<PAGE>
________________________________________________________________________________
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 2-26983
THE PEOPLES GAS LIGHT AND COKE COMPANY
(Exact name of registrant as specified in its charter)
ILLINOIS 36-1613900
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
122 SOUTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60603
(Address of principal executive offices) (Zip Code)
(312) 431-4000
(Registrant's telephone number, including area code)
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 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 issuer's classes of
common stock, as of the latest practicable date: 24,817,566 shares of Common
Stock, without par value, outstanding at April 30, 1994.
________________________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
March 31, March 31, March 31,
------------------------ ------------------------ ------------------------
1994 1993 1994 1993 1994 1993
--------- --------- --------- --------- --------- ---------
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Gas sales $ 457,125 $ 414,696 $ 753,101 $ 705,941 $1,026,865 $ 933,295
Transportation of customer-
owned gas 34,110 37,217 64,244 71,336 99,105 112,798
Other 4,011 3,699 8,098 7,233 16,383 14,734
--------- --------- --------- --------- --------- ---------
Total Operating Revenues 495,246 455,612 825,443 784,510 1,142,353 1,060,827
--------- --------- --------- --------- --------- ---------
OPERATING EXPENSES:
Gas costs 281,580 249,950 453,258 419,782 588,732 531,991
Operation 53,060 49,812 101,647 95,660 194,728 177,779
Maintenance 8,964 7,923 16,716 15,131 34,005 32,455
Depreciation 14,464 13,663 28,135 26,691 56,060 53,157
Taxes - Income 26,376 26,181 41,221 42,371 31,801 31,599
- State and local revenue 54,730 50,799 90,758 86,730 125,079 117,520
- Other 5,177 4,987 9,466 9,224 18,734 18,163
--------- --------- --------- --------- --------- ---------
Total Operating Expenses 444,351 403,315 741,201 695,589 1,049,139 962,664
--------- --------- --------- --------- --------- ---------
OPERATING INCOME 50,895 52,297 84,242 88,921 93,214 98,163
--------- --------- --------- --------- --------- ---------
OTHER INCOME:
Interest income 768 195 944 434 1,912 2,551
Allowance for funds used during
construction -- -- -- -- -- 193
Miscellaneous 1,055 786 11,657 1,611 13,117 2,461
--------- --------- --------- --------- --------- ---------
Total Other Income 1,823 981 12,601 2,045 15,029 5,205
--------- --------- --------- --------- --------- ---------
GROSS INCOME 52,718 53,278 96,843 90,966 108,243 103,368
--------- --------- --------- --------- --------- ---------
INCOME DEDUCTIONS:
Interest on long-term debt 9,792 8,642 18,446 17,295 36,058 35,395
Other interest 740 706 2,023 1,747 2,685 2,920
Amortization of debt discount
and expense 176 151 337 302 651 605
Miscellaneous 34 8 68 21 126 51
--------- --------- --------- --------- --------- ---------
Total Income Deductions 10,742 9,507 20,874 19,365 39,520 38,971
--------- --------- --------- --------- --------- ---------
NET INCOME $ 41,976 $ 43,771 $ 75,969 $ 71,601 $ 68,723 $ 64,397
Preferred stock dividends -- 221 -- 451 267 1,055
--------- --------- --------- --------- --------- ---------
NET INCOME APPLICABLE TO
COMMON STOCK $ 41,976 $ 43,550 $ 75,969 $ 71,150 $ 68,456 $ 63,342
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
-2-
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
1994 September 30, 1993
(Unaudited) 1993 (Unaudited)
----------- ----------- -----------
(Thousands)
<S> <C> <C> <C>
PROPERTIES AND OTHER ASSETS
CAPITAL INVESTMENTS
Property, plant and equipment,
at original cost $ 1,728,509 $ 1,702,401 $ 1,652,334
Less - Accumulated depreciation 578,891 557,855 549,610
----------- ----------- -----------
Net property, plant and equipment 1,149,618 1,144,546 1,102,724
Gas supply advances and investments 809 825 854
Other investments 7,368 7,470 7,533
----------- ----------- -----------
TOTAL CAPITAL INVESTMENTS -- NET 1,157,795 1,152,841 1,111,111
----------- ----------- -----------
CURRENT ASSETS
Cash 10,264 7,909 10,943
Cash equivalents 78,866 -- 38,000
Other temporary cash investments,
at cost that approximates market value 600 600 600
Trust fund, utility construction 57,234 -- --
Receivables--
Customers, net of allowance for
uncollectible accounts of $19,388,
$18,934, and $19,019, respectively 212,690 75,382 191,590
Other 9,424 28,274 1,759
Accrued unbilled revenues 44,848 26,199 50,823
Materials and supplies, at average cost 22,731 23,673 25,048
Gas in storage, at last-in, first-out cost 52,915 119,654 51,783
Gas costs recoverable through rate adjustments 19,755 43,047 66,436
Prepayments 2,789 2,018 2,968
----------- ----------- -----------
TOTAL CURRENT ASSETS 512,116 326,756 439,950
----------- ----------- -----------
DEFERRED CHARGES 35,788 26,510 22,137
----------- ----------- -----------
TOTAL PROPERTIES AND OTHER ASSETS $ 1,705,699 $ 1,506,107 $ 1,573,198
----------- ----------- -----------
----------- ----------- -----------
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
-3-
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
1994 September 30, 1993
(Unaudited) 1993 (Unaudited)
----------- ------------- -----------
(Thousands, except share data)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stockholder's Equity:
Common stock, without par value
Authorized -- 40,000,000 shares
Outstanding -- 24,817,566 shares $ 165,307 $ 165,307 $ 165,307
Retained earnings 406,356 357,686 393,161
----------- ----------- -----------
Total Common Stockholder's Equity 571,663 522,993 558,468
Redeemable cumulative preferred stock,
$100 par value, exclusive of sinking
fund payments and redemptions due within one year -- -- 8,950
Long-term debt, exclusive of sinking
fund payments and maturities due within one year 549,150 447,150 433,500
----------- ----------- -----------
TOTAL CAPITALIZATION 1,120,813 970,143 1,000,918
----------- ----------- -----------
CURRENT LIABILITIES
Interim loans 900 63,200 900
Accounts payable 99,658 101,682 99,540
Dividends payable on common stock 13,650 14,146 13,401
