CTG Resources 10-K405 1999 FY Annual report (delinquent filer disclosure)

CONNECTICUT NATURAL GAS CORPORATION

-----------------------------------

UNION EMPLOYEE SAVINGS PLAN

---------------------------

FINANCIAL STATEMENTS AND SCHEDULES

----------------------------------

AS OF DECEMBER 31, 1998 AND 1997

--------------------------------

TOGETHER WITH

--------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

----------------------------------------

CONNECTICUT NATURAL GAS CORPORATION

-----------------------------------

UNION EMPLOYEE SAVINGS PLAN

---------------------------

INDEX

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	PAGE ----
Report of Independent Public Accountants	1
Financial Statements: Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998	2
Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997	4
Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998	6
Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997	8
Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1996	10
Notes to Financial Statements and Schedules	12
Schedules: Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998	18
Schedule II - Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 All schedules, except those as set forth above, are omitted as not applicable or not required.	19

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

----------------------------------------

To the Plan Administrator of Connecticut Natural

Gas Corporation Union Employee Savings Plan:

We have audited the accompanying statements of net assets available for benefits with fund information of Connecticut Natural Gas Corporation Union Employee Savings Plan (the Plan) as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits with fund information for each of the three years in the period ended December 31, 1998. These financial statements and schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits with fund information of the Plan as of December 31, 1998 and 1997, and the changes in its net assets available for benefits with fund information for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

By Arthur Andersen LLP
------------------------
Arthur Andersen LLP

Hartford, Connecticut
June 25, 1999

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
Participant Directed
	---------------------------------------------------------------------------------------
					Putnam
	Putnam	The George	The Putnam Fund	Putnam	International	Putnam
	Stable	Putnam Fund	for Growth	Vista	Growth	Income
	Value Fund	of Boston	and Income	Fund	Fund	Fund
	-----------------	----------	---------------	---------	----------	--------
Assets
------
Investments, at
current value	$599,871	$1,908,329	$5,197,979	$2,685,586	$428,138	$213,795
	----------	----------	----------	---------	----------	--------
Cash and temporary
investments, at
current value	-	-	-	-	-	-
	----------	----------	----------	---------	----------	--------
Accounts receivable
Employer	1,043	1,106	3,878	4,167	1,014	283
Employees	6,310	13,358	33,961	21,635	3,173	1,367
Broker	-	-	-	-	-	-
	----------	----------	----------	---------	----------	--------
	7,353	14,464	37,839	25,802	4,187	1,650
	----------	----------	----------	---------	----------	--------
Participant notes receivable	-	-	-	-	-	-
	----------	----------	----------	---------	----------	--------
Net Assets Available
for Benefits	$607,224	$1,922,793	$5,235,818	$2,711,388	$432,325	$215,445
	==========	==========	==========	==========	==========	========
The accompanying notes are an integral part of this financial statement.

