purchasing a long-term weather insurance policy to protect it from the negative earnings impact of warmer-than-normal weather.

The company purchased the policy from Aegis of Hamilton, Bermuda.

The five-year programme begins with fiscal year 2000, and takes effect when weather is some 8 percent warmer than normal.

There is no effect on revenue when weather is colder than normal, the company said.

The selected programme costs less than one percent of net earnings annually, a spokesperson for the company said.

If this programme had been in place during fiscal 1998 and fiscal 1999, Peoples Energy would have collected $12 million and $10 million, which would have improved earnings by 21 cents and 17 cents per share, respectively.

Shares of Peoples Energy were up 1/2 at 35-7/8.