Customer gas service and credit deposits 14,788 38,493 19,395
Sinking fund payments, maturities, and redemptions
due within one year -
Long-term debt -- -- 1,895
Redeemable cumulative preferred stock -- 3,400 1,950
Accrued taxes 85,167 25,249 71,621
Gas sales revenue refundable through rate adjustments 5,156 7,262 6,907
Accrued interest 9,802 8,271 7,699
Temporary LIFO liquidation credit 99,396 -- 110,355
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 328,517 261,703 333,663
----------- ----------- -----------
RESERVES AND DEFERRED CREDITS
Deferred income taxes -- primarily
accelerated depreciation 186,307 180,882 161,998
Investment tax credits being amortized
over the average lives of related property 36,673 37,478 38,162
Other 33,389 55,901 38,457
----------- ----------- -----------
TOTAL RESERVES AND DEFERRED CREDITS 256,369 274,261 238,617
----------- ----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,705,699 $ 1,506,107 $ 1,573,198
----------- ----------- -----------
----------- ----------- -----------
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
-4-
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
---------------------------------
1994 1993
----------- -----------
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 75,969 $ 71,601
Adjustments to reconcile net income to net cash:
Depreciation 28,135 26,691
Deferred income taxes and investment tax credits -- net 928 782
Change in other deferred credits and reserves (18,820) (3,187)
Change in deferred charges (9,278) 4,041
Other 15 26
----------- -----------
76,949 99,954
Change in certain current assets and liabilities:
Receivables -- net (118,458) (136,094)
Accrued unbilled revenues (18,649) (30,349)
Gas in storage 66,739 64,883
Rate adjustments recoverable or refundable 21,186 (44,340)
Accounts payable (2,024) 21,028
Customer gas service and credit deposits (23,705) (24,160)
Accrued taxes 59,918 55,548
Accrued interest 1,531 (327)
Temporary LIFO liquidation credit 99,396 110,355
Other 244 (1,189)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 163,127 115,309
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures -- construction (32,308) (40,640)
Other assets (899) (2,268)
Other temporary cash investments -- (200)
Other capital investments 102 929
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (33,105) (42,179)
----------- -----------
FINANCING ACTIVITIES:
Issuance of long-term debt 102,000 --
Trust fund, utility construction (57,234) --
Interim loans -- net (62,300) (8,000)
Redemption of preferred stock (3,400) (3,900)
Dividends paid on preferred stock (71) (753)
Dividends paid on common stock (27,796) (24,321)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (48,801) (36,974)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 81,221 36,156
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,909 12,787
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 89,130 $ 48,943
----------- -----------
----------- -----------
<FN>
- - -----------------------------------------------------------------------------------------------
( ) Denotes red figure.
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
-5-
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (CONTINUED)
MARCH 31, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by
The Peoples Gas Light and Coke Company (Company) in conformity with the rules
and regulations of the Securities and Exchange Commission (SEC) and reflect all
adjustments that are, in the opinion of management, necessary to present fairly
the results for the interim periods herein and to prevent the information from
being misleading.
Certain footnote disclosures and other information, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted from these interim financial
statements, pursuant to SEC rules and regulations. Therefore, the statements
should be read in conjunction with the consolidated financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.
The business of the Company is influenced by seasonal weather conditions
because a large element of the Company's customer load consists of gas used for
space heating. Weather-related deliveries can, therefore, have a significant
positive or negative impact on net income. Accordingly, the results of
operations for the interim periods presented are not indicative of the results
to be expected for all or any part of the balance of the current fiscal year.
2. SIGNIFICANT ACCOUNTING POLICIES
2(a) Revenue Recognition
Gas sales revenues for retail customers are recorded on the accrual
basis for all gas delivered during the month, including an estimate for
gas delivered but unbilled at the end of each month.
2(b) Statement of Cash Flows
For purposes of the balance sheet and the statement of cash flows,
the Company considers all short-term liquid investments with maturities
of three months or less to be cash equivalents.
-6-
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
2(b) Statement of Cash Flows (Continued)
Income taxes and interest paid (excluding capitalized interest) were
as follows:
<TABLE>
<CAPTION>
For the six months
ended March 31, 1994 1993
----------------------------------------------------------
(Thousands)
<S> <C> <C>
Income taxes paid $22,445* $21,893
Interest paid 18,604 19,202
<FN>
* Excludes income taxes paid on the interest portion of the IRS
settlement refund received in March. (See Note 6.)
</TABLE>
2(c) Income Taxes
In March 1993, the Company adopted, effective October 1, 1992, the
liability method of accounting for deferred income taxes required by the
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes." Under the liability method, deferred income taxes
have been recorded using currently enacted tax rates for the differences
between the tax basis of assets and liabilities and the basis reported in
the financial statements. Due to the effects of regulation on the
Company, certain adjustments made to deferred income taxes to reflect the
adoption of SFAS No. 109 are, in turn, debited or credited to regulatory
assets or liabilities. Such adjustments had no material impact on
financial position or results of operations of the Company.