-3-

CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
			Non-
			Participant
	Participant Directed		Directed
	----------------------------		-----------
		Common	Common
	Participant	Stock	Stock
	Notes	Fund	Fund	Total
	-----------	----------	-----------	-----------
Assets
------
Investments, at
current value	$ -	$8,398,549	$12,001	$19,444,248
Cash and temporary
investments, at
current value	-	(3,857)	4,769	912
Accounts receivable
Employer	-	34,300	-	45,791
Employees	3,024	18,838	-	101,666
Broker	-	16,412	-	16,412
	------------	----------	-----------	-----------
	3,024	69,550	-	163,869
	------------	----------	-----------	-----------
Participant notes receivable	349,432	-	-	349,432
	------------	----------	-----------	-----------
Net Assets Available
for Benefits	$352,456	$8,464,242	$16,770	$19,958,461
	============	==========	===========	===========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
Participant Directed
	--------------------------------------------------------------------------------------------------
					Putnam
	Putnam	The George	The Putnam Fund	Putnam	International	Putnam
	Stable	Putnam Fund	for Growth	Vista	Growth	Income
	Value Fund	of Boston	and Income	Fund	Fund	Fund
	-----------------	------------	---------------	-----------	-----------	---------
Assets
------
Investments, at
current value	$596,471	$1,752,110	$4,378,627	$1,759,969	$244,521	$56,198
Cash and temporary
investments, at current value	-	-	-	-	-	-
Accounts receivable
from broker	-	-	-	-	-	-
	----------	----------	----------	----------	--------	--------
Total Assets	596,471	1,752,110	4,378,627	1,759,969	244,521	56,198
Liabilities
-----------
Accounts payable to
broker	-	-	-	-	-	-
	----------	----------	----------	----------	--------	--------
Net Assets Available
for Benefits	$596,471	$1,752,110	$4,378,627	$1,759,969	$244,521	$56,198
	==========	==========	==========	==========	========	========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
		Non-
	Participant	Participant
	Directed	Directed
	-----------	-----------
	Common	Common
	Stock	Stock
	Fund	Fund	Total
	-----------	-----------	-----------
Assets
------
Investments, at
current value	$6,491,623	$2,449,512	$17,729,031
Cash and temporary
investments, at current value	81,698	30,128	111,826
Accounts receivable
from broker	3,437	1,304	4,741
	----------	----------	-----------
Total Assets	6,576,758	2,480,944	17,845,598
Liabilities
-----------
Accounts payable to
broker	(45,292)	-	(45,292)
	----------	----------	----------
Net Assets Available
for Benefits	$6,531,466	$2,480,944	$17,800,306
	==========	==========	===========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Participant Directed
	-----------------------------------------------------------------------------------
			The Putnam			Putnam
	Putnam	The George	Fund for	Putnam		International
	Stable	Putnam Fund	Growth	Vista		Growth
	Value Fund	of Boston	and Income	Fund		Fund
	-------------	--------------	----------------	------------		------------
Additions to net assets
attributed to:
Dividends and interest income	$34,391	$177,100	$453,317	$193,982	$12,343
	--------	----------	----------	----------		--------
Realized gains (losses), net	-	4,663	32,307	48,254		3,766
	--------	----------	----------	----------		--------
Unrealized appreciation
(depreciation) of investments	-	1,718	171,784	185,909		32,231
	--------	----------	----------	----------		--------
Contributions:
Employees	50,988	136,810	349,087	215,943		31,221
Employer	7,607	11,355	39,392	38,566		8,883
	--------	----------	----------	----------		--------
Total contributions	58,595	148,165	388,479	254,509		40,104
Loan repayments	2,217	3,889	14,827	8,817		2,190
Transfers, net	3,796	(16,490)	107,259	357,294		114,802
Other, net	(105)	(163)	(416)	(161)		(21)
	--------	----------	----------	----------		--------
Total additions/(deductions)	98,894	318,882	1,167,557	1,048,604		205,415
	--------	----------	----------	----------		--------
Deductions from net assets
attributed to:
Benefits paid to participants	(69,387)	(117,092)	(210,056)	(24,201)		(10,427)
Loan issues	(18,754)	(31,107)	(100,310)	(72,984)		(7,184)
	--------	----------	----------	----------		--------
Total deductions	(88,141)	(148,199)	(310,366)	(97,185)		(17,611)
	--------	----------	----------	----------		--------
Net increase (decrease)	10,753	170,683	857,191	951,419		187,804
Net Assets Available
for Benefits:
Beginning of year	596,471	1,752,110	4,378,627	1,759,969		244,521
	--------	----------	----------	----------		--------
End of year	$607,224	$1,922,793	$5,235,818	$2,711,388		$432,325
	========	==========	==========	==========		========

