana Gas
were consistent with Indiana Energy, Inc.'s
(Indiana Gas' parent) growth strategy that was
approved by its board of directors during 1997.
See Item 7, Growth Strategy and Corporate
Restructuring.

Item 2. Property

The properties of Indiana Gas are used for
the purchase, production, storage and
distribution of gas and are located primarily
within the state of Indiana. As of December 31,
1999, such properties included 11,174 miles of
distribution and transmission mains; 531,324
meters; five reservoirs currently being used for
the underground storage of purchased gas with
approximately 71,484 acres of land held under
storage easements; 8,017,943 Dth of gas in
company-owned underground storage with a daily
deliverability of 134,160 Dth; 171,451 Dth of gas
in contract storage with a daily deliverability
of 3,563 Dth; and four liquefied petroleum
(propane) air-gas manufacturing plants with a
total daily capacity of 32,700 Dth of gas.

Indiana Gas' capital expenditures during the
year ended December 31, 1999, amounted to $62.9
million.

Item 3. Legal Proceedings

See Item 8, Note 11 for litigation matters
involving insurance carriers pertaining to
Indiana Gas' former manufactured gas plants and
storage facilities.

See Item 8, Note 12 for discussion of
litigation matters relating to the gas supply and
portfolio administration agreements between
ProLiance and Indiana Gas and ProLiance and
Citizens Gas and Coke Utility.

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

On December 17, 1999, the shareholders of Indiana
Energy, Inc. approved the merger between Indiana
Energy, Inc. and SIGCORP, Inc.

Item 4a. Executive Officers of the Company

The Executive Officers of the company as of
December 31, 1999 are as follows:

<TABLE>

Family
Relation- Office or Date Elected
Name Age ship Position Held Or Appointed(1)

<S> <C> <C> <C> <C>
Lawrence A. Ferger 65 None Chairman and Chief (Retired May 31, 1999) (2)
Executive Officer Oct. 1, 1997
Chairman, President and
Chief Executive Officer Jan. 26, 1996
President and Chief
Executive Officer July 1, 1987

Niel C. Ellerbrook 50 None President and Chief
Executive Officer June 1, 1999
President Oct. 1, 1997
Executive Vice President
and Chief Financial
Officer Jan . 22, 1997
Senior Vice President and
Chief Financial Officer July 1, 1987

Paul T. Baker 59 None Executive Vice
President and Chief
Operating Officer Oct. 1, 1997
Senior Vice President
and Chief Operating
Officer Aug. 1, 1991

Anthony E. Ard 58 None Secretary Jul. 31, 1998
Senior Vice President of
Corporate Affairs Jan. 9, 1995
(through
Sep. 30, 1997)
Vice President -
Corporate Affairs Jan. 11, 1993

Timothy M. Hewitt 49 None Vice President of
Operations and Engineering Jan. 9, 1995
Vice President of Sales
and Field Operations Jan. 14, 1991
</TABLE>

(1) Each of the officers has served continuously since the dates indicated
unless otherwise noted.

(2) Continues role as Chairman of the Board of Indiana Gas Company, Inc.

With the consummation of the merger on March 31, 2000 the officers
of the company are as follows:

<TABLE>
Date Elected
Name Position Held Or Appointed(1)
<S> <C> <C>
Timothy M. Hewitt President March 31, 2000

Jerome A. Benkert, Jr. Executive Vice President and March 31, 2000
Chief Financial Officer

Ronald E. Christian Senior Vice President, March 31, 2000
General Counsel and Secretary

Timothy L. Burke Vice President and Treasurer March 31, 2000

M. Susan Hardwick Vice President and Controller March 31, 2000

Robert E. Heidorn Deputy General Counsel, March 31, 2000
Assistant Secretary and
Assistant Treasurer

Eric J. Schach Vice President and March 31, 2000
Chief Information Officer

Thomas J. Zabor Vice President, March 31, 2000
Employee Relations

</TABLE>

(1) Each of the officers has served continuously since the dates
indicated unless otherwise noted.

Part II

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

All of the outstanding shares of Indiana Gas'
common stock are owned by Indiana Energy, Inc. at
December 31, 1999. With the consumation of the
merger, Vectren now owns all of common stock of
Indiana Gas. The common stock is not traded.

During 1999, the company paid dividends of
$7.0 million, $7.0 million, $7.3 million and $5.7
million in the first, second, third and fourth
quarters, respectively.

During 1998, the company paid dividends of
$6.8 million, $6.8 million, $7.0 million and $6.9
million in the first, second, third and fourth
quarters, respectively.

Item 6. Selected Financial Data

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
(Thousands)

Year Ended December 31 (1) 1999 1998 1997(3) 1996 1995
<S> <C> <C> <C> <C> <C>
Operating revenues $431,361 $420,459 $528,058 $548,766 $445,057
Margin 204,544 188,570 208,320 207,996 199,876
Operating expenses 158,843 146,569 178,741 156,837 145,627
Operating income 45,701 42,001 29,579 51,159 54,249
Other income - net 1,010 626 1,118 1,162 1,537
Interest expense 16,969 15,802 17,049 16,200 15,528
Net income $ 29,742 $ 26,825 $ 13,648 $ 36,121 $ 40,258

Ratio of earnings to fixed 3.6 3.5 2.2 4.4 4.9
charges

Common shareholder's equity $248,622 $245,880 $246,406 $291,453 $280,832

Long-term debt (2) 211,849 191,964 165,000 139,733 193,693

$460,471 $437,844 $411,406 $431,186 $474,525

Total Assets $739,870 $686,757 $698,889 $750,928 $740,790

Total throughput 118,861 109,600 123,922 124,999 118,480

Annual heating degree days
as a percent of normal 87% 79% 101% 105% 99%

Utility customers served -
Average 502,958 491,371 480,793 467,745 457,801

</TABLE>

(1) On March 31, 2000, Indiana Energy and SIGCORP were merged into
Vectren and Vectren now owns all of the outstanding shares of
capital stock of Indiana Gas. Since Vectren has a December 31
fiscal year end, Indiana Gas changed its fiscal year end from
September 30 to December 31 accordingly. This Form 10-K has been
amended to reflect financial information for the entire fiscal years
ended December 31, 1999, 1998 and 1997.

(2) Includes current maturities; excludes sinking fund
requirements.

(3) Reflects the recording of pre-tax restructuring costs of $39.5
million in 1997 (see Item 8, Note 3).

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

Results of Operations

Net income for Indiana Gas Company, Inc. and subsidiaries (Indiana
Gas or the company) for the last three years were as follows:

<TABLE>

(Millions) 1999 1998 1997(1)
<S> <C> <C> <C>
Net Income $29.7 $26.8 $13.6

</TABLE>

(1) Reflects restructuring costs of $24.5 million after-tax (see
Growth Strategy and Corporate Restructuring).

Margin (Operating Revenues Less Cost of Gas)
In 1999, utility margin increased 8 percent ($16.0 million) when
compared to 1998. The increase is primarily attributable to
weather 8 percent colder than the same period last year, but 13
percent warmer than normal, and the addition of new residential and
commercial customers.

In 1998, utility margin decreased 9 percent ($19.8 million) when
compared to 1997. The decrease is primarily attributable to weather
22 percent warmer than the prior year and 21 percent warmer than
normal, offset somewhat by the addition of new residential and
commercial customers.

In 1999, total system throughput (combined sales and
transportation) increased 8 percent (8.4 MMDth) when compared to
last year. In 1998, throughput decreased 11 percent (14.1 MMDth)
when compared to 1997. Indiana Gas' rates for transportation
generally provide the same margins as are earned on the sale of gas
under its sales tariffs. Approximately one-half of total system
throughput represents gas used for space heating and is affected by
weather

Total average cost per dekatherm of gas purchased (average
commodity and demand) was $3.01 in 1999, $3.65 in 1998 and $3.64 in
1997. The price changes are due primarily to changing commodity
costs in the marketplace.

Operating Expenses
Operation and maintenance expenses increased $6.0 million in 1999
due in part to administrative and service fees paid to Indiana Gas'
affiliate, IEI Services, LLC (IEI Services). Higher administrative
service costs associated with the company's new customer
information and work management systems and rental expense related
to buildings previously owned also contributed to the increase.
These increases were partially offset by the adjustment to the
company's severance accrual originally recorded as part of the
restructuring charge in 1997.

Operation and maintenance expenses increased approximately $5.7
million in 1998 when compared to 1997. The increase is due
primarily to administrative and service fees paid to Indiana Gas'
affiliate, IEI Services, LLC (IEI Services) related to assets now
owned by IEI Services. IEI Services began providing support
services to Indiana Gas effective October 1, 1997 (see resulting
lower depreciation and amortization below). The increase was
offset somewhat by lower labor costs and related benefits resulting
from work force reductions.

Restructuring costs of $39.5 million (pre-tax) were recorded in
1997 related to the implementation of Indiana Energy, Inc.'s new
growth strategy during that year (see Growth Strategy and Corporate
Restructuring).

Depreciation and amortization increased in 1999 primarily due to
additions to plant to serve new customers and to maintain
dependable service to existing customers. Depreciation and
amortization decreased in 1998 due primarily to the transfer of
assets to IEI Services, and assets held for disposal which were
written down to estimated fair values in 1997. The decrease was
partially offset by additions to plant.

Federal and state income taxes increased in 1999 and 1998 due
primarily to changes in taxable income.

Taxes other than income taxes increased in 1999 by approximately
$1.8 million due to higher property tax expense, the result of
additions to plant. Taxes other than income taxes decreased in 1998
due to lower property tax expense and reduced gross receipts tax
expense.

Interest Expense
In 1999, interest expense increased 1.2 million compared to 1998.
The increase is primarily due to an increase in average debt
outstanding. Interest expense decreased in 1998 due to a decrease
in interest rates, partially offset by an increase in the average
outstanding debt.

Other Operating Matters

Indiana Energy and SIGCORP Merger
On June 14, 1999, Indiana Energy and SIGCORP, Inc. (SIGCORP)
jointly announced the signing of a definitive agreement to combine
into a new holding company named Vectren Corporation (Vectren).
SIGCORP was an investor-owned energy and telecommunications company
that through its subsidiaries provided electric and gas service to
southwest Indiana and energy and telecommunication products and
services throughout the Midwest and elsewhere.

The merger was conditioned, among other things, upon the approvals
of the shareholders of each company and customary regulatory
approvals. On December 17, 1999, the merger was approved by the
shareholders of each company. On December 20, 1999, the Federal
Energy Regulatory Commission (FERC) issued an order approving the
proposed merger. In approving the merger, the FERC concluded that
the merger was in the public interest and would not adversely
affect competition, rates or regulation. On January 18, 2000, the
Department of Justice informed the Companies that it had concluded
its review of their Hart Scott Rodino notification filings and
would take no further action. On March 8, 2000, approval was
received from the SEC under the Public Utility Holding Company Act
to consummate the merger. On March 31, 2000 the merger was
completed.