2(d) Recovery of Gas Costs, Including Charges for Take-or-Pay and Transition
Costs
Under the tariffs of the Company, the difference for any fiscal year
between costs recoverable through the Gas Charge and revenues billed to
customers under the Gas Charge is refunded or recovered over a 12-month
billing cycle beginning the following January 1. Consistent with these
tariff provisions, such difference for any month is recorded either as a
current liability or as a current asset (with a contra entry to Gas
Costs), and the fiscal year-end balance is amortized over the 12-month
period beginning the following January 1.
The Illinois Commerce Commission (Commission) conducts annual
proceedings regarding, for each gas utility, the reconciliation of
revenues from the Gas Charge and related costs incurred for gas. In such
proceedings, costs recovered by a utility through the Gas Charge are
subject to challenge. Such proceedings regarding the Company for fiscal
years 1992 and 1993 are currently pending before the Commission.
-7-
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
2(d) Recovery of Gas Costs, Including Charges for Take-or-Pay
and Transition Costs (Continued)
Pursuant to Federal Energy Regulatory Commission (FERC) Order
No. 500, and successor orders, pipelines were allowed to direct-bill firm
sales customers for a portion of so-called "past" take-or-pay costs.
These costs arose from the settlement of liabilities under agreements
between pipelines and producers whereby pipelines were required to pay
for contracted supplies, whether or not they were taken. The Company has
recovered all take-or-pay charges, billed by its pipeline suppliers,
through the Gas Charge. Although additional recoveries may be required
in the future, any amount is anticipated to be insignificant.
Pursuant to FERC Order No. 636 and successor orders, pipelines are
allowed to recover from their customers so-called transition costs.
These costs arise from the restructuring of pipeline service obligations
required by the 636 Orders. The Company is currently recovering pipeline
charges for transition costs through an existing provision of the Gas
Charge. The Commission entered an order on March 9, 1994, providing for
the full recovery of all such charges from customers. (See Notes 3(a) and
3(b).)
3. RATES AND REGULATION
3(a) Utility Rate Proceedings
On October 6, 1992, the Commission issued an order approving changes
in the rates of the Company that are designed to increase annual revenues
by approximately $30.6 million, exclusive of additional charges for
revenue taxes. The new rates were implemented on October 10, 1992. The
Company was allowed a 10.40 percent return on its original-cost rate
base, reflecting a 12.25 percent cost of common equity. The Commission's
order also approved a rate mechanism by which the Company will recover
costs associated with environmental activities, principally the
investigation and remediation of residues associated with past
manufactured gas operations. Consistent
-8-
<PAGE>
3. RATES AND REGULATION (Continued)
3(a) Utility Rate Proceedings (Continued)
with the order it issued in separate rate proceedings (see discussion
below), the Commission directed that such costs be recovered over a five-
year period without recovery of carrying charges on unrecovered balances.
The Company and several parties have appealed the Commission's order to
the Illinois Appellate Court. Any change made pursuant to the Appellate
Court's order on appeal would have a prospective effect only.
On September 30, 1992, the Commission issued an order in its
consolidated proceedings, initiated in March 1991, regarding the
appropriate ratemaking treatment of costs incurred by Illinois utilities,
including the Company and North Shore Gas, in connection with the
investigation and treatment of residues associated with past manufactured
gas operations ("environmental costs"). In its order, the Commission
approved rate recovery of environmental costs but required that such
recovery occur over a five-year period without recovery of carrying
charges on unrecovered balances. Reimbursements of environmental costs
from insurance carriers or other entities are to be netted against costs
and reflected in rates over a five-year period. In November 1992,
several parties, including the Company and North Shore Gas, appealed the
Commission's order to the Illinois Appellate Court. On
December 29, 1993, the Third District Appellate Court issued its opinion
affirming the Commission's order in the consolidated proceedings. On
February 2, 1994, a petition for leave to appeal the Third District
Court's decision to the Illinois Supreme Court was filed. On April 6,
1994, the Illinois Supreme Court granted that petition. Any change made
pursuant to the Supreme Court's order on appeal would have a prospective
effect only.
On September 15, 1993, the Commission entered an order initiating an
investigation into the appropriate means of recovery by Illinois gas
utilities of pipeline charges for FERC Order No. 636 transition costs.
The Commission issued a final order in this proceeding on March 9, 1994.
The order provides for the full recovery of transition costs from the
Company's sales customers and transportation customers to the extent they
contract for firm standby service. The Citizens Utility Board and
State's Attorney of Cook County filed an application for rehearing of the
March 9 order with the Commission. On May 4, 1994, the Commission granted
rehearing, limited to the question of the allocation of transition costs.
(See Notes 2(d) and 3(b).)
-9-
<PAGE>
3. RATES AND REGULATION (Continued)
3(b) FERC Orders 636, 636-A, and 636-B
On April 8, 1992, the FERC issued Order No. 636, and on August 3,
1992, the FERC issued Order No. 636-A. On November 27, 1992, the FERC
issued Order No. 636-B, which substantially confirmed Order Nos. 636 and
636-A. There are numerous appeals of the 636 Orders pending before the
Federal Circuit Court of Appeal for the D.C. Circuit.