The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
				Non-
				Participant
	Participant Directed			Directed
	-------------------------------------			----------
	Putnam		Common	Common
	Income	Participant	Stock	Stock
	Fund	Notes	Fund	Fund	Total
	-----------	----------	-----------	----------	-----------
Additions to net assets
attributed to:
Dividends and interest income	$ 7,567	$ 15,754	$ 274,713	$ 58,029	$ 1,227,196
	--------	--------	----------	---------	-----------
Realized gains (losses), net	33	-	(125,613)	(47,718)	(84,308)
	--------	--------	----------	---------	-----------
Unrealized appreciation
(depreciation) of investments	(2,549)	-	190,695	(268)	579,520
	--------	--------	----------	---------	-----------
Contributions:
Employees	12,287	-	170,856	-	967,192
Employer	2,337	-	382,721	-	490,861
	--------	--------	----------	---------	-----------
Total contributions	14,624	-	553,577	-	1,458,053
Loan repayments	11	(48,427)	16,476	-	-
Transfers, net	145,398	-	1,619,949	(2,332,008)	-
Other, net	(1)	-	11,522	(188)	(10,467)
	--------	--------	----------	---------	-----------
Total additions/(deductions)	165,083	(32,673)	2,541,319	(2,322,153)	3,190,928
	--------	--------	----------	---------	-----------
Deductions from net assets
attributed to:
Benefits paid to participants	(5,819)	-	(453,770)	(142,021)	(1,032,773)
Loan issues	(17)	385,129	(154,773)	-	-
	--------	--------	----------	---------	-----------
Total deductions	(5,836)	385,129	(608,543)	(142,021)	(1,032,773)
	--------	--------	----------	---------	-----------
Net increase (decrease)	159,247	352,456	1,932,776	(2,464,174)	2,158,155
Net Assets Available
for Benefits:
Beginning of year	56,198	-	6,531,466	2,480,944	17,800,306
	--------	--------	----------	---------	-----------
End of year	$215,445	$352,456	$8,464,242	$ 16,770	$19,958,461
	========	========	==========	=========	===========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Participant Directed
	------------------------------------------------------------------------------
			The Putnam		Putnam
	Putnam	The George	Fund for	Putnam	International
	Stable	Putnam Fund	Growth	Vista	Growth
	Value Fund	of Boston	and Income	Fund	Fund
	-------------	--------------	-------------	-----------	------------
Additions to net assets
attributed to:
Dividends and interest income	$29,899	$160,512	$549,106	$129,215	$13,905
	-----------	-----------	-----------	-----------	-----------
Realized gains (losses), net	-	18,221	32,290	21,608	2,477
	-----------	-----------	-----------	-----------	-----------
Unrealized appreciation
of investments	-	122,487	216,087	132,110	12,926
	-----------	-----------	-----------	-----------	-----------
Contributions:
Employees	42,141	127,395	324,049	179,858	22,408
Employer	2,826	10,452	30,021	22,782	4,216
	-----------	-----------	-----------	-----------	-----------
Total contributions	44,967	137,847	354,070	202,640	26,624
Transfers, net	97,965	4,347	274,367	213,306	85,601
Other, net	-	-	-	-	-
	-----------	-----------	-----------	-----------	-----------
Total additions/(deductions)	172,831	443,414	1,425,920	698,879	141,533
Deductions from net assets
attributed to:
Benefits paid to participants	(53,785)	(91,473)	(219,160)	(80,099)	(10,796)
	-----------	-----------	-----------	-----------	-----------
Net increase (decrease)	119,046	351,941	1,206,760	618,780	130,737
Net Assets Available
for Benefits:
Beginning of year	477,425	1,400,169	3,171,867	1,141,189	113,784