As provided for in the merger agreement, Indiana Energy
shareholders received one share of Vectren common stock for each
share of Indiana Energy held at the closing date. SIGCORP
shareholders received 1.333 shares of Vectren common stock for each
share of SIGCORP held at the March 31, 2000, closing date. The
transaction was accounted for as a pooling of interests. The
transaction was a tax-free exchange of shares.

Indiana Gas Company, Inc. and Southern Indiana Gas and Electric
Company, Inc., Indiana Energy's and SIGCORP's utility companies,
are operating as subsidiaries of Vectren.

Vectren, parent of Indiana Gas, has a December 31 fiscal year end.
In order to be consistent with its parent company Indiana Gas has
changed its fiscal year end from September 30 to December 31.

Growth Strategy and Corporate Restructuring
In April 1997, the Board of Directors of Indiana Energy approved a
growth strategy designed to support the company's transition into a
more competitive environment. As part of the current growth
strategy, Indiana Energy (now Vectren) will endeavor to become a
leading regional provider of energy products and services and to
grow its consolidated earnings per share by an average of 10
percent annually through 2004. To achieve such earnings growth,
Indiana Energy's (now Vectren's) aim is to grow the earnings
contribution from non-regulated operations to over 35 percent of
its total annual earnings by 2004 and to aggressively manage costs
within its utility operations and non-regulated administrative
services provider.

During 1997, the Indiana Gas Board of Directors authorized
management to undertake the actions necessary and appropriate to
restructure Indiana Gas' operations and recognize a resulting
restructuring charge of $39.5 million ($24.5 million after-tax) for
1997 as described below.

In July 1997, the company advised its employees of its plan to
reduce its work force from about 1,025 full-time employees at June
30, 1997, to approximately 800 employees by 2002. The reductions
are being implemented through involuntary separation and attrition.
Indiana Gas recorded restructuring costs of $5.4 million during
1997 related to the involuntary terminations planned under the
company's specific near-term employee reduction plan, which was
scheduled for completion by the end of 1999. These costs include
separation pay in accordance with Indiana Gas' severance policy of
$3.9 million, and net curtailment losses related to these
employees' postretirement and pension benefits. As a result of
initial work force reductions during September 1997 and primarily
attrition thereafter, most of the reductions contemplated during
the two year period and accrued originally have been achieved.
During 1999, the company reviewed its remaining accruals for costs
associated with the involuntary work force reductions. Taking into
consideration an unexpectedly high level of voluntary terminations,
the company determined that no additional significant involuntary
work force reductions were likely to occur. In 1998, $2.2 million
of involuntary termination benefits had been paid. As a result,
the severance accrual and other operating expenses were reduced by
$1.7 million during 1999.

Indiana Gas' management also committed to sell, abandon or
otherwise dispose of certain assets, including buildings, gas
storage fields and intangible plant. Indiana Gas recorded
restructuring costs of $34.1 million during 1997 to adjust the
carrying value of those assets to estimated fair value. These
assets have been sold or are no longer in use.
ProLiance Energy, LLC
ProLiance Energy, LLC (ProLiance), a nonregulated marketing
affiliate of Indiana Energy, began providing natural gas and
related services to Indiana Gas and Citizens Gas and Coke Utility
(Citizens Gas) effective April 1, 1996.

The sale of gas and provision of other services to Indiana Gas by
ProLiance is subject to regulatory review through the quarterly gas
cost adjustment proceeding currently pending before the IURC.

On September 12, 1997, the Indiana Utility Regulatory Commission
(IURC) issued a decision finding the gas supply and portfolio
administration agreements between ProLiance and Indiana Gas and
ProLiance and Citizens Gas (the gas supply agreements) to be
consistent with the public interest. The IURC's decision reflected
the significant gas cost savings to customers obtained by
ProLiance's services and suggested that all material provisions of
the agreements between ProLiance and the utilities are reasonable.
Nevertheless, with respect to the pricing of gas commodity
purchased from ProLiance and two other pricing terms, the IURC
concluded that additional review in the gas cost adjustment (GCA)
process would be appropriate and directed that these matters be
considered further in the pending, consolidated GCA proceeding
involving Indiana Gas and Citizens Gas. The IURC has not yet
established a schedule for conducting these additional proceedings.

The IURC's September 12, 1997, decision was appealed to the Indiana
Court of Appeals by certain Petitioners, including the Indiana
Office of Utility Consumer Counselor, the Citizens Action Coalition
of Indiana and a small group of large-volume customers. On October
8, 1998, the Indiana Court of Appeals issued a decision which
reversed and remanded the case to the IURC with instructions that
the gas supply agreements be disapproved. The basis for the
decision was that because the gas supply agreements provide for
index based pricing of gas commodity sold by ProLiance to the
utilities, the gas supply agreements should have been the subject
of an application for approval of an alternative regulatory plan
under Indiana statutory law.

On April 22, 1999, the Indiana Supreme Court granted a petition for
transfer of the case and will now consider the appeal of the IURC's
decision and issue its own decision on the merits of the appeal at
a later date. By granting transfer, the Supreme Court has vacated
the Court of Appeals' decision.

If the Supreme Court reverses the IURC's decision , the case will
be remanded to the IURC for further proceedings regarding the
public interest in the gas supply agreements. If the Supreme Court
affirms the IURC's decision, as described above, the reasonableness
of certain of the gas costs incurred by Indiana Gas under the gas
supply agreements will be further reviewed by the IURC in the
consolidated GCA proceeding. The existence of significant benefits
to the utilities and their customers resulting from ProLiance's
services has not been challenged on appeal. Indiana Gas and
Citizens Gas are continuing to utilize ProLiance for their gas
supplies.

On or about August 11, 1998, Indiana Gas, Citizens Gas and
ProLiance each received a Civil Investigative Demand ("CID") from
the United States Department of Justice requesting information
relating to Indiana Gas' and Citizens Gas' relationship with and
the activities of ProLiance. The Department of Justice issued the
CID to gather information regarding ProLiance's formation and
operations, and to determine if trade or commerce has been
restrained. Indiana Gas has provided all information requested and
management continues to believe that there are no significant
issues in this matter.

While the results of the ProLiance issues mentioned above cannot be
predicted, management does not expect these matters to have a
material impact on Indiana Gas' financial position or results of
operations. However, no assurance can be provided.

The Year 2000 Issue
Many existing computer programs use only two digits to identify a
year in the date field. These programs were designed and developed
without considering the impact of the upcoming change in the
century. If not corrected, many computer applications could fail or
create erroneous results by or at the year 2000. This issue relates
not only to information technology (IT), but also to non-IT related
equipment and plant that may contain embedded date-sensitive
microcontrollers or microchips.

The company has identified what it believes are its most
significant worst case Year 2000 scenarios for the purpose of
helping it to focus its Year 2000 efforts. These scenarios are the
interference with the company's ability to (1) receive and deliver
gas to customers, (2) monitor gas pressure throughout the company's
gas distribution system, (3) bill and receive payments from
customers, and (4) maintain continuous operation of its computer
systems. As discussed below, the company has taken the steps
necessary to ensure that these worst case scenarios are addressed
and any impact has been minimized.

The company has evaluated the Year 2000 readiness of all IT
hardware and software including the mainframe, network, servers,
personal computers, system and application software and
telecommunications. Almost all hardware was found to be in
compliance as a result of projects conducted in 1997 and 1998.
Replacements of major customer information and billing systems,
which had already begun in 1997, were placed into service in
January 1999. These new systems, driven by the need for additional
functionality and business flexibility, are designed to be Year
2000 compliant and have been tested. Other maintenance and project
activities conducted in 1998 and 1999 and activities scheduled for
the remainder of 1999 have been initiated to bring the remaining
software environment into compliance. The projects include
replacements, upgrades and rewrites. The company's plan for IT
items includes the following phases and timeline: (a) Assessment -
completed in 1998, (b) Strategy - completed in 1998 and (c) Design,
Implementation, Testing and Validation - completed as of
December 31, 1999. The company did not find it necessary
to postpone work on any other critical IT projects
because of efforts to achieve Year 2000 compliance.

Non-IT systems with embedded microcontrollers or microchips have
been evaluated to determine if they are Year 2000 compliant. These
systems include buildings, transportation, monitoring equipment,
process controls, engineering and construction. The internal
assessment process has been completed, and few compliance issues
were found. Software upgrades for equipment in the gas control
system were completed in July 1999.

The company has contacted its major vendors, suppliers and
customers to gather information regarding the status of their Year
2000 compliance. Although compliance issues identified from these
inquiries have been addressed, this process may not fully ensure
these parties' Year 2000 compliance. Disruptions in the operations
of these parties could have an adverse financial and operational
effect on the company.

The company has developed its contingency plan related to Year 2000
issues. This plan includes modifying the company's already existing
plans for business resumption, information technology disaster
recovery and gas supply contingencies, and considers, among other
things, alternate recovery locations, backup power generation,
adequate material supplies and personnel requirements. The
company's contingency plan was filed with the IURC, and was
tested and refined as needed by December 31, 1999.

Total costs expected to be incurred by the company to remedy its
Year 2000 issues were originally estimated at $1.5 million, which
included costs to replace certain existing systems sooner than had
been planned. The total expenditures for the remedy of Year 2000
issues approximated the original estimate.

Management believes that Year 2000 issues have been addressed on a
schedule and in a manner that will prevent such issues from having
a material impact on the company's financial position or results of
operations.

No significant issues have been encountered related to the year
2000 issue through the date of this report.

Environmental Matters
Indiana Gas is currently conducting environmental investigations
and work at 26 sites that were the locations of former manufactured
gas plants. It has been seeking to recover the costs of the
investigations and work from insurance carriers and other
potentially responsible parties (PRPs). The IURC has determined
that these costs are not recoverable from utility customers.

Indiana Gas has completed the process of identifying PRPs and now
has PRP agreements in place covering 19 of the 26 sites. The
agreements provide for coordination of efforts and sharing of
investigation and clean-up costs incurred and to be incurred at the
sites. PSI Energy, Inc. is a PRP on all 19 sites. Northern
Indiana Public Service Company is a PRP on 5 of the 19 sites.
These agreements limit Indiana Gas' share of past and future
response costs at these 19 sites to between 20 and 50 percent.
Based on the agreements, Indiana Gas has recorded a receivable from
PRPs for their unpaid share of the liability for work performed by
Indiana Gas to date, as well as accrued Indiana Gas' proportionate
share of the estimated cost related to work not yet performed.