The 636 Orders required substantial restructuring of the service
obligations of interstate pipelines. Among other things, the 636 Orders
mandated "unbundling" of existing pipeline gas sales services. Mandatory
unbundling requires pipelines to sell separately the various components
of their gas sales services (gathering, transportation and storage
services, and gas supply). These components were previously combined or
"bundled" in gas services such as those purchased by the Company. To
address concerns raised by utilities about reliability of service to
their service territories, the 636 Orders required pipelines to offer a
"no-notice" transportation service under which firm transporters can
receive delivery of gas up to their contractual capacity level on any day
without prior scheduling. Further, the 636 Orders provided for
mechanisms for pipelines to recover prudently incurred transition costs
associated with the restructuring process.
The FERC initiated individual restructuring proceedings for each
interstate pipeline. Each pipeline submitted a proposal to bring it into
compliance with the requirements of the 636 Orders. The restructured
tariffs of Natural Gas Pipeline Company of America (Natural), the
principal pipeline serving the Company, went into effect December 1,
1993. The restructured tariffs of other pipelines serving the Company
had previously gone into effect. Several appeals of the orders approving
Natural's and other pipelines' restructured tariffs are pending before
the Federal Circuit Court of Appeal for the D.C. Circuit.
As part of the restructuring process, the Company elected necessary
levels of restructured services, including no-notice services, from the
menu of restructured services offered by the various pipelines. Also
during 1993, the Company took the steps necessary to obtain reliable gas
supply as a replacement for the bundled merchant service supply which was
no longer available from the interstate pipelines to any significant
extent.
-10-
<PAGE>
3. RATES AND REGULATION (Continued)
3(b) FERC Orders 636, 636-A, and 636-B (Continued)
Under the 636 Orders, pipelines must make separate rate filings to
recover transition costs. There are four categories of such costs, the
largest of which for the Company is gas supply realignment (GSR) costs.
The Company is subject to charges for transition cost recovery by two
pipelines: Midwestern Gas Transmission Company/Tennessee Gas Pipeline
Company and Natural. Contracts with Midwestern and Tennessee having been
terminated effective November 30, 1993, transition cost billings by these
companies are limited to the period September 1993 through November 1993.
Charges for Natural's transition costs commenced on January 1, 1994.
While the total amount of the transition costs expected to be billed to
the Company by Natural are uncertain at this time, such total amount is
expected to be substantial. The Company is currently recovering
transition costs through the Gas Charge. On February 1, 1994, Natural
filed a Stipulation and Agreement with the FERC addressing GSR costs. If
approved by the FERC, the Stipulation and Agreement would place a cap on
the amount of GSR costs recoverable by Natural from the Company.
The 636 Orders are not expected to have a material adverse effect on
financial position or results of operations of the Company. (See Notes
2(d) and 3(a).)
4. ENVIRONMENTAL MATTERS
The Company, its predecessors, and certain former affiliates operated
facilities in the past for manufacturing gas and storing manufactured gas. In
connection with manufacturing and storing gas, various by-products and waste
materials were produced, some of which might have been disposed of on sites
where the facilities were located. Under certain laws and regulations relating
to the protection of the environment, the Company might be required to undertake
remedial action with respect to some of these materials, if found at the sites.
The current owner of a site near Chicago has advised the Company that it
has found what appear to be wastes associated with by-products of the gas
manufacturing process under its property. The owner has asserted that these
wastes are the responsibility of the Company. The Company is currently
evaluating this claim.
-11-
<PAGE>
4. ENVIRONMENTAL MATTERS (Continued)
The Company, in cooperation with the Illinois Environmental Protection
Agency (IEPA), is conducting investigations of certain sites (a total of 29) to
determine whether remedial action might be necessary. The investigations were
initiated pursuant to an informal request by the IEPA. To the best of the
Company's knowledge, similar informal requests have been made by the IEPA to
other major Illinois gas and electric utilities. The Company has engaged
environmental consulting firms to assist in the Company's investigations. At
this time, except for one site in Chicago (discussion below), it is not known
what, if any, remedial action will be necessary at the sites or, if necessary,
what the cost of any such action would be. As discussed below, the Company may
conduct a remedial investigation/feasibility study (RI/FS) at two of these sites
under the supervision of the IEPA and, with the agreement of the IEPA, has
commenced limited work at a third site.
In August 1988, the IEPA conducted an inspection at the Company's
Division Street property in Chicago. During the inspection, the IEPA and the
Company took several soil samples for laboratory analysis. The analysis of the
samples collected by the Company indicates the presence of certain substances
within the soil of the Division Street property that could be attributable to
former manufactured gas operations. The Company may conduct an RI/FS of the
property under the supervision of the IEPA.
The current owners at another site in Chicago have advised the Company
that they have found what appear to be gas manufacturing wastes underneath their
property. The owners have demanded monetary compensation from the Company
because of the presence of such wastes. The Company has rejected this demand,
but may conduct an RI/FS of the site under the supervision of the IEPA.
The Company has observed what appear to be gas purification wastes on
another former site in Chicago and property contiguous thereto. The Company has
fenced the site and the contiguous property and is conducting a study under the
supervision of the IEPA to determine the feasibility of a limited removal
action.
The Company is accruing and deferring the costs it incurs in connection
with all of the sites, including related legal expenses, pending recovery
through rates or from insurance carriers or other entities. As of March 31,
1994, the total of the costs deferred by the Company, net of recoveries, was
$10.0 million. The costs of remediation at the sites cannot be determined until
more is known about the nature and extent of contamination and the remedial
action, if any, to be required by the IEPA. While the Company intends to seek
contribution from other entities for the costs incurred at the sites, the full
extent of such contributions cannot be determined at this time.