	-----------	-----------	-----------	-----------	-----------
End of year	$596,471	$1,752,110	$4,378,627	$1,759,969	$244,521
	===========	===========	===========	===========	===========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
			Non-
			Participant
	Participant Directed		Directed
	--------------------------		------------
	Putnam	Common	Common
	Income	Stock	Stock
	Fund	Fund	Fund	Total
	------------	-------------	------------	------------
Additions to net assets
attributed to:
Dividends and interest income	$3,765	$293,359	$184,513	$1,364,274
	-----------	-----------	-----------	-----------
Realized gains (losses), net	(298)	(130,973)	(103,306)	(159,981)
	-----------	-----------	-----------	-----------
Unrealized appreciation
of investments	2,178	407,554	33,162	926,504
	-----------	-----------	-----------	-----------
Contributions:
Employees	7,586	177,751	-	881,188
Employer	1,746	411,539	-	483,582
	-----------	-----------	-----------	-----------
Total contributions	9,332	589,290	-	1,364,770
Transfers, net	(21,655)	668,319	(1,348,357)	(26,107)
Other, net	-	38,771	28,830	67,601
	-----------	-----------	-----------	-----------
Total additions/(deductions)	(6,678)	1,866,320	(1,205,158)	3,537,061
Deductions from net assets
attributed to:
Benefits paid to participants	(88)	(234,670)	(178,660)	(868,731)
	-----------	-----------	-----------	-----------
Net increase (decrease)	(6,766)	1,631,650	(1,383,818)	2,668,330
Net Assets Available
for Benefits:
Beginning of year	62,964	4,899,816	3,864,762	15,131,976
	-----------	-----------	-----------	-----------
End of year	$56,198	$6,531,466	$2,480,944	$17,800,306
	===========	===========	===========	===========
The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Participant Directed
	-------------------------------------------------------------------------
			The Putnam		Putnam
	Putnam	The George	Fund for	Putnam	International
	Stable	Putnam Fund	Growth	Vista	Growth
	Value Fund	of Boston	and Income	Fund	Fund
	-------------	--------------	-------------	-----------	------------
Additions to net assets
attributed to:
Dividends and interest income	$29,716	$126,396	$261,597	$73,049	$1,533
	-----------	-----------	-----------	-----------	-----------
Realized gains (losses), net	-	10,593	15,932	18,393	38
	-----------	-----------	-----------	-----------	-----------
Unrealized appreciation
(depreciation) of investments	-	64,242	266,834	73,191	10,680
	-----------	-----------	-----------	-----------	-----------
Contributions:
Employees	39,687	141,929	318,816	131,575	13,495
Employer	1,017	5,058	14,181	10,363	1,309
	-----------	-----------	-----------	-----------	-----------
Total contributions	40,704	146,987	332,997	141,938	14,804
Transfers, net	(18,573)	(23,751)	(102,230)	417,255	23,480
Other, net	-	-	-	-	-
	-----------	-----------	-----------	-----------	-----------
Total additions/(deductions)	51,847	324,467	775,130	723,826	50,535
Deductions from net assets
attributed to:
Benefits paid to participants	(125,937)	(175,636)	(182,900)	(8,014)	(372)
	-----------	-----------	-----------	-----------	-----------
Net increase (decrease)	(74,090)	148,831	592,230	715,812	50,163
Net Assets Available
for Benefits:
Beginning of year	551,515	1,251,338	2,579,637	425,377	63,621
	-----------	-----------	-----------	-----------	-----------
End of year	$477,425	$1,400,169	$3,171,867	$1,141,189	$113,784
	===========	===========	===========	===========	===========