Indiana Gas has filed a complaint in Indiana state court to
continue its pursuit of insurance coverage from three insurance
carriers, with the trial scheduled for early 2000. As of December
31, 1999, Indiana Gas has recorded settlements from other insurance
carriers in an aggregate amount of approximately $15.5 million. As
of December 31, 1999, agreements in principle have been reached
with each of these insurers.

These environmental matters have had no material impact on earnings
since costs recorded to date approximate insurance settlements
received. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with remediation
activities, it is possible that future events may require some
level of additional remedial activities which are not presently
foreseen.

For further information regarding the status of investigation and
remediation of the sites and financial reporting, see Note 11 of
the Notes to Consolidated Financial Statements.

Gas Cost Adjustment
Adjustments to Indiana Gas' rates and charges related to the cost
of gas are made through gas cost adjustment (GCA) procedures
established by Indiana law and administered by the IURC. The GCA
passes through increases and decreases in the cost of gas to
Indiana Gas' customers dollar for dollar.

In addition, the IURC has applied the statute authorizing the GCA
procedures to reduce rates when necessary so as to limit utility
operating income, after adjusting to normal weather, to the level
authorized in the last general rate order. The earnings test
provides that no refund be paid to the extent a utility has not
earned its authorized utility operating income over the previous 60
months
(or during the period since the utility's last rate order, if
longer).

New Accounting Standards
In 1999, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 131, Disclosures about Segments of an
Enterprise and Related Information. This statement establishes
standards for the way that public companies report information
about operating segments in annual financial statements and
requires that those companies report selected information about
operating segments in annual and interim financial reports issued
to shareholders. Indiana Gas has no reportable segments.

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities. The statement establishes accounting and
reporting standards requiring that every derivative instrument,
including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement requires that
changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that
receive hedge accounting. In June 1999, the FASB issued SFAS 137,
which defers the effective date of SFAS 133. ProLiance, an equity
investment of Indiana Energy (now Vectren) at December 31, 1999,
utilizes derivative instruments to manage pricing decisions,
minimize the risk of price volatility, and minimize price risk
exposure in the energy markets. The standard will be effective for
ProLiance in 2001. ProLiance has not yet quantified the impact of
adopting this statement on its financial position or results of
operations. Likewise, Indiana Gas has not yet quantified the
impact of adopting this statement on its financial position or
results of operations.

Liquidity and Capital Resources
Indiana Gas' capitalization objectives are 55-65 percent common
equity and preferred stock and 35-45 percent long-term debt.
Indiana Gas' common equity component was 54 percent of its total
capitalization at December 31, 1999.

New construction, normal system maintenance and improvements, and
information technology investments needed to provide service to a
growing customer base will continue to require substantial
expenditures. Total capital required to fund capital expenditures
and refinancing requirements for 1998 and 1999, along with
estimated amounts for 2000 through 2002, is as follows:

<TABLE>
Thousands 1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C>
Capital expenditures $ 55,320 $ 62,880 $ 57,700 $ 58,050 $ 54,000
Refinancing requirements 93,000 10,000 - - 3,000
$148,320 $ 72,880 $ 57,700 $ 58,050 $ 57,000

</TABLE>

Indiana Gas' long-term goal is to internally fund at least 75
percent of its capital expenditure program. This has helped Indiana
Gas maintain its high creditworthiness. The long-term debt of
Indiana Gas is currently rated Aa2 by Moody's Investors Service and
AA- by Standard & Poor's Corporation. In 1999, 57 percent of
Indiana Gas' capital expenditures were funded internally (i.e.,
from net income less dividends plus charges to net income not
requiring funds). In 1998, 57 percent of capital expenditures were
provided by funds generated internally. External funds required for
the 1999 construction program were obtained primarily through short-
term debt. Indiana Gas' ratio of earnings to fixed charges for
1999 was 3.6 (see Exhibit 12).

In July 1999, Indiana Gas retired $10 million of 8.90% Notes.

In July 1999, Indiana Gas filed a registration statement with the
Securities and Exchange Commission which has become effective with
respect to $100 million in debt securities. Indiana Gas expects to
issue this debt pursuant to a medium-term note program, denominated
as Series G. The net proceeds from the sale of these new debt
securities will be used for general corporate purposes, including
repayment of long-term debt and financing of Indiana Gas'
continuing construction program.

On October 5, 1999, Indiana Gas issued $30,000,000 in principal
amount of Series G Medium Term Notes bearing interest at 7.08% with
a maturity date of October 5, 2029.

Provisions under which certain of Indiana Gas' Series E, Series F
and Series G Medium-Term Notes were issued entitle the holders of
$137 million of these notes to put the debt back to Indiana Gas at
face value at certain specified dates before maturity beginning in
2000. Long-term debt subject to the put provisions during the four
years following 1999 totals $20.0 million.

Short-term cash working capital is required primarily to finance
customer accounts receivable, unbilled utility revenues resulting
from cycle billing, gas in underground storage, prepaid gas
delivery service and capital expenditures until permanently
financed. Short-term borrowings tend to be greatest during the
heating season when accounts receivable and unbilled utility
revenues are at their highest. Indiana Gas' commercial paper is
rated P-1 by Moody's and A-1+ by Standard & Poor's. Prior to March
1999, bank lines of credit had been the primary source of short-
term financing. Effective in March 1999, Indiana Gas implemented a
$100 million commercial paper program.

Forward-Looking Information

A "safe harbor" for forwarding-looking statements is provided by
the Private Securities Litigation Reform Act of 1995 (Reform Act of
1995). The Reform Act of 1995 was adopted to encourage such
forward-looking statements without the threat of litigation,
provided those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying
important factors that could cause the actual results to differ
materially from those projected in the statement. Forward-looking
statements have been and will be made in written documents and oral
presentations of Indiana Gas and its subsidiaries. Such statements
are based on management's beliefs, as well as assumptions made by
and information currently available to management. When used in
Indiana Gas and its subsidiaries' documents or oral presentations,
the words "believe," "anticipate," "endeavor," "estimate,"
"expect," "objective," "projection," "forecast," "goal," and
similar expressions are intended to identify forward-looking
statements. In addition to any assumptions and other factors
referred to specifically in connection with such forward-looking
statements, factors that could cause Indiana Gas and its
subsidiaries' actual results to differ materially from those
contemplated in any forward-looking statements included, among
others, the following:

Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unusual maintenance
or repairs; unanticipated changes to fossil fuel costs; unanticipated
changes to gas supply costs, or availability due to higher demand,
shortages, transportation problems or other developments; environmental
or pipeline incidents; transmission or distribution incidents;
unanticipated changes to electric energy supply costs, or availability
due to demand, shortages, transmission problems or other developments;
or electric transmission or gas pipeline system constraints.

Increased competition in the energy environment including effects of
industry restructuring and unbundling.

Regulatory factors such as unanticipated changes in rate-setting
policies or procedures, recovery of investments made under traditional
regulation, and the frequency and timing of rate increases.

Financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission (Commission), the Federal Energy Regulatory Commission,
state public utility commissions, state entities which regulate
natural gas transmission, gathering and processing, and similar
entities with regulatory oversight.

Economic conditions including inflation rates and monetary
fluctuations.

Changing market conditions and a variety of other factors associated
with physical energy and financial trading activities including, but
not limited to, price, basis, credit, liquidity, volatility, capacity,
interest rate, and warranty risks.

Availability or cost of capital, resulting from changes in Indiana
Gas and its subsidiaries, interest rates, and securities ratings or
market perceptions of the utility industry and energy-related
industries.

Employee workforce factors including changes in key executives,
collective bargaining agreements with union employees, or work
stoppages.

Legal and regulatory delays and other obstacles associated with
mergers, acquisitions, and investments in joint ventures.

Costs and other effects of legal and administrative proceedings,
settlements, investigations, claims, and other matters, including,
but not limited to, those described in periodic filings made with
the Commission by Indiana Gas.

Changes in federal, state or local legislature requirements, such
as changes in tax laws or rates, environmental laws and regulations.

Indiana Gas and its subsidiaries undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of changes in actual results, changes in assumptions,
other factors affecting such statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Indiana Gas' (the company's) debt portfolio contains a substantial
amount of fixed-rate long-term debt and, therefore, does not
expose the company to the risk of material earnings or cash flow
loss due to changes in market interest rates. At December 31,
1999, the company was not engaged in other contracts which would
cause exposure to the risk of material earnings or cash flow loss
due to changes in market commodity prices, foreign currency
exchange rates, or interest rates.

Item 8. Financial Statements and Supplementary Data

Management's Responsibility for Financial Statements

The management of the company is responsible for the preparation of
the consolidated financial statements and the related financial
data contained in this report. The financial statements are
prepared in conformity with generally accepted accounting
principles and follow accounting policies and principles applicable
to regulated public utilities.

The integrity and objectivity of the data in this report, including
required estimates and judgements, are the responsibility of
management. Management maintains a system of internal controls and
utilizes an internal auditing program to provide reasonable
assurance of compliance with company policies and procedures and
the safeguard of assets.

The board of directors pursues its responsibility for these
financial statements through its audit committee, which meets
periodically with management, the internal auditors and the
independent auditors, to assure that each is carrying out its
responsibilities. Both the internal auditors and the independent
auditors meet with the Audit Committee of the company's board of
directors, with and without management representatives present, to
discuss the scope and results of their audits, their comments on
the adequacy of internal accounting controls and the quality of
financial reporting.

/s/ Timothy S. Hewitt
Timothy S. Hewitt
President

Report of Independent Public Accountants

To the Shareholders and Board of Directors of Indiana Gas Company,
Inc.:

We have audited the accompanying consolidated balance sheets and
schedules of long-term debt of Indiana Gas Company, Inc. (an
Indiana corporation and wholly owned subsidiary of Indiana Energy,
Inc.) and subsidiary companies as of December 31, 1999 and 1998,
and the related consolidated statements of income, common
shareholder's equity and cash flows for each of the three years in
the period ended December 31, 1999. These financial statements and
the schedule referred to below are the responsibility of the
company's management. Our responsibility is to express an opinion
on these financial statements and the schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Indiana Gas Company, Inc. and subsidiary companies,
as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

Our audits were made for the purpose of forming our opinion on the
basic financial statements taken as a whole. The schedule listed
in Item 14(a)-2 is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the
basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic financial
statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana,
May 12, 2000.