-12-
<PAGE>
4. ENVIRONMENTAL MATTERS (Continued)
The Company has filed suit against a number of insurance carriers for the
recovery of costs associated with the investigation and remediation of residues
from its former manufactured gas operations. The suit asks the court to declare
that the insurers are liable under policies in effect between 1938 and 1985 for
costs incurred or to be incurred by the Company in connection with its former
manufactured gas sites. The Company is also asking the court to award damages
stemming from the insurers' breach of their contractual obligation to defend and
indemnify the Company against these costs. At this time, management cannot
determine the timing and extent of the Company's recovery of costs from its
insurance carriers. Accordingly, the costs deferred as of March 31, 1994 have
not been reduced to reflect recoveries from insurance carriers.
Costs incurred by the Company for environmental activities relating to
the sites of former manufactured gas operations will be recovered from insurance
carriers or other entities or through rates for utility service. Accordingly,
management believes that the costs incurred by the Company in connection with
the sites will not have a material adverse effect on financial position or
results of operations. The Company is authorized to recover the costs of
environmental activities relating to its former manufactured gas operations
under a rate mechanism approved by the Commission in its October 1992 order. As
of March 31, 1994, it had recovered $132,000 of such costs through rates. (See
Note 3(a) for a discussion of proceedings regarding the recovery of these costs
through utility rates.)
5. GAS OVER-PRESSURE CONDITION
On January 17, 1992, an over-pressure condition occurred in the gas mains
of the Company serving an approximately one-square-mile area of the Near
Northwest Side of the City of Chicago. The over-pressure condition caused a
major explosion and numerous fires. The Company is aware of four deaths and 14
personal injuries allegedly resulting from the explosion and fires. The Company
also has been informed that damage occurred in an estimated 28 buildings. There
was also damage, such as broken windows, wall cracks, and water damage, to
additional buildings.
A number of lawsuits have been filed against the Company as a result of
the over-pressure condition. The lawsuits include wrongful-death claims and
several class actions that seek to certify as a class those persons who suffered
bodily harm and/or property damage. All of the suits allege negligence and seek
compensatory damages. Some of the lawsuits also seek punitive damages. These
suits have not quantified the alleged damages except for certain amounts that
are not material.
-13-
<PAGE>
5. GAS OVER-PRESSURE CONDITION (Continued)
In January 1993, the National Transportation Safety Board (NTSB)
completed its report regarding its investigation of the over-pressure incident
that occurred on January 17, 1992. In its report, the NTSB stated that "the
probable cause of the over-pressure accident and the resulting losses was the
failure of Peoples Gas Light Coke Company to adequately train its gas operations
section employees in recognizing and correctly responding to abnormal
situations, which consequently led to the failure of the gas operations section
crew to properly monitor and control the pressure of the gas being supplied to
the low-pressure gas system during a routine inspection."
In June 1993, the Staff of the Illinois Commerce Commission (Commission
Staff) released its report concerning the over-pressure incident. In its
report, the Commission Staff concluded that employee error was the probable
cause of the over-pressurization. The report was critical of the Company's
training of its personnel in its gas operations section and of some of the
Company's practices at the time of the incident.
The Company strongly disagrees with the criticisms by the NTSB and the
Commission Staff of the training given by the Company to personnel in its gas
operations section. The Company also disagrees with some of the findings and
conclusions of the Commission Staff, including several of the Commission Staff's
findings and its theory, analysis, and conclusions pertaining to the probable
cause of the over-pressurization.
The Company carries substantial insurance coverage. If liability were
found on the part of the Company, management believes that any costs incurred
for damages will be adequately covered by insurance. However, the Company's
primary insurance carrier has asserted that under Illinois law, liability for
punitive damages is not insurable. The Company has advised the insurance
carrier that it disagrees and intends to assert all of its rights against the
carrier including its right to obtain recovery for punitive damages, if any.
Management is not aware of any conduct on its part or by employees of the
Company that would give rise to punitive damages under Illinois law.
Accordingly, management believes that the incident will not have a material
adverse effect on financial position or results of operations of the Company.
-14-
<PAGE>
6. TAX MATTERS
On September 30, 1993, the Company received notification from the
Internal Revenue Service (IRS) that settlement of past income tax returns had
been reached for fiscal years 1978 through 1990. The IRS settlement resulted in
a March 1994 payment of principal and interest to the Company in total amount of
approximately $25 million, or $19 million after income taxes. The Company has
received regulatory authorization to defer the recording of the settlement
amount in income for fiscal year 1993, and to record its portion of the
settlement amount in income for fiscal years 1994 and 1995. The Company has
represented to the Commission that, having received this accounting
authorization, it will not file a request for an increase in base rates before
December 1994. The regulatory treatment of the IRS settlement having been
resolved in November 1993, the Company included $12.6 million, or $9.7 million
after income taxes, in income for that month; the amount after income taxes is
included in Other Income - Miscellaneous. At March 31, 1994, approximately
$12 million is included in Reserves and Deferred Credits - Other. The Company
will amortize its remaining portion of the settlement amount in income in fiscal
year 1995, the effect of which will be to offset increases in costs that the
utility will incur during that year.
7. ISSUANCE OF BONDS
On December 22, 1993, the City of Chicago issued $102 million, in
aggregate principal amount, of gas supply revenue bonds ($75 million 5 3/4%
Series A and $27 million adjustable-rate Series B), which were collateralized by
an equal amount of the Company's 30-year first mortgage bonds. The proceeds
were lent to the Company for the purpose of financing the construction of
certain facilities within the City. The proceeds are being held in a trust fund
until drawn down by the Company for reimbursement of construction expenditures.