The accompanying notes are an integral part of this financial statement.

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CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
			Non-
			Participant
	Participant Directed		Directed
	-----------------------		----------
	Putnam	Common	Common
	Income	Stock	Stock
	Fund	Fund	Fund	Total
	-----------	-----------	-----------	-----------
Additions to net assets
attributed to:
Dividends and interest income	$3,320	$223,414	$279,804	$998,829
	--------	-----------	-----------	-----------
Realized gains (losses), net	(479)	(9,904)	(20,127)	14,446
	--------	-----------	-----------	-----------
Unrealized appreciation
(depreciation) of investments	(540)	372,926	368,477	1,155,810
	--------	-----------	-----------	-----------
Contributions:
Employees	5,724	217,894	-	869,120
Employer	194	364,046	85,391	481,559
	--------	-----------	-----------	-----------
Total contributions	5,918	581,940	85,391	1,350,679
Transfers, net	17,506	1,378,873	(1,701,888)	(9,328)
Other, net	-	(13,783)	(28,024)	(41,807)
	--------	-----------	-----------	-----------
Total additions/(deductions)	25,725	2,533,466	(1,016,367)	3,468,629
Deductions from net assets
attributed to:
Benefits paid to participants	(133)	(153,473)	(239,898)	(886,363)
	--------	-----------	-----------	-----------
Net increase (decrease)	25,592	2,379,993	(1,256,265)	2,582,266
Net Assets Available
for Benefits:
Beginning of year	37,372	2,519,823	5,121,027	12,549,710
	--------	-----------	-----------	-----------
End of year	$62,964	$4,899,816	$3,864,762	15,131,976
	=========	===========	===========	============

The accompanying notes are an integral part of this financial statement.

-12-

CONNECTICUT NATURAL GAS CORPORATION

-----------------------------------

UNION EMPLOYEE SAVINGS PLAN

---------------------------

NOTES TO FINANCIAL STATEMENTS AND SCHEDULES

-------------------------------------------

AS OF DECEMBER 31, 1998 AND 1997

--------------------------------

1. Description of the Plan:

------------------------

The following description of the Connecticut Natural Gas Corporation Union Employee Savings Plan (the Plan) is provided for general information purposes only. More complete information regarding the Plan's provisions may be found in the Plan document.

a. General -

-------

The Plan is a defined contribution thrift plan open to union employees of CTG Resources, Inc. (the "Company") and its subsidiaries and affiliates. Effective as of the close of business on March 31, 1997, the Company became the holding company and parent of Connecticut Natural Gas Corporation ("CNG").

The Plan was established by the Company under the provisions of Section 401(a) of the Internal Revenue Code (IRC), and it includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC for the benefit of eligible employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan Administrator is the Company. The Compensation Committee of the Company's Board of Directors appointed an Administrative Committee to serve as manager of the Plan. Putnam Fiduciary Trust Company, trustee of the Plan, holds the Plan's investments and executes transactions therein.

b. Eligibility -

-----------

Employees are eligible to participate when the following criteria are met:

(1) Are at least age 21.

(2) Are employed by the Company for one year or more.

(3) Have completed 1,000 hours or more of service in a 12-month period beginning with date of hire.

(4) Are normally employed for 20 or more hours per week and are covered by a collective bargaining agreement between the Company and any union which provides for participation under the Plan.

The number of employees participating in the Plan as of December 31, 1998 and 1997 was 314 and 323, respectively.

c. Contributions -

-------------

Eligible employees may elect to participate in the Plan and authorize payroll deductions of not less than 1% and not greater than 26% of basic earnings as savings contributions to their accounts during each year, subject to the limits under Section 415 of the IRC.

The Company will match a percentage of an employee's compensation depending on age or years of continuous service. The amount of the Company contribution will be determined according to the schedule below. However, if an employee's elected savings allotment is less than the percentage contained in the schedule, the Company will

-13-

match no more than the percentage contributed by the employee.