<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands)

Year Ended December 31
1999 1998
<S> <C> <C>
UTILITY PLANT
Original Cost $1,005,304 $946,602
Less - accumulated depreciation and 407,887 376,133
amortization
597,417 570,469

CURRENT ASSETS
Cash and cash equivalents 353 20
Accounts receivable less reserves of
$1,739 and $1,749, respectively 37,058 28,668
Accrued unbilled revenue 36,634 40,577
Liquified petroleum gas at average 815 892
cost
Gas in underground storage - at last 11,627 18,150
in, first out cost
Prepaid gas delivery services 20,937 -
Prepayments and other 16,468 10,928
123,892 99,235

DEFERRED CHARGES AND OTHER ASSETS
Unamortized debt discount and 11,906 12,653
expense
Regulatory income tax asset 2,741 1,778
Other 3,914 2,622

$ 739,870 $686,757

The accompanying notes are an integral part of these consolidated
financial statements.

</TABLE>

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands)

Year Ended December 31
1999 1998
<S> <C> <C>
CAPITIALIZATION
Common stock and paid-in captial $142,995 $142,995
Retained earnings 105,627 102,885
Total common shareholder's equity 248,622 245,880
Long-term debt 211,849 181,964
460,471 427,844

CURRENT LIABILITIES
Maturities and sinking fund - 10,000
requirements of long term debt
Notes payable 82,172 48,675
Accounts payable 37,111 32,547
Refundable gas costs 10,204 14,343
Customer deposits and advance 11,817 22,416
payments
Accrued taxes 16,208 9,848
Accrued interest 5,252 4,746
Other current liabilities 12,697 14,245
175,461 156,820

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 61,061 60,580
Accrued postretirement benefits 28,474 25,884
other than pensions
Unamortized investment tax credits 8,152 9,082
Other 6,251 6,547
103,938 102,093

$739,870 $686,757

The accompanying notes are an integral part of these consolidated
financial statements.

</TABLE>

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME
(Thousands)

Year Ended December 31
1999 1998 1997
<S> <C> <C> <C>
OPERATING REVENUE $431,361 $420,459 $528,058

COST OF GAS 226,817 231,889 319,738
MARGIN 204,544 188,570 208,320

OPERATING EXPENSES
Operation and maintenance 91,829 85,871 80,156
Restructuring costs - - 39,531
Depreciation and 34,585 32,758 34,340
amortization
Income taxes 16,734 14,058 7,813
Taxes other than 15,695 13,882 16,901
income taxes
Total Operating Expenses 158,843 146,569 178,741

OPERATING INCOME 45,701 42,001 29,579

OTHER INCOME - NET 1,010 626 1,118

INCOME BEFORE INTEREST EXPENSE 46,711 42,627 30,697

INTEREST EXPENSE 16,969 15,802 17,049

NET INCOME $29,742 $26,825 $13,648

The accompanying notes are an integral part of these
consolidated financial statements.

</TABLE>

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)

Years Ended December 31
1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $29,742 $26,825 $13,648

Adjustments to reconcile net income
to cash

Provided from operating activities -

Non cash restructuring costs - - 32,838
Depreciation and amortization 34,585 32,758 34,340
Deferred income taxes (482) 1,192 (12,645)
Investment tax credit (930) (930) (930)
Gain on sale of assets - (1,219) -
33,173 31,801 53,603

Changes in assets and liabilities
Receivables - net (4,447) 30,073 (17,001)
Inventories 5,708 (1,193) 21,231
Accounts payable, customer
deposits, advance
payments, current
liabilities (8,646) (24,277) (11,901)
Accrued taxes and interest 6,866 ( 7,610) 3,736

Refundable gas costs (4,139) 4,010 27,282

Prepaid gas delivery
service (20,937) - (2,613)

Prepayments (3,585) (1,072) -

Accrued postretirement 2,590 2,140 7,916
benefits other than pension

Other - net 506 4,916 3,802

Total adjustments 7,089 38,788 86,055

Net cash flows from operations 36,831 65,613 99,703

CASH FLOWS FROM (REQUIRED FOR) FINANCING
OPERATIONS

Sale of long term debt 30,000 60,000 50,000
Reduction in long term debt (10,115) (33,036) (59,733)
Net change in short term 33,497 (20,325) 6,000
borrowings
Dividends on common stock (27,000) (27,500) (26,500)

Net cash flows from (required for)
financing operations 26,382 (20,861) (30,233)

CASH FLOWS FROM (REQUIRED FOR) INVESTING
ACTIVITIES
Capital Expenditures (62,880) (55,320) (68,271)

Proceeds from sale of assets - 9,204 -

Net cash flows required for
investing activities (62,880) (46,116) (68,271)

NET INCREASE (DECREASE) IN CASH 333 (1,364) 1,199

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 20 1,384 185

CASH AND CASH EQUIVALENTS AT END OF $ 353 $ 20 $ 1,384
PERIOD

The accompanying notes are an integral part of these consolidated
financial statements.

</TABLE>

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
(Thousands)

Common Stock and
Paid-in Capital Retained
Shares Amount Earnings Total
<S> <C> <C> <C> <C>
Balance at December 31, 1996 9,080,770 $142,995 $148,458 $291,453

Net income 13,648 13,648

Common stock dividends (26,500) (26,500)

Noncash Dividend (32,195) (32,195)

Balance at December 31, 1997 9,080,770 142,995 103,411 246,406

Net income 26,825 26,825

Common stock dividends (27,500) (27,500)

Other 149 149

Balance at December 31, 1998 9,080,770 142,995 102,885 245,880

Net income 29,742 29,742

Common stock dividend (27,000) (27,000)

Balance at December 31, 1999 9,080,770 $142,995 $105,627 $248,622

The accompanying notes are an integral part of these consolidated
financial statements.

</TABLE>

<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

Consolidated Schedules of Long Term Debt
(Thousands - Unaudited)

December 31
Total Due Within 1999 1998
Outstanding One Year Balance Balance
Long-term debt - Utility Due Date
<S> <C> <C> <C> <C> <C>
Notes Payable

5.75% Series F January 15, 2003 $ 15,000 $ - $ 15,000 $ 15,000
6.36% Series F December 6, 2004 15,000 15,000 15,000
6.54% Series E July 9, 2007 6,500 6,500 6,500
6.69% Series E June 10, 2013 5,000 5,000 5,000
7.15% Series E March 15, 2015 5,000 5,000 5,000
6.69% Series E December 21, 2015 5,000 5,000 5,000
6.69% Series E December 29, 2015 10,000 10,000 10,000
9.375% January 15, 2021 25,000 25,000 25,000
9.125% Series A February 15, 2021 7,000 7,000 7,000
6.31% Series E June 10, 2025 5,000 5,000 5,000
6.53% Series E June 10, 2025 10,000 10,000 10,000
6.42% Series E July 7, 2027 5,000 5,000 5,000
6.68% Series E July 7, 2027 3,500 3,500 3,500
6.34% Series F December 10, 2027 20,000 20,000 20,000
6.75% Series F March 15, 2028 14,849 14,849 14,964
6.36% Series F May 1, 2028 10,000 10,000 10,000
6.55% Series F June 30, 2028 20,000 20,000 20,000
7.08% Series G October 5, 2029 30,000 30,000 -
Total Long-term debt $211,849 $ - $211,849 $181,964

The accompanying notes are an integral part of these consolidated schedules.

</TABLE>

Notes to Consolidated Financial Statements

1. Indiana Energy, Inc. and SIGCORP, Inc. Merger
Indiana Gas Company, Inc. and its subsidiaries (Indiana Gas or
the company) provide natural gas and transportation services
to a diversified base of customers in 311 communities in 49
of Indiana's 92 counties. It was incorporated under
the laws of the state of Indiana on July 16, 1945.
Prior to March 31, 2000, all of the outstanding
shares of common stock of the company were owned
by Indiana Energy, Inc. (Indiana Energy), a public
utility holding company.

Indiana Gas Company, Inc. and Southern Indiana Gas
and Electric Company, Inc. (SIGECO), are operating as
subsidiaries of Vectren.

2. Summary of Significant Accounting Practices

A. Utility Plant and Depreciation
Except as described below, utility plant is stated at the original
cost and includes allocations of payroll-related costs and
administrative and general expenses, as well as an allowance for
the cost of funds used during construction. Upon normal retirement
of a depreciable unit of property, the cost is credited to utility
plant and charged to accumulated depreciation together with the
cost of removal, less any salvage. No gain or loss is recognized
upon normal retirement.

Provisions for depreciation of utility property are determined by
applying straight-line rates to the original cost of the various
classifications of property. The average depreciation rate was
3.5 percent for 1999, 3.5 percent for 1998, and 3.7 percent for
1997.

Cost in excess of underlying book value of acquired gas
distribution companies is reflected as a component of utility
plant and is being amortized primarily over 40 years.

B. Unamortized Debt Discount and Expense
Indiana Gas was authorized as part of an August 17, 1994, order
from the Indiana Utility Regulatory Commission (IURC) to amortize
over a 15-year period the debt discount and expense related to new
debt issues and future premiums paid for debt reacquired in
connection with refinancing. Debt discount and expense for issues
in place prior to this order are being amortized over the lives of
the related issues. Premiums paid prior to this order for debt
reacquired in connection with refinancing are being amortized over
the life of the refunding issue.

C. Cash Flow Information
For the purposes of the Consolidated Statements of Cash Flows, the
company considers cash investments with an original maturity of
three months or less to be cash equivalents. Cash paid during the
periods reported for interest and income taxes were as follows:

<TABLE>

Thousands 1999 1998 1997
<S> <C> <C> <C>
Interest (net of amount capitalized) $ 16,463 $ 15,356 $ 16,852
Income taxes $ 21,921 $ 25,717 $ 16,919

</TABLE>

D. Revenues
To more closely match revenues and expenses, Indiana Gas records
revenues for all gas delivered to customers but not billed at the
end of the accounting period.

E. Gas in Underground Storage
Gas in underground storage at December 31, 1999, was $11.6 million
compared to $18.2 million at December 31, 1998. This decrease is
the result of the replacement of contract storage with increased
delivery services.

Based on the average cost of purchased gas during the twelve
months ended December 31, 1999, the cost of replacing the
current portion of gas in underground storage exceeded last-in,
first-out cost at December 31, 1999, by approximately $11.6 million.

F. Refundable or Recoverable Gas Cost
The cost of gas purchased and refunds from suppliers, which differ
from amounts recovered through rates, are deferred and are being
recovered or refunded in accordance with procedures approved by
the IURC.

G. Allowance For Funds Used During Construction
An allowance for funds used during construction (AFUDC), which
represents the cost of borrowed and equity funds used for
construction purposes, is charged to construction work in progress
during the period of construction and included in "Other Income -
net" on the Consolidated Statements of Income. An annual AFUDC
rate of 6.0 percent was used for 1999 and 1998, while an annual
rate of 7.5 percent was used for 1997.