In accordance with provisions of the Internal Revenue Code and
regulations thereunder, any arbitrage income must be paid to the federal
government. Additionally, all assets financed through this arrangement must be
depreciated on a straight-line basis for tax purposes.
-15-
<PAGE>
8. INTEREST-RATE ADJUSTMENTS
The rate of interest on the City of Joliet 1984 Series C Bonds, which are
secured by the Company's Adjustable-Rate Bonds, Series W, is subject to
adjustment annually on October 1. Owners of the Series C Bonds have the right
to tender such bonds at par during a limited period prior to that date. The
Company is obligated to purchase any such bonds tendered if they cannot be
remarketed. All Series C Bonds that were tendered prior to October 1, 1993,
have been remarketed. The interest rate on such bonds is 3 percent for the
period October 1, 1993, through September 30, 1994.
The rate of interest on the City of Chicago 1993 Series B Bonds, which
are secured by the Company's Adjustable-Rate Bonds, Series EE, currently is
subject to adjustment annually on December 1. Owners of the Series B Bonds have
the right to tender such bonds at par during a limited period prior to that
date. The Company is obligated to purchase any such bonds tendered if they
cannot be remarketed. The interest rate on such bonds is 2.55 percent for the
period December 1, 1993, through November 30, 1994.
9. RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS
In December 1990, the Financial Accounting Standards Board (FASB) issued
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company adopted SFAS No. 106 effective October 1, 1993. SFAS
No. 106 requires the accrual of the expected costs of such benefits during the
employees' years of service. The Accumulated Postretirement Benefit Obligation
at October 1, 1993, was approximately $105.3 million. The unfunded obligation
will be amortized over 20 years. The estimated cost for fiscal 1994 is
approximately $16.1 million.
In October 1992, the Company was granted rates by the Commission that
included its estimated postretirement benefit costs determined on the accrual
basis of accounting. (See Note 3(a).) The financial reporting for
postretirement benefit costs is consistent with the related rate treatment. Due
to regulatory treatment, the adoption of SFAS No. 106 will not have a material
effect on financial position or results of operations.
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement requires the accrual of certain
benefits provided to former or inactive employees after employment but before
retirement. Adoption of SFAS No. 112 is required by the Company no later than
fiscal 1995. The Company does not expect the adoption of SFAS No. 112 to have a
material effect on financial position or results of operations.
-16-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
NET INCOME
Net income applicable to common stock decreased $1.6 million, to $42.0
million, for the three-month period ended March 31, 1994, from the results of
last year's second quarter. The current quarter benefited from uncommonly cold
weather that was 8 percent colder than the year-ago period, but the extreme
winter conditions increased operating expenses. In addition, the provision for
uncollectible accounts was increased, reflecting experience in the fiscal year
through the second quarter.
Net income applicable to common stock for the six- and 12-month periods
rose $4.8 million, to $76.0 million, and $5.1 million, to $68.5 million,
respectively, from the results of last year's like periods. Results for the
current six- and 12-month periods include the recording of one-half of the IRS
settlement, increasing net income by $9.7 million. (See Note 6 of the Notes to
Consolidated Financial Statements.) In addition to the tax settlement, the
current six- and 12-month periods benefited from weather that was 4 percent and
2 percent colder than the respective year-ago periods, while the current 12-
month period also was aided by the Company's rate increase that went into effect
on October 10, 1992. (See Note 3(a) of the Notes to Consolidated Financial
Statements.) However, the current six- and 12-month results were adversely
affected by the same higher operating expenses that hampered the second-
quarter's performance. The 12-month figures were reduced further by customer
conservation measures and by the accrual of postretirement benefit costs
consistent with rate treatment granted the Company.
A summary of variations affecting income between periods is presented
below, with explanations of significant differences following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended 12 Months Ended
March 31, March 31, March 31,
1994 Over 1993 1994 Over 1993 1994 Over 1993
------------------- ------------------- -------------------
(Thousands of dollars) Amount % Amount % Amount %
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues* $ 4,073 2.6 3,429 1.2 17,226 4.2
Operation and
maintenance expenses 4,289 7.4 7,572 6.8 18,499 8.8
Depreciation expense 801 5.9 1,444 5.4 2,903 5.5
Income taxes 195 0.7 (1,150) (2.7) 202 0.6
Other income 842 85.8 10,556 516.2 9,824 188.7
Income deductions 1,235 13.0 1,509 7.8 549 1.4
Net Income Applicable
to Common Stock (1,574) (3.6) 4,819 6.8 5,114 8.1
- - ------------------------------------------------------------------------------------------------------------------
<FN>
( ) Denotes red figure.
* Operating revenues, net of gas costs and revenue taxes.
</TABLE>
-17-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
NET OPERATING REVENUES
Gross revenues of the Company have been affected in recent years by
customers who purchase gas directly from producers and marketers, rather than
from the Company, and also by changes in the unit cost of the Company's gas
purchases. These direct customer purchases have no effect on net income because
the Company provides transportation service for such gas volumes and recovers
margins similar to those applicable to conventional gas sales. Changes in the
unit cost of gas do not significantly affect net income because the Company's
tariffs provide for dollar-for-dollar recovery of gas costs. (See Note 2(d) of
Notes to Consolidated Financial Statements.) The Company's tariffs also provide
for dollar-for-dollar recovery of the cost of revenue taxes imposed by the State
and the City.
Since income is not significantly affected by changes in revenue from
customers' direct gas purchases rather than from the Company, changes in gas
costs, or changes in revenue taxes, the discussion below pertains to "net
operating revenues" (operating revenues, net of gas costs and revenue taxes).