As of December 31, 1998, if an employee's:

Years of Continuous Service are --------------------	Or --	Age is ------	The Company Will Contribute ---------------------------
20		45	4-1/2% of compensation
10		35	3% of compensation
Less than l0		Under 35	2% of compensation

An exception to the above schedule exists for those Plan participants subject to the collective bargaining agreement between the Company and the employees in its Greenwich division. Each such participant who, as of April 1, 1998, had either (1) attained age 50 or (2) completed 30 years of continuous service is grandfathered with respect to a previous Plan provision entitling such individual to a matching contribution of up to 6% of compensation or the amount of the participant's contribution, if less.

d. Investment Options -

------------------

Plan participants direct their contributions among various investment options in 5% increments, and they may elect to change their investment options at any time. A description of each investment option is provided below:

(1) PUTNAM STABLE VALUE FUND - This fund seeks to provide interest income while preserving principal and maintaining liquidity. The fund invests in pools of guaranteed investment contracts, security-backed investment contracts, and money market instruments issued by insurance companies and banks. The average yield for this fund was 6.06%, 6.48%, 5.74% for the years ended December 31, 1998, 1997 and 1996, respectively.

(2) THE GEORGE PUTNAM FUND OF BOSTON - This fund primarily seeks current income and capital growth through investment in common and preferred stocks, debt securities, and cash equivalents.

(3) THE PUTNAM FUND FOR GROWTH AND INCOME - This fund seeks long-term capital growth and current income through a portfolio of income-producing common stocks.

(4) PUTNAM VISTA FUND - This fund seeks to provide capital appreciation by investing primarily in stocks of small to midsize companies believed to have above-average growth potential.

(5) PUTNAM INTERNATIONAL GROWTH FUND - This fund seeks to provide capital appreciation by investing in a diversified portfolio of equity securities in companies located outside the United States.

(6) PUTNAM INCOME FUND - This fund seeks to provide as high a level of income as possible given a prudent level of risk by investing in high yield and investment grade corporate bonds, mortgage and asset-backed securities, U.S. Treasury securites, and foreign bonds.

(7) COMMON STOCK FUND - This fund seeks to provide capital appreciation and current income through investment in the common stock of the Company, purchased at not more than fair market value.

Pursuant to the change in corporate organization discussed in Note 1.a. above and an Agreement and Plan of Exchange, dated as of December 20, 1996, by and between the Company and CNG, all outstanding shares of common stock of CNG, including those shares held by the Plan, were exchanged for shares of common stock of the Company.

-14-

All Company matching contributions are invested in the Common Stock Fund. Beginning on March 1, 1996 and continuing on a quarterly basis through October 1, 1999, the Plan Administrator has directed that portions of the non-participant directed Common Stock Fund be transferred to the participant directed Common Stock Fund based upon a predetermined schedule. These transfers are scheduled to take place on January 1, April 1, July 1, and October 1 of each year, with the exception of 1996 for which the March 1 transfer was in lieu of the April 1 transfer. Following the transfers, Plan

participants will have the discretion of investing the transferred shares of common stock in the same manner as the other amounts under

their direction in the various participant directed funds. Also, effective March 1, 1996, all Company matching contributions are being invested in the participant directed Common Stock Fund.

In addition to transfers between the various funds noted above as a result of investment elections made by Plan participants, transfers are also made to or from the Employee Savings Plan for those employees who transfer to (from) the Company's non-union payroll.

e. Vesting -

-------

Participants are fully vested in their contributions and the earnings thereon. Participants are vested in the Company matching contributions and the earnings thereon as follows:

Years of Continuous Service are -------------------------------	Percentage Vested -----------------
Less than 1	0%
1 but less than 2	20
2 but less than 3	40
3 but less than 4	60
4 but less than 5	80
5 or more	100

Participants also become fully vested in their Company matching contribution account if any one of the following occurs:

(1) Death

(2) Disability

(3) Attainment of age 65 (normal retirement date)

(4) Total or partial termination of the Plan

(5) Discontinuance of Company contributions to the Plan

Upon termination of employment before full vesting, the non-vested Company match portion of a participant's common stock account shall be forfeited after five years if the participant is not rehired and applied as a credit against the employer's future contributions.

f. Benefits -

--------

Upon termination of employment due to retirement, disability, or death, a participant (or his/her beneficiary) may elect to receive a lump-sum distribution equal to the value of the participant's vested interest in his/her account as soon as practicable following the

termination date or defer the distribution to some future date.