The table below reflects the total AFUDC capitalized and the
portion of which was computed on borrowed and equity funds for all
periods reported.

<TABLE>

Thousands 1999 1998 1997
<S> <C> <C> <C>
AFUDC - borrowed funds $ 362 $ 303 $ 594
AFUDC - equity funds 443 341 486
Total AFUDC capitalized $ 805 $ 644 $ 1,080

</TABLE>

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 reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

I. Regulatory Assets and Liabilities
Indiana Gas is subject to the provisions of Statement of Financial
Accounting Standards No. 71, Accounting for the Effects of Certain
Types of Regulation (SFAS 71). Regulatory assets represent
probable future revenue to Indiana Gas associated with certain
costs which will be recovered from customers through the
ratemaking process. Regulatory liabilities represent probable
future reductions in revenues associated with amounts that are to
be credited to customers through the ratemaking process.
Regulatory assets and liabilities reflected in the Consolidated
Balance Sheet as of December 31 (in thousands) relate to the
following:

<TABLE>

Regulatory Assets 1999 1998
<S> <C> <C>
Postretirement benefits other than pensions $ 442 $ 2,239
Unamortized debt discount and expense 11,906 12,653
Amounts due from customers - income taxes, net 2,741 1,778
Deferred acquisition costs 650 671
$ 15,739 $ 17,341

Regulatory Liabilities
Refundable Gas Costs $ 10,204 $ 14,343

</TABLE>

Of the above December 31, 1999 balances, $3.4 million is earning a
return, which is comprised of Amounts due from customers - income
taxes, net and Deferred acquisition costs.

The remaining net assets of $0.3 million, while consisting of
items included in rates but not earning a return, are being
recovered over varying periods. Postretirement benefits other
than pensions will be fully recovered over less than one year.
Unamortized debt discount and expense will be recovered as
discussed in Note 2C. Refundable gas costs will be refunded as
discussed in Note 2G.

It is Indiana Gas' policy to continually assess the recoverability
of costs recognized as regulatory assets and the ability to
continue to account for its activities in accordance with SFAS 71,
based on the criteria set forth in SFAS 71. Based on current
regulation, Indiana Gas believes such accounting is appropriate.
If all or part of Indiana Gas' operations cease to meet the
criteria of SFAS 71, a write-off of related regulatory assets and
liabilities would be required. In addition, Indiana Gas would be
required to determine any impairment to the carrying costs of
deregulated plant and inventory assets.

J. Reclassifications
Certain reclassifications have been made in the company's
financial statements of prior years to conform to the current year
presentation. These reclassifications have no impact on
previously reported net income.

3. Corporate Restructuring
In April 1997, the Board of Directors of Indiana Energy approved a
growth strategy designed to support the company's transition into
a more competitive environment.

In July 1997, the company advised its employees of its plan to
reduce its work force from about 1,025 full-time employees at June
30, 1997, to approximately 800 employees by 2002. The reductions
are being implemented through involuntary separation and
attrition. Indiana Gas recorded restructuring costs of $5.4
million during 1997 related to the involuntary terminations
planned under the company's specific near-term employee reduction
plan, which was scheduled for completion by the end of 1999.
These costs include separation pay in accordance with Indiana Gas'
severance policy of $3.9 million, and net curtailment losses
related to these employees' postretirement and pension benefits.
As a result of initial work force reductions during September 1997
and primarily attrition thereafter, most of the reductions
contemplated during the two year period and accrued originally
have been achieved. During 1999, the company reviewed its
remaining accruals for costs associated with the involuntary work
force reductions. Taking into consideration an unexpectedly high
level of voluntary terminations, the company determined that no
additional significant involuntary work force reductions were
likely to occur. In 1998, $2.2 million of involuntary termination
benefits had been paid. As a result, the severance accrual and
other operating expenses were reduced by $1.7 million during year
1999.

4. Short-Term Borrowings
Effective in March 1999, Indiana Gas implemented a $100 million
commercial paper program. Indiana Gas' commercial paper is priced
to the public at a rate determined by current money market
conditions. At December 31, 1999 Indiana Gas had approximately
$82.2 million outstanding.

In addition to Indiana Gas' $100 million committed facility for
its commercial paper program, Indiana Gas has an aggregate $20
million line of credit. At December 31, 1999, Indiana Gas had no
outstanding bank loans. These lines are renewable annually.
Indiana Gas compensates the participating banks with
arrangements that vary from no commitment fees to a combination
of fees that are mutually agreeable. Notes payable to
banks bore interest at rates negotiated with the banks at the time
of borrowing. Indiana Gas' Board of Directors has authorized
short-term borrowings of up to $150 million.

Commercial paper and bank loans outstanding during the reported
periods were as follows:

<TABLE>

Thousands 1999(1) 1998(2) 1997(2)
<S> <C> <C> <C>
Outstanding at year end $ 83,000 $ 48,675 $ 71,000
Weighted average interest rates at year end 6.3% 5.8% 6.0%
Weighted average interest rates during the year 5.5% 5.7% 5.5%
Weighted average total outstanding during the year $ 38,068 $ 35,734 $ 29,800
Maximum total outstanding during the year $ 93,200 $ 50,950 $ 71,000

(1) Commercial paper
(2) Bank loans

</TABLE>

5. Long-Term Debt
In July 1999, Indiana Gas retired $10 million of 8.90% Notes.

In July 1999, Indiana Gas filed a registration statement with the
Securities and Exchange Commission with respect to $100 million in
debt securities. Indiana Gas expects to issue this debt pursuant
to a medium term note program, denominated as Series G. The net
proceeds from the sale of these new debt securities will be used
for general corporate purposes, including repayment of long term
debt and financing of Indiana Gas' continuing construction
program.

On October 5, 1999, Indiana Gas issued $30 million in principal
amount of Series G Medium Term Notes bearing interest at the per
annum rate of 7.08% with a maturity date of October 5, 2029.

Consolidated maturities and sinking fund requirements on long-term
debt subject to mandatory redemption during the five years
following 1999 are (in millions) $3.25 in 2002, $18.25 in 2003 and
$3.25 in 2004.

Provisions under which certain of Indiana Gas' Series E, Series F
and Series G Medium Term Notes were issued entitle the holders of
$137 million of these notes to put the debt back to Indiana Gas at
face value at certain specified dates before maturity beginning in
2000. Long-term debt (in millions) subject to the put provisions
during the five years following 1999 totals $5.0 in 2000, $11.5 in
2002 and $3.5 in 2004.

6. Fair Value of Financial Instruments
The estimated fair values of the company's financial instruments
were as follows:

<TABLE>

December 31, 1999 December 31, 1998
Carrying Fair Carrying Fair
Thousands Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 353 $ 353 $ 20 $ 20
Notes payable $ 82,172 $ 82,172 $ 48,675 $ 48,675
Long-term debt (includes
amounts due within one year) $211,849 $188,976 $181,964 $162,000

</TABLE>

Certain methods and assumptions must be used to estimate the fair
value of financial instruments. Because of the short maturity of
cash and cash equivalents and notes payable, the carrying amounts
approximate fair values for these financial instruments. The fair
value of the company's long-term debt was estimated based on the
quoted market prices for the same or similar issues or on the
current rates offered to the company for debt of the same
remaining maturities.

Under current regulatory treatment, call premiums on reacquisition
of long-term debt are generally recovered in customer rates over
the life of the refunding issue or over a 15-year period (see Note
2C). Accordingly, any reacquisition would not be expected to have
a material effect on the company's financial position or results
of operations.

7. Capital Stock
Indiana Gas has 16 million shares of authorized no par value
common stock.

Indiana Gas has 4 million shares of authorized and unissued
preferred stock.

8. Retirement Plans and Other Postretirement Benefits
Indiana Energy, Inc. and subsidiaries have multiple defined
benefit pension and other postretirement benefit plans. The
nonpension plans include plans for health care and life insurance.
All of the plans are non-contributory with the exception of the
health care plan which contains cost-sharing provisions whereby
employees retiring after January 1, 1996, are required to make
contributions to the plan when increases in the companies' health
care costs exceed the general rate of inflation, as measured by
the Consumer Price Index (CPI). Indiana Gas is a participating
company in those plans and all amounts disclosed below relate
solely to Indiana Gas.

The IURC has authorized Indiana Gas to recover the costs related
to postretirement benefits other than pensions under the accrual
method of accounting consistent with Statement of Financial
Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. Amounts accrued prior
to that authorization were deferred as allowed by the IURC and are
currently being amortized.

During the three years ended December 31, 1999, net periodic pension
benefit was $(1,183), $(1,053) and $(504), respectively. For the
same three years, net periodic postretirement benefit expense other
than pensions was $4,780, $6,317 and $7,375, respectively. The prepaid
pension benefit cost reflected in the accompanying balance sheet is
$6,291 and $4,548 as of Decmeber 31, 1999 and December 31, 1998. The
accrued postretirement benefit cost reflected in the accompanying balance
sheet is $28,474 and $25,884 as of December 31, 1999 and December 31,
1998.

The detailed disclosures of benefit components that follow are
based on an actuarial valuation performed for the September 30, 1999,
1998, and 1997 financial statements using a measurement date as of
June 30, 1999. In management's opinion, the disclsoures required as
of and for the years ended December 31, 1999, 1998 and 1997 would not
differ materially from those presented below.

<TABLE>
Pension Benefits Other Benefits
Thousands 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 1,617 $ 1,133 $ 1,268 $ 738 $ 608 $ 770
Interest cost 4,887 4,504 4,847 3,098 3,075 3,311
Expected return
on plan assets (7,310) (6,393) (6,606) - - -
Amortization of
transition
obligation (asset) (316) (316) (309) 1,955 1,955 2,280
Amortization of
loss (gain)
and other 108 (19) 884 (149) 1,354 1,397
Net periodic
benefit cost $(1,014)$(1,091) $ 84 $ 5,642 $ 6,992 $ 7,758

</TABLE>

A reconciliation of the plans' benefit obligations, fair value of
plan assets, funded status and amounts recognized in the company's
statement of financial position follows:

<TABLE>
Pension Benefits Other Benefits

Thousands 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Benefit obligation at
beginning of year $76,708 $65,977 $47,501 $ 42,883
Service cost 1,617 1,133 738 608
Interest cost 4,887 4,504 3,098 3,075
Actuarial loss
(gain) and other (9,216) 9,553 (5,373) 3,998
Benefits paid (4,715) (4,460) (2,944) (3,064)
Benefit obligation at
the end of the year 69,281 76,707 43,020 47,500

Fair value of plan assets
at beginning of year 97,628 87,801 - -
Actual return on plan assets 8,179 14,194 - -
Employer contributions 119 93 2,944 3,064
Benefits paid (4,715) (4,460) (2,944) (3,064)
Fair value of plan assets
at end of year 101,211 97,628 - -

Funded status 31,930 20,921 (43,020) (47,500)
Unrecognized prior service cost 374 3,602 - -

Unrecognized net obligation
(assets) from transition (882) (1,198) 27,375 29,330
Unrecognized net (gain)
loss and other (25,965) (19,371) (12,224) (6,999)
Prepaid (accrued) benefit cost
at end of year $ 5,457 $ 3,954 $(27,869) $(25,169)

</TABLE>

The aggregate benefit obligation and aggregate fair value of plan
assets for pension plans with benefit obligations in excess of
plan assets were, in thousands, $5,518 and $0, respectively as of
December 31, 1999, and $5,503 and $0, respectively as of December
31, 1998.