The Company considers net operating revenues to be a more pertinent measure of
operating results than gross revenues.
Net operating revenues increased $4.1 million, to $158.9 million and
$3.4 million, to $281.4 million, for the three- and six-month periods,
respectively, due primarily to weather that was 8 and 4 percent colder than the
similar prior periods.
Net operating revenues increased $17.2 million, to $428.5 million, for
the 12-month period, due principally to the impact of the October 1992 rate
increase for the Company (increasing net operating revenues by $19.4 million, or
$11.9 million after income taxes). The 12-month period also was affected by a
rise in customers' energy conservation measures, partially offset by weather
that was 2 percent colder than the prior 12-month period.
OPERATION AND MAINTENANCE
Operation and maintenance expenses increased $4.3 million, to
$62.0 million, $7.6 million, to $118.4 million, and $18.5 million, to
$228.7 million, for the three-, six-, and 12-month periods, respectively, due
mainly to increases in labor costs associated with the current second quarter's
extreme winter conditions and the provision for uncollectible accounts.
The current 12-month period was also affected by an increase in group insurance
expenses, due primarily to the accrual of postretirement benefit costs
consistent with rate treatment allowed the Company (see Note 9 of the Notes to
Consolidated Financial Statements).
-18-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
DEPRECIATION EXPENSE
Depreciation expense increased $801,000, to $14.5 million, $1.4 million
to $28.1 million, and $2.9 million, to $56.1 million, for the three-, six-, and
12-month periods, respectively, due primarily to depreciable property additions.
INCOME TAXES
Income taxes increased $195,000, to $26.4 million, for the three-month
period, and increased $202,000, to $31.8 million, exclusive of $2.9 million
included in other income related to the IRS settlement (see Note 6 of the Notes
to Consolidated Financial Statements), for the 12-month period, due principally
to the federal tax rate change from 34 percent to 35 percent effective
January 1, 1993, and decreased adjustments to deferred taxes, partially offset
by lower pre-tax income.
Income taxes, exclusive of the $2.9 million included in other income
related to the IRS settlement (see Note 6 of the Notes to Consolidated Financial
Statements), decreased $1.2 million, to $41.2 million, for the six-month period,
due mainly to lower pre-tax income, partially offset by the aforementioned tax
rate change.
OTHER INCOME
Other income increased $842,000, to $1.8 million, for the three-month
period, due mainly to increased interest income resulting from the proceeds
being held in a trust fund generated from the Company's December 1993 issuance
of bonds. (See Note 7 of the Notes to Consolidated Financial Statements.)
Other income increased $10.6 million, to $12.6 million, and $9.8 million,
to $15.0 million, for the six- and 12-month periods, due primarily to recording
the IRS settlement of approximately $9.7 million after income taxes. (See Note
6 of the Notes to Consolidated Financial Statements.)
-19-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
INCOME DEDUCTIONS
Income deductions increased $1.2 million, to $10.7 million, $1.5 million,
to $20.9 million, and $549,000, to $39.5 million, for the three-, six-, and 12-
month periods, respectively, due chiefly to increased interest on long-term debt
reflecting additional debt issued, partially offset by lower preferred stock
dividends resulting from redemptions.
OTHER MATTERS
Weather variations affect the volumes of gas delivered for heating
purposes and, therefore, can have a significant positive or negative impact on
net income.
On September 30, 1993, the Company received notification from the IRS
that settlement of past income tax returns had been reached for fiscal years
1978 through 1990. The IRS settlement resulted in a March 1994 payment of
principal and interest to the Company in total amount of approximately
$25 million, or $19 million after income taxes. (See Note 6 of the Notes to
Consolidated Financial Statements.)
In March 1993, the Company adopted, effective October 1, 1992, the
liability method of accounting for deferred income taxes required by SFAS
No. 109. (See Note 2(c) of the Notes to Consolidated Financial Statements.)
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement requires the accrual of certain
benefits provided to former or inactive employees after employment but before
retirement. SFAS No. 112 requires adoption by the Company no later than fiscal
1995. (See Note 9 of the Notes to Consolidated Financial Statements.)
-20-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
OTHER MATTERS (Continued)
Effective October 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This statement
requires the accrual of the expected costs of such benefits during the
employees' years of service. (See Note 9 of the Notes to Consolidated Financial
Statements.)
In 1992, the FERC issued Order No. 636 and successor orders that require
substantial restructuring of the service obligations of interstate pipelines.
(See Notes 2(d), 3(a), and 3(b) of the Notes to Consolidated Financial
Statements.)
On September 15, 1993, the Commission entered an order initiating an
investigation into the appropriate means of recovery by Illinois gas utilities
of pipeline charges for FERC Order No. 636 transition costs. The Commission
issued a final order in this proceeding on March 9, 1994. (See Notes 2(d),
3(a), and 3(b) of the Notes to Consolidated Financial Statements.)
On May 1, 1994, a Chicago city ordinance imposing a use tax on natural
gas became effective. Under the ordinance, the use or consumption of natural
gas in Chicago is taxed at a rate of 1.5 cents per therm. The use tax does not
apply to gas used or consumed by a governmental body, a purchaser exempt from
the municipal utility tax, a gas public utility, or a person using natural gas
as vehicle fuel. To prevent multiple taxation, the use tax also does not apply
to the use of gas by persons who are charged for a state or municipal tax with
respect to the purchase of such gas. Because the Company is subject to such
state and municipal taxes and recovers the cost of such taxes from its
customers, the use tax does not apply to the use of gas which is purchased from
the Company. Rather, the tax is directed at users who are transportation
customers of the Company; these users have been avoiding local taxation on
purchases of gas by purchasing gas from out-of-state sellers. The Company is
collecting the tax for the City and is paid a fee of three percent of the taxes
collected. The Company will not be liable for failure of users to pay the use
tax.