Participants may request the withdrawal of certain account balances prior to termination of employment. Application for withdrawal of after-tax contributions and employee IRA contributions may be made once a year. There are no Plan penalties for such withdrawals.

-15-

g. Participant Notes Receivable -

----------------------------

Effective May 1, 1998 (July 1, 1998 for those Plan participants covered by the collective bargaining agreement between the Company and its Greenwich division employees), the Board of Directors adopted an amendment to the Plan which established a participant loan provision. Under this provision, a Plan participant is allowed to borrow a minimum of $1,000 up to a maximum of one-half of the participant's vested account balance or $50,000, whichever is less. Each loan carries an interest rate of prime plus 1%, established on the first day of the calendar quarter in which the loan is made. Security for each loan is provided by one-half of the Plan participant's vested account balance. Two types of loans are available to Plan participants--"general purpose" and "principal residence" loans. Full repayment of each of these types of loans is required within five and fifteen years following loan origination, respectively, and loan refinancings are not permitted. All loans require level amortization with principal and interest payments made at least quarterly, and for those Plan participants who are active employees, payments are made ratably through payroll deductions. No Plan partcipant may have more than one "general purpose" loan and one "principal residence" loan outstanding at any time.

h. Participant Accounts -

--------------------

Individual accounts are maintained for each of the Plan's participants to reflect the participant's share of the Plan's income, the participant's and the Company's contributions, and the participant's loan(s) (if applicable). Allocations of Plan income are based on the share balances in the participants' accounts.

2. Summary of Significant Accounting Policies:

------------------------------------------

a. Basis of Accounting -

-------------------

The accompanying financial statements have been prepared on the accrual basis of accounting.

b. Income Recognition -

------------------

Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned.

c. Investment Valuation -

--------------------

The Plan's investments are reflected at current value. The shares

of the Common Stock Fund and the Putnam mutual funds owned by the Plan, with the exception of the Putnam Stable Value Fund, are valued at market as determined by the quoted market price as of the last business day of the year. The latter fund is valued at contract value (cost plus accumulated earnings) which approximates current value. Purchases and sales of securities are reflected on a trade date basis. Realized and unrealized appreciation (depreciation)

presented in the statements of changes in net assets available for benefits with fund information are computed based on the change in the current value of the Plan assets from year to year.

d. Administrative Expenses -

-----------------------

Administrative expenses of the Plan may be paid by either the Company or the Plan. During 1998, 1997 and 1996, the Company paid all administrative expenses relating to the Plan.

-16-

e. Use of Estimates in the Preparation of Financial Statements -

-----------------------------------------------------------

The preparation of financial statements in conformity with generally accepted accounting principles and the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the fianancial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

3. Federal Income Tax Status:

-------------------------

In 1994 the Plan was amended and restated to meet the requirements of the Tax Reform Act of 1986, and the Plan received a favorable

determination letter from the Internal Revenue Service dated October 24, 1994. The Plan has been amended since receiving the determination letter. However, the Plan Administrator and management believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt through the year ended December 31, 1998.

4. Investments:

-----------

The fair market values of individual assets that represent 5% or more of the Plan's net assets as of December 31, 1998 and 1997 are as follows:

1998:

CTG Resources, Inc. common stock $8,410,550

The Putnam Fund for Growth and Income                    5,197,979

The George Putnam Fund of Boston   1,908,329

Putnam Vista Fund    2,685,586

1997:

CTG Resources, Inc. common stock $8,941,135

The Putnam Fund for Growth and Income                   4,378,627

The George Putnam Fund of Boston   1,752,110

Putnam Vista Fund    1,759,969

5. Concentration of Credit Risk:

----------------------------

The Plan's assets are invested in mutual funds managed by Putnam Investments, Inc., as described in Note 1, and the common stock of CTG. In the event of any uncertainties in the financial marketplace, the Plan may be exposed to financial risks.