Weighted-average assumptions used in the accounting for these
plans were as follows:

<TABLE>

Pension Benefits Other Benefits
Thousands 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Discount rate 7.50% 6.75% 7.50% 6.75%
Expected return
on plan assets 9.00% 9.00% n/a n/a
Rate of compensation
increase 5.00% 5% to 5.5% n/a n/a
CPI rate n/a n/a 3.50% 3.50%

</TABLE>

The assumed health care cost trend rate for medical gross eligible
charges used in measuring the postretirement benefit obligation
for the health care plan as of December 31, 1999, was 6.5 percent
for 2000. This rate is assumed to decrease gradually through
2004 to 5.0 percent and remain at that level thereafter.

A 1 percent change in the assumed health care cost trend rates for
the company's postretirement health care plan would have the
following effects:

<TABLE>

Thousands 1% Increase 1% Decrease
<S> <C> <C>
Effect on the aggregate of the service
and interest cost components $ 70 $ (63)

Effect on the postretirement
benefit obligation $ 775 $ (701)

</TABLE>

The company also participates in Indiana Energy's defined
contribution retirement savings plan which is qualified under
sections 401(a) and 401(k) of the Internal Revenue Code. During
1999, 1998 and 1997, the company made contributions, in millions,
to this plan of $1.2, $1.8 and $2.4, respectively.

9. Commitments
Estimated capital expenditures for 2000 are $58 million. Lease
commitments, in millions, are $2.4 in 2000, $1.5 in 2001, $1.5 in
2002, $1.4 in 2003, $1.0 in 2004 and $3.7 in total for all later
years. There are no leases that extend beyond 2036. Indiana Gas
has storage and supply contracts that extend up to 6 years. Total
lease expense was $2.0 in 1999, approximately $1.0 in 1998 and
approximately $2.2 in 1997.

The Company is party to various legal proceedings arising in the
normal course of business. In the opinion of management of the
Company, however, there are no legal proceedings pending against
the Company that are likely to have a material adverse effect on
the financial position or results of operations of the Company.

10. Income Taxes
Indiana Energy, Inc. and subsidiary companies file a consolidated
federal income tax return. Indiana Gas' current and deferred tax
expense is computed on a separate company basis. The components
of consolidated income tax expense for Indiana Gas were as
follows:

<TABLE>

Thousands 1999 1998 1997
<S> <C> <C> <C>
Current:
Federal $15,702 $11,828 $18,436
State 2,444 1,968 2,952
18,146 13,796 21,388
Deferred:
Federal (484) 1,067 (11,703)
State 2 125 (942)
(482) 1,192 (12,645)

Amortization of investment
tax credits (930) (930) (930)
Consolidated income tax expense $16,734 $14,058 $ 7,813

</TABLE>

The recording of restructuring costs of $39.5 million in 1997 had
the effect of decreasing deferred income tax expense by
approximately $15.0 million.

Effective income tax rates were 36.01 percent, 34.39 percent and
36.41 percent of pretax income for 1999, 1998 and 1997,
respectively. This compares with a combined federal and state
income tax statutory rate of 37.93 percent for all years reported.
Individual components of these rate differences were not
significant except investment tax credit which amounted to (2.0%)
in 1999, (2.3%) in 1998 and (4.3%) in 1997.

As required by the IURC, Indiana Gas uses a normalized method of
accounting for deferred income taxes. Deferred income taxes
reflect the net tax effect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Deferred
income taxes are provided for taxes not currently payable due to,
among other things, the use of various accelerated depreciation
methods, shorter depreciable lives and the deduction of certain
construction costs for tax purposes. Taxes deferred in prior years
are being charged and income credited as these tax effects reverse
over the lives of the related assets.

Significant components of Indiana Gas' net deferred tax liability
as of December 31, 1999, and 1998, are as follows:

<TABLE>

Thousands 1999 1998
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation $ 52,414 $ 50,708
Property basis differences 6,527 7,272
Acquisition adjustment 5,861 6,050
Other 5,101 4,756
Deferred tax assets:
Deferred investment tax credit (3,092) (3,445)
Regulatory income tax asset
(liability) (649) (5)
Less deferred income taxes related
to current assets and liabilities (5,101) (4,756)
Balance as of December 31 $ 61,061 $ 60,580

</TABLE>

Investment tax credits have been deferred and are being credited
to income over the life of the property giving rise to the credit.
The Tax Reform Act of 1986 eliminated investment tax credits for
property acquired after January 1, 1986.

11. Environmental Costs
In the past, Indiana Gas and others, including former affiliates,
and/or previous landowners, operated facilities for the
manufacturing of gas and storage of manufactured gas. These
facilities are no longer in operation and have not been operated
for many years. Under currently applicable environmental laws and
regulations, Indiana Gas, and the others, may now be required to
take remedial action if certain byproducts are found above a
regulatory threshold at these sites.

Indiana Gas has identified the existence, location and certain
general characteristics of 26 gas manufacturing and storage sites.
Based upon the site work completed to date, Indiana Gas believes
that a level of contamination that may require some level of
remedial activity may be present at a number of the sites. Removal
activities have been conducted at several sites and a remedial
investigation/feasibility study (RI/FS) has been completed at one
of the sites under an agreed order between Indiana Gas and the
Indiana Department of Environmental Management (IDEM), with a
Record of Decision (ROD) expected to be issued by IDEM in
2000. Although Indiana Gas has not begun an RI/FS at additional
sites, Indiana Gas has submitted several of the sites to IDEM's
Voluntary Remediation Program (VRP) and is currently conducting
some level of remedial activities including groundwater monitoring
at certain sites where deemed appropriate and will continue
remedial activities at the sites as appropriate and necessary.

Based upon the work performed to date, Indiana Gas has accrued
investigation, remediation, groundwater monitoring and related
costs for the sites. Estimated costs of certain remedial actions
that may likely be required have also been accrued. Costs
associated with environmental remedial activities are accrued when
such costs are probable and reasonably estimable. Indiana Gas does
not believe it can provide an estimate of the reasonably possible
total remediation costs for any site prior to completion of an
RI/FS and the development of some sense of the timing for
implementation of the site specific remedial alternative, to the
extent such remediation is required. Accordingly, the total costs
which may be incurred in connection with the remediation of all
sites, to the extent remediation is necessary, cannot be
determined at this time.

Indiana Gas has been seeking to recover the costs it has incurred
and expects to incur relating to the 26 sites from insurance
carriers and other potentially responsible parties (PRPs). The
IURC has determined that these costs are not recoverable from
utility customers.

Indiana Gas has completed the process of identifying PRPs and now
has PRP agreements in place covering 19 of the 26 sites. The
agreements provide for coordination of efforts and sharing of
investigation and clean-up costs incurred and to be incurred at
the sites. PSI Energy, Inc. is a PRP on all 19 sites. Northern
Indiana Public Service Company is a PRP on 5 of the 19 sites.
These agreements limit Indiana Gas' share of past and future
response costs at these 19 sites to between 20 and 50 percent.
Based on the agreements, Indiana Gas has recorded a receivable
from PRPs for their unpaid share of the liability for work
performed by Indiana Gas to date, as well as accrued Indiana Gas'
proportionate share of the estimated cost related to work not yet
performed.

Indiana Gas has filed a complaint in Indiana state court to
continue its pursuit of insurance coverage from four insurance
carriers, with the trial scheduled for early 2000. As of December
31, 1999, Indiana Gas has recorded settlements from other
insurance carriers in an aggregate amount of approximately $15.5
million. Subsequent to December 31, 1999, an agreement in
principle has been reached with all of these insurers.

These environmental matters have had no material impact on
earnings since costs recorded to date approximate insurance
settlements received. While Indiana Gas has recorded all costs
which it presently expects to incur in connection with remediation
activities, it is possible that future events may require some
level of additional remedial activities which are not presently
foreseen.

12. Affiliate Transactions
ProLiance Energy, LLC (ProLiance), a non-regulated marketing
affiliate of Indiana Energy, began providing natural gas supply
and related services to Indiana Gas effective April 1, 1996.
Indiana Gas' purchases from ProLiance for resale and for
injections into storage for 1999, 1998 and 1997 totaled $240.7
million, $232.2 million and $311.7 million, respectively.

The sale of gas and provision of other services to Indiana Gas by
Indiana Energy's marketing affiliates are subject to regulatory
review through the quarterly gas cost adjustment proceeding
currently pending before the IURC.

On September 12, 1997, the Indiana Utility Regulatory Commission
(IURC) issued a decision finding the gas supply and portfolio
administration agreements between ProLiance and Indiana Gas and
ProLiance and Citizens Gas (the gas supply agreements) to be
consistent with the public interest. The IURC's decision reflected
the significant gas cost savings to customers obtained by
ProLiance's services and suggested that all material provisions of
the agreements between ProLiance and the utilities are reasonable.
Nevertheless, with respect to the pricing of gas commodity
purchased from ProLiance and two other pricing terms, the IURC
concluded that additional findings in the gas cost adjustment
(GCA) process would be appropriate and directed that these matters
be considered further in the pending, consolidated GCA proceeding
involving Indiana Gas and Citizens Gas. The IURC has not yet
established a schedule for conducting these additional
proceedings.

The IURC's September 12, 1997, decision was appealed to the
Indiana Court of Appeals by certain Petitioners including the
Indiana Office of Utility Consumer Counselor, the Citizens Action
Coalition of Indiana and a small group of large-volume customers.
On October 8, 1998, the Indiana Court of Appeals issued a decision
which reversed and remanded the case to the IURC with instructions
that the gas supply agreements be disapproved. The basis for the
decision was that because the gas supply agreements provide for
index based pricing of gas commodity sold by ProLiance to the
utilities, the gas supply agreements should have been the subject
of an application for approval of an alternative regulatory plan
under Indiana statutory law.

On April 22, 1999, the Indiana Supreme Court granted a petition
for transfer of the case and will now consider the appeal of the
IURC's decision and issue its own decision on the merits of the
appeal at a later date. By granting transfer, the Supreme Court
has vacated the Court of Appeals' decision.