-21-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
INTEREST COVERAGE. The Company's fixed charges coverage ratios for the 12
months ended March 31, 1994, and for fiscal 1993 and 1992 were 3.63, 3.57, and
3.18, respectively. The current 12-month period ratio reflects the recording of
the Company's fiscal 1994 portion of the IRS settlement in income. (See Note 6
of the Notes to Consolidated Financial Statements.) In addition, the increase
in the current 12-month period and fiscal 1993 ratios as compared to fiscal 1992
is primarily attributable to the benefit of the rate increase approved in
October 1992 and decreased fixed charges, partially offset by increased
operating expenses.
ENVIRONMENTAL MATTERS. The Company is conducting environmental investigations
and work at certain sites that were the location of former manufactured gas
operations. (See Note 4 of the Notes to Consolidated Financial Statements.)
REGULATORY ACTIONS. On September 30, 1992, the Commission issued an order in
its consolidated proceedings, initiated in March 1991, regarding the appropriate
ratemaking treatment of environmental costs incurred by Illinois utilities,
including the Company. In its order, the Commission approved rate recovery of
environmental costs but required that such recovery occur over a five-year
period without recovery of carrying charges on unrecovered balances. (See Note
3(a) of the Notes to Consolidated Financial Statements.)
OVER-PRESSURE CONDITION. On January 17, 1992, an over-pressure condition
occurred in the gas mains of the Company serving an approximately one-square-
mile area of the Near Northwest Side of the City of Chicago. The over-pressure
condition caused a major explosion and numerous fires. Four deaths, 14 personal
injuries, and extensive property damage allegedly resulted from the explosion
and fires. (See Note 5 of the Notes to Consolidated Financial Statements.)
BONDS ISSUED. On December 22, 1993, the City of Chicago issued $102 million, in
aggregate principal amount, of gas supply revenue bonds, which were
collateralized by an equal amount of the Company's 30-year first mortgage bonds.
The proceeds were lent to the Company for the purpose of financing the
construction of certain facilities within the City. (See Note 7 of the Notes to
Consolidated Financial Statements.)
CREDIT LINES. On February 1, 1994, the Company reduced its lines of credit to
approximately $154 million from $184 million in effect since November 1, 1993.
Such lines of credit cover projected short-term credit needs of the Company and
North Shore Gas and support the long-term debt treatment of the Company's
adjustable-rate mortgage bonds. (See Note 8 of the Notes to Consolidated
Financial Statements.) North Shore Gas may borrow up to $20 million of the
aggregate $154 million.
OTHER MATTERS. In February 1994, MidCon Corp. (MidCon) paid Peoples Energy
approximately $7.3 million. The payment relates to the reorganization of
Peoples Energy that occurred in November 1981. Prior to the reorganization,
MidCon and its subsidiaries were subsidiaries of Peoples Energy. Peoples
Energy and MidCon agreed to allocate state income tax liabilities for certain
years ending prior to October 1, 1982. The $7.3 million payment, $7.1 million
of which relates to the state income tax liabilities of the Company, was made
pursuant to such agreement. Payment was delayed until MidCon was assured of
appropriate federal income tax treatment.
-22-
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART II. OTHER INFORMATION
MARCH 31, 1994
ITEM 1. LEGAL PROCEEDINGS
See Note 4 of the Notes to Consolidated Financial Statements for a
discussion pertaining to environmental matters.
See Note 5 of the Notes to Consolidated Financial Statements for a
discussion of an over-pressure condition that occurred on January 17, 1992, in
the Company's gas mains on the Near Northwest Side of the City of Chicago.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Company's sole stockholder acted by written consent in lieu of
an annual meeting of stockholders on March 31, 1994.
b. On March 31, 1994, the following persons were elected Directors of
the Company by written consent and comprise the entire Board of
Directors of the Company: Kenneth S. Balaskovits, J. Bruce Hasch,
James Hinchliff, Michael S. Reeves, and Richard E. Terry.
c. The following matter was voted upon by written consent in lieu of
an annual meeting of stockholders:
1. The election of nominees for Directors who will serve for a
one-year term or until their respective successors shall be duly
elected. The nominees, all of whom were elected, were as follows:
Kenneth S. Balaskovits, J. Bruce Hasch, James Hinchliff, Michael S.
Reeves, and Richard E. Terry. The Secretary of the Company certified
the following vote tabulations:
<TABLE>
<CAPTION>
FOR WITHHELD
---------- --------
<S> <C> <C>
Kenneth S. Balaskovits . . . . . . . . . . 24,817,566 0
J. Bruce Hasch . . . . . . . . . . . . . . 24,817,566 0
James Hinchliff . . . . . . . . . . . . . 24,817,566 0
Michael S. Reeves . . . . . . . . . . . . 24,817,566 0
Richard E. Terry . . . . . . . . . . . . . 24,817,566 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
None
b. Reports on Form 8-K filed during the quarter ended March 31, 1994
None
-23-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Peoples Gas Light and Coke Company
--------------------------------------
(Registrant)
May 11, 1994 By: K. S. BALASKOVITS
- - ----------------------- --------------------------------
(Date) K. S. Balaskovits
Vice President and Controller
(Same as above)
--------------------------------
Principal Accounting Officer
-24-