6. Reconciliation to Form 5500:

---------------------------

As of December 31, 1996, the Plan had $1,324 of excess contributions from participants. In 1997, these excess contributions were returned to the participants. This amount was reflected as a reduction in benefits paid to participants in the Plan's Form 5500 for 1997; however, in accordance with generally accepted accounting principles, benefits paid to participants is not reduced by this amount in the accompanying statement of changes in net assets available for benefits for the year ended December 31, 1997.

The table on the following page reconciles benefits paid to participants per the financial statements to the Form 5500 as filed by the Company for the year ended December 31, 1997.

-17-

Benefits

Paid to

Participants

------------

Per financial statements                                  $868,731

Excess contributions

returned to participants                                      (1,324)

--------

Per Form 5500                  $867,407

========

-18-

Schedule I

EIN 06-0383860

Plan No. 006

	CONNECTICUT NATURAL GAS CORPORATION
	UNION EMPLOYEE SAVINGS PLAN
	ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
	AS OF DECEMBER 31, 1998
		(c)Description of Investment
		Including Maturity Date, Rate
	(b)Identity of Issue, Borrower,	of Interest, Collateral, Par		(e)Current
(a)	Lessor, or Similar Party	or Maturity Value	(d)Cost	Value
---	---------------------------------------------	----------------------------------	-----------	---------
*	Putnam Stable Value Fund	Fund comprised of
		investment contracts	$ 599,871	$ 599,871
			-----------	-----------
*	The George Putnam Fund of Boston	Mutual fund comprised of
		common stocks and bonds	1,668,223	1,908,329
			-----------	-----------
*	The Putnam Fund for Growth and Income	Mutual fund comprised of
		common stocks	4,336,603	5,197,979
			-----------	-----------
*	Putnam Vista Fund	Mutual fund comprised of
		common stocks	2,280,827	2,685,586
			-----------	-----------
*	Putnam International Growth Fund	Mutual fund comprised of
		common stocks	374,329	428,138
			-----------	-----------
*	Putnam Income Fund	Mutual fund comprised of bonds
		and U.S. Treasury securities	215,843	213,795
			-----------	-----------
		Participant directed -
*	CTG Resources, Inc.	Common stock	7,360,205	8,398,549
*	Boston Safe Company	Daily Liquidity Fund	(3,857)	(3,857)
			-----------	-----------
			7,356,348	8,394,692
			-----------	-----------
		Non-participant directed -
*	CTG Resources, Inc.	Common stock	10,517	12,001
*	Boston Safe Company	Daily Liquidity Fund	4,769	4,769
			-----------	-----------
			15,286	16,770
			-----------	-----------
		Total Common Stock Fund	7,371,634	8,411,462
			-----------	-----------
		Total Investments	$16,847,330	$19,445,160
			===========	===========
	*Represents a party-in-interest.
	The accompanying notes are an integral part of this schedule.

-19-

Schedule II

EIN 06-0383860

Plan No. 006

CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
						Current Value
		Number				of Asset on
Identity of	Description	of	Purchase	Selling	Cost of	Transaction	Net Gain
Party Involved	of Asset	Transactions	Price	Price	Asset	Date	or (Loss)
---------------	---------------	----------	----------	----------	----------	------------	----------
Putnam Vista	Mutual fund	62	$1,116,813	$ -	$1,116,813	$1,116,813	$ -
Fund	comprised of	41	-	425,358	393,882	425,358	31,476
	common stocks
The Putnam	Mutual fund	57	1,268,349	-	1,268,349	1,268,349	-
Fund for	comprised of	95	-	653,089	574,678	653,089	78,411
Growth and	common stocks
Income
CTG	Common stock	35	3,259,520	-	3,259,520	3,259,520	-
Resources, Inc.		119	-	3,878,476	3,486,856	3,878,476	391,620
The accompanying notes are an integral part of this schedule.