If the Supreme Court reverses the IURC's decision , the case will
be remanded to the IURC for further proceedings regarding the
public interest in the gas supply agreements. If the Supreme Court
affirms the IURC's decision, the reasonableness of certain of the
gas costs incurred by Indiana Gas under the gas supply agreements
will be further reviewed by the IURC in the consolidated GCA
proceeding. The existence of significant benefits to the utilities
and their customers resulting from ProLiance's services has not
been challenged on appeal. Indiana Gas is continuing to utilize
ProLiance for its gas supply.

On or about August 11, 1998, Indiana Gas, Citizens Gas and
ProLiance each received a Civil Investigative Demand ("CID") from
the United States Department of Justice requesting information
relating to Indiana Gas' and Citizens Gas' relationship with and
the activities of ProLiance. The Department of Justice issued the
CID to gather information regarding ProLiance's formation and
operations, and to determine if trade or commerce has been
restrained. Indiana Gas and ProLiance have provided all
information requested and management continues to believe that
there are no significant issues in this matter.

While the results of the ProLiance issues mentioned above cannot
be predicted, management does not expect these matters to have a
material impact on Indiana Gas' financial position or results of
operations. However, no assurance can be provided.

CIGMA, LLC, owned jointly and equally by IGC Energy, Inc., an
indirect wholly owned subsidiary of Indiana Energy, and Citizens
By-Products Coal Company, a wholly owned subsidiary of Citizens
Gas, provides materials acquisition and related services that are
used by Indiana Gas. Indiana Gas' purchases of these services
during 1999 and 1998 totaled $17.3 million and $15.9 million,
respectively.

IEI Services, a wholly owned subsidiary of Indiana Energy,
provides information technology, financial, human resources,
building and fleet services. Amounts billed by IEI Services to
Indiana Gas for 1999 and 1998 were $31.4 million and $25.9
million, respectively.

Indiana Gas also participates in a centralized cash management
program with its parent, affiliated companies and banks which
permits funding of checks as they are presented.

Amounts owed to affiliates totaled $28.8 million and $27.9 million
at December 31, 1999 and 1998, respectively, and are included in
Accounts Payable on the Consolidated Balance Sheets.

Amounts due from affiliates totaled $3.0 million and $2.0 million
at December 31, 1999 and 1998, respectively, and are included in
Accounts Receivable on the Consolidated Balance Sheets.

13. New Accounting Standards
For 1999, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 131, Disclosures about Segments of an
Enterprise and Related Information. This statement establishes
standards for the way that public companies report information
about operating segments in annual financial statements and
requires that those companies report selected information about
operating segments in annual and interim financial reports issued
to shareholders. Indiana Gas has no reportable segments.

In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. The statement
establishes accounting and reporting standards requiring that
every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair
value. The statement requires that changes in the derivative's
fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset
related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge
accounting. In June 1999, the FASB issued SFAS 137, which defers
the effective date of SFAS 133. ProLiance utilizes derivative
instruments to manage pricing decisions, minimize the risk of
price volatility, and minimize price risk exposure in the energy
markets. SFAS 133 is now effective for ProLiance and Indiana Gas
in 2001. ProLiance has not yet quantified the impact of adopting
this statement on its financial position or results of operations.
Likewise, Indiana Gas has not quantified the impact of adopting
this statement on its financial position or results or operations.

14. Summarized Financial Data (Unaudited)
Summarized quarterly financial data (in thousands of dollars) for
1999 and 1998 are as follows:

<TABLE>

1999: THREE MONTHS ENDED MAR. 31 JUNE 30 SEP. 30 DEC. 31
<S> <C> <C> <C> <C>
Operating revenues $161,484 $72,131 $60,499 $137,247
Operating income (loss) 27,876 4,183 (2,086) 15,728
Net income (loss) 23,998 639 (5,791) 10,896

1998: THREE MONTHS ENDED MAR. 31 JUNE 30 SEP. 30 DEC. 31
Operating revenues $163,131 $70,560 $61,821 $124,947
Operating income (loss) 23,428 3,929 (1,933) 16,577
Net income (loss) 19,258 321 (5,285) 12,531

</TABLE>

Note: Because of the seasonal factors that significantly affect
the companies' operations, the results of operations for interim
periods within years are not comparable.

Item 9. Changes in and Disagreements with Accountants

None.

Part III

Item 10. Directors and Executive Officers of the Registrant

Except for the list of the executive officers, which
can be found in Part I, Item 4(a) of this report, the
information required to be shown in this part for Item
10, Directors and Executive Officers of the Registrant
is incorporated by reference here from the Form 10-K
of the registrant's parent company, Indiana Energy,
Inc. That statement was prepared and filed
electronically with the Securities and Exchange
Commission on December 29, 1999. The information is
included in Item 10 of the 1999 10-K and attached as
Exhibit 99.

Item 11. Executive Compensation

The information required to be shown in this part for
Item 11, Executive Compensation, is incorporated by
reference here from the Form 10-K report of the
registrant's parent company, Indiana Energy, Inc. That
report was prepared and filed electronically with the
Securities and Exchange Commission on December 29,
1999. The information is included in Item 11 of the
1999 10-K and attached as Exhibit 99.

Contained in the Indiana Energy Form 10-K, Summary
Compensation Table, Column C and Column D, Salary
Amounts and Bonus Amounts, are some compensation
dollars which are allocated to subsidiaries of Indiana
Energy other than Indiana Gas. The named executives
received the following compensation, including Bonus,
for the years ended December 31, 1999, 1998 and 1997,
as it relates to only Indiana Gas.

<TABLE>

1999 1998 1997
<S> <C> <C> <C>
Lawrence A. Ferger $510,418 $620,335 $556,769

Paul T. Baker 398,395 406,862 367,154
Niel C. Ellerbrook 347,167 296,777 278,703
Anthony E. Ard 189,278 182,177 214,730
Timothy M. Hewitt 208,539 200,010 228,661

</TABLE>

Item 12. Securities Ownership of Certain Beneficial Owners
and Management

The information required to be shown in this part for
Item 12, Securities Ownership of Certain Beneficial
Owners and Management, is incorporated by reference
here from the 1999 10-K of the registrant's parent
company, Indiana Energy, Inc. That statement was
prepared and filed electronically with the Securities
and Exchange Commission on December 29, 1999. The
information is included in Item 12 of the 1999 10-K
and attached as Exhibit 99.

Item 13. Certain Relationships and Related Transactions

The information required to be shown in this part for
Item 13, Certain Relationships and Related
Transactions is incorporated by reference here from
the 1999 10-K of Indiana Energy, Inc. That statement
was prepared and filed electronically with the
Securities and Exchange Commission on December 29,
1999. The information is included in Item 12 of the
1999 10-K and attached as Exhibit 99.

Part IV

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

The following documents are filed as part of this
report:

(a)-1 Financial Statements

<TABLE>
Location in 10-K
<S> <C>
Report of Independent Public Accountants Item 8

Consolidated Statements of Income - 1999,
1998 and 1997 Item 8

Consolidated Statements of Cash Flows - 1999,
1998 and 1997 Item 8

Consolidated Balance Sheets at December 31,
1999 and 1998 Item 8

Consolidated Statements of Common
Shareholder's Equity - 1999, 1998 and 1997 Item 8

Consolidated Schedules of Long-Term Debt
as of December 31, 1999 and 1998 Item 8

Notes to Financial Statements Item 8

</TABLE>

(a)-2 Financial Statement Schedules

Report of Independent Public Accountants on Schedules

Schedule II. Valuation and Qualifying
Accounts - 1999, 1998 and 1997

(a)-3 Exhibits

See Exhibit Index

On October 29, 1999, Indiana Gas filed a Current Report on Form
8-K with respect to the release by Indiana Energy, Inc. (Indiana
Energy) of summary financial information to the investment
community regarding Indiana Energy's consolidated results of
operations, financial position and cash flows for the twelve-
month periods ended September 30, 1999. Items reported include:

Item 5. Other Events

Item 7. Exhibits

99 Financial Analyst Report - Fourth Quarter 1999

<TABLE>

EXHIBIT INDEX

Exhibit No. Description Reference
<S> <C> <C>
2-A Agreement and Plan of Exhibit 2 to Indiana
Merger dated as of Energy's Current
June 11, 1999, among Report on Form 8-K
Indiana Energy, Inc., dated as of June 11,
SIGCORP, Inc. and 1999, and filed as of
Vectren Corporation. June 15, 1999.

2-B Amendment No.1, dated Exhibit 2 to Indiana
December 14, 1999 to Energy's Current
Agreement and Plan of Report on Form 8-K
Merger (Set forth in 2- dated as of December
A, above) 16, 1999, and filed as
of December 16, 1999.
2-C Asset Purchase Exhibit 2 and 99.1 to
Agreement dated Indiana Energy, Inc.
December 14, 1999 Current Report on Form
between Indiana 8-K dated as of
Energy, Inc., Dayton December 14, 1999 and
Power and Light Co., filed as of December
Inc. and Number -3CHK 28, 1999.
with commitment letter
for 364-Day Credit
Facility dated
December 16, 1999

3-A Amended and Restated Exhibit 3-A to Indiana
Articles of Gas' Quarterly Report
Incorporation. on Form 10-Q for the
quarterly period ended
March 31, 1997.

3-B Amended and Restated Exhibit 3-B to Indiana
Code of By-Laws. Gas' Quarterly Report
on Form 10-Q for the
quarterly period ended
March 31, 1997.

4-A Indenture dated Exhibit 4(a) to
February 1, 1991, Indiana Gas Company,
between Indiana Gas Inc.'s Current Report
and Continental Bank, on Form 8-K dated
National Association. February 1, 1991, and
filed February 15,
1991; First
Supplemental Indenture
thereto dated as of
February 15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated February 1,
1991, and filed
February 15, 1991);
Second Supplemental
Indenture thereto
dated as of September
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated September
15, 1991, and filed
September 25, 1991);

Third Supplemental
Indenture thereto
dated as of September
15, 1991 (incorporated
by reference to
Exhibit 4(c) to
Indiana Gas Company,
Inc.'s Current Report
on Form 8-K dated
September 15, 1991 and
filed September 25,
1991);

Fourth Supplemental
Indenture thereto
dated as of
December 2, 1992,
(incorporated by
reference
to Exhibit 4(b) to
Indiana
Gas Company, Inc.'s
Current Report on Form
8-K dated December 1,
1992, and filed
December 8, 1992);
Officers' Certificate
pursuant to Section
301 of the Indenture
dated as of
April 5, 1995,
(incorporated by
reference to Exhibit
4(a) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated and filed
April 5, 1995); and
Officers' Certificate
pursuant to Section
301 of the Indenture
dated as of November
19, 1997 (incorporated
by reference to
Exhibit 4 to Indiana
Gas Company, Inc.'s
Report on Form 8-K
dated November 19,
1997 and filed
December 5, 1997);
Officer's Certificate
pursuant to Section
301 of the Indenture
dated as of August 13,
1999 (incorporated by
reference to Exhibit 4
to Indiana Gas Company
Inc.,'s Current Report
on Form 8-K dated
August 13, 1999, and
filed August 17,
1999).

10-A Employment Agreement Exhibit 10-A to
between Indiana Indiana Energy, Inc.'s
Energy, Inc. and Quarterly Report on
Lawrence A. Ferger Form 10-Q for the
effective January 1, quarterly period ended
1999. December 31, 1998.
10-B Employment Agreement Exhibit 10-B to
between Indiana Indiana Energy, Inc.'s
Energy, Inc. and Niel Quarterly Report on
C. Ellerbrook Form 10-Q for the
effective January 1, quarterly period ended
1999. December 31, 1998.
10-C Employment Agreement Exhibit 10-C to
between Indiana Indiana Energy, Inc.'s
Energy, Inc. and Paul Quarterly Report on
T. Baker effective Form 10-Q for the
January 1, 1999. quarterly period ended
December 31, 1998.
10-D Employment Agreement Exhibit 10-D to
between Indiana Indiana Energy, Inc.'s
Energy, Inc. and Quarterly Report on
Anthony E. Ard Form 10-Q for the
effective January 1, quarterly period ended
1999. December 31, 1998.
10-E Employment Agreement Exhibit 10-E to
between Indiana Indiana Gas Company,
Energy, Inc. and Inc.'s Quarterly
Timothy M. Hewitt, Report on Form 10-Q
effective January 1, for the quarterly
1999. period ended December
31, 1998.
10-F Indiana Energy, Inc. Exhibit 10-G to
Unfunded Supplemental Indiana Energy, Inc.'s
Retirement Plan for a Quarterly Report on
Select Group of Form 10-Q for the
Management Employees quarterly period ended
as amended and December 31, 1998.
restated effective
December 1, 1998.
10-G Indiana Energy, Inc. Exhibit 10-H to
Nonqualified Deferred Indiana Energy, Inc.'s
Compensation Plan Quarterly Report on
effective January 1, Form 10-Q for the
1999. quarterly period ended
December 31, 1998.
10-H Indiana Energy, Inc. Exhibit 10-I to
Executive Restricted Indiana Energy, Inc.'s
Stock Plan as amended Quarterly Report on
and restated Form 10-Q for the
effective December 1, quarterly period ended
1998. December 31, 1998.
10-I Indiana Energy, Inc. Exhibit 10-D to
Annual Management Indiana Energy's 1987
Incentive Plan Annual Report on Form
effective October 1, 10-K.
1987.
10-J First Amendment to Exhibit 10-Q to
the Indiana Energy, Indiana Energy's 1998
Inc. Annual Annual Report on Form
Management Incentive 10-K.
Plan (set forth in 10-
I above) effective
October 1, 1997.
10-K Indiana Energy, Inc. Exhibit 10-J to
Directors' Restricted Indiana Energy, Inc.'s
Stock Plan, as Quarterly Report on
amended and restated Form 10-Q for the
effective December 1, quarterly period ended
1998. December 31, 1998.
10-L Formation Agreement Exhibit 10-C to
among Indiana Energy, Indiana Energy's
Inc., Indiana Gas Quarterly Report on
Company, Inc., IGC Form 10-Q for the
Energy, Inc., Indiana quarterly period ended
Energy Services, March 31, 1996.
Inc., Citizens Gas &
Coke Utility,
Citizens Energy
Services Corporation
and ProLiance Energy,
LLC, effective March
15, 1996.
10-M Gas Sales and Exhibit 10-C to
Portfolio Indiana Gas' Quarterly
Administration Report on Form 10-Q
Agreement between for the quarterly
Indiana Gas period ended March 31,
Company, Inc. and 1996.
ProLiance Energy,
LLC, effective
March 15, 1996,
for services to
begin April 1,
1996.
10-N Amended appendices to Exhibit 10-A to
the Gas Sales and Indiana Gas' Quarterly
Portfolio Report on Form 10-Q
Administration for the quarterly
Agreement between period ended March 31,
Indiana Gas Company, 1999.
Inc. and ProLiance
Energy, LLC effective
November 1, 1998.
10-O Amended appendices to Exhibit 10-O to
the Gas Sales and Indiana Gas Company,
Portfolio Inc.'s 1999 Annual
Administration Report on Form 10-K.
Agreement between
Indiana Gas Company,
Inc. and ProLiance
Energy, LLC effective
November 1, 1999.
10-P Indiana Energy, Inc. Exhibit 10-O to
Executive Restricted Indiana Energy,
Stock Plan as amended Inc.'s 1998 Annual
and restated report on Form 10-
effective October 1, K.
1998
10-Q Indiana Energy, Inc. Exhibit 10-B to
Director's Restricted Indiana Energy,
Stock Plan as amended Inc.'s Quarterly
and restated Report on Form 10-
effective May 1, 1997 Q for the
quarterly period
ended June 30,
1997.

12 Computation of Ratio
of Earnings
to Fixed Charges Filed herewith.

21 Subsidiaries of
Indiana Gas
Company, Inc. Filed herewith.

23 Consent of Independent
Public Accountants. Filed herewith.

27 Financial Data
Schedule Filed herewith.

99 Exhibits

99.1 Indiana Exhibit 99.1 to
Energy, Inc. Form Indiana Gas Company,
10-K as of September Inc.'s 1999 Annual
30, 1999, Item 10 Report on Form 10-K.

99.2 Indiana Exhibit 99.2 to
Energy, Inc. Form Indiana Gas Company,
10-K as of September Inc.'s 1999 Annual
30, 1999, Item 11 Report on Form 10-K.

99.3 Indiana Exhibit 99.3 to
Energy, Inc. Form Indiana Gas Company,
10-K as of September Inc.'s 1999 Annual
30, 1999, Item 12 Report on Form 10-K.

99.4 Indiana Exhibit 99.4 to
Energy, Inc. Form Indiana Gas Company,
10-K as of September Inc.'s 1999 Annual
30, 1999, Item 13 Report on Form 10-K.

</TABLE>

<TABLE>

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31

For Purposes
Charged to For Which
Beginning Costs and Reserves Other Ending
Description Year Balance Expenses Other Were Created Charges Balance
<S> <C> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM
APPLICABLE ASSET

Reserve for
uncollectible accounts 1997 $2,658 2,919 - 3,473 - $2,104
1998 $2,104 3,408 - 3,763 - $1,749
1999 $1,749 2,819 - 2,829 - $1,739

</TABLE>

SIGNATURES

Pursuant to the requirements of the 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.

INDIANA GAS COMPANY, INC.

Dated May 15, 2000 /s/ Timothy M. Hewitt
Timothy M. Hewitt
President

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.

<TABLE>

Signature Title Date
<S> <C> <C>

/s/ Timothy S. Hewitt President May 15, 2000

/s/ Jerome A. Benkert Executive Vice President, May 15, 2000
Jerome A. Benkert Chief Financial Offier
and Director

/s/ Ronald E. Christian Senior Vice President,
Ronald E. Christian General Counsel,
Secretary and Director May 15, 2000

/s/ Timothy L. Burke Vice President and May 15, 2000
Timothy L. Burke Treasurer

/s/ M. Susan Hardwick Vice President and
M. Susan Hardwick Controller May 15, 2000

/s/ Neil C. Ellerbrook Director May 15, 2000
Neil C. Ellerbrook

/s/ Andrew E. Goebel Director May 15, 2000
Andrew E. Goebel

/s/ J. Gordon Hurst Director May 15, 2000
J. Gordon Hurst

</TABLE>

<TABLE>

EXHIBIT 12

INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)

Year Ended December 31
1999 1998 1997(1) 1996 1995
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $29,742 $26,825 $13,648 $36,121 $40,258
Income taxes 16,734 14,058 7,813 21,637 24,110
Fixed charges (see below) 17,691 16,133 17,782 17,154 16,465
Total adjusted earnings $64,167 $57,016 $39,243 $74,912 $80,833

Fixed charges:
Total interest expense $16,969 $15,802 $17,049 $16,200 $15,528
Interest component of rents 722 331 733 954 937
Total fixed charges $17,691 $16,133 $17,782 $17,154 $16,465

Ratio of earnings to fixed
charges 3.6 3.5 2.2 4.4 4.9

(1)Reflects the recording of restructuring costs in 1997
(see Item 8, Note 3). Indiana Gas' ratio of earnings to
fixed charges for 1997 before restructuring costs was
4.4.

</TABLE>

<TABLE>

EXHIBIT 21

State of Incorporation
<S> <C>
Subsidiaries of Indiana Gas Company, Inc.
(Parent) -
Richmond Gas Corporation,
d/b/a Indiana Gas Company, Inc. Indiana
Terre Haute Gas Corporation,
d/b/a Indiana Gas Company, Inc. Indiana

</TABLE>

EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K/A, into Indiana
Gas Company, Inc.'s previously filed Registration Statement File No.
333-82111.

/s/Arthur Andersen LLP
Arthur Andersen LLP

Indianapolis, Indiana,
May 12, 2000.

<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Indiana Gas Company, Inc.'s consolidated financial statements as of
December 31, 1999, and for the fiscal year then ended and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 597,417
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 123,892
<TOTAL-DEFERRED-CHARGES> 18,561
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 739,870
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 105,627
<TOTAL-COMMON-STOCKHOLDERS-EQ> 248,622
0
0
<LONG-TERM-DEBT-NET> 211,849
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 82,172
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 197,227
<TOT-CAPITALIZATION-AND-LIAB> 739,870
<GROSS-OPERATING-REVENUE> 431,361
<INCOME-TAX-EXPENSE> 16,734
<OTHER-OPERATING-EXPENSES> 368,926
<TOTAL-OPERATING-EXPENSES> 385,660
<OPERATING-INCOME-LOSS> 45,701
<OTHER-INCOME-NET> 1,010
<INCOME-BEFORE-INTEREST-EXPEN> 46,711
<TOTAL-INTEREST-EXPENSE> 19,969
<NET-INCOME> 29,742
0
<EARNINGS-AVAILABLE-FOR-COMM> 29,742
<COMMON-STOCK-DIVIDENDS> 27,000
<TOTAL-INTEREST-ON-BONDS> 13,109
<CASH-FLOW-OPERATIONS> 36,831
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>