Peoples Energy Completes Sale of Interest In Elwood Energy.

CHICAGO -- Peoples Energy Corporation (NYSE:PGL) today announced that it has completed the sale of substantially all of its fifty percent interest in Elwood Energy, LLC to J-Power USA Development Co. (J-Power). The Company expects to close on the sale of its remaining power asset, a development site in Oregon, to J-Power within the near future. As a result of these transactions, the Company expects to record a net gain of approximately $20 million on a pre-tax basis in the quarterly period ended March 31, 2007. Cash proceeds of approximately $110 million, which include approximately $6 million of cash distributions received by the Company from the Elwood partnership since agreement was reached with J-Power on the sales in 2006, will be used to reduce short-term borrowing at Peoples Energy Corporation. The Company will temporarily retain a 0.1% interest in the Elwood partnership, but expects to transfer the remaining Elwood interest to J-Power within 18 months.

The sale of Elwood follows an announcement by Peoples Energy in February, 2006, of its intent to divest its power assets and exit the power generation business. The Company's interest in the Southeast Chicago Energy Project (SCEP) was sold to Exelon Generation in May, 2006, for approximately $50 million. The Company recognized a $4.1 million pre-tax gain as a result of that sale.

Peoples Energy, a member of the S&P 500, is a diversified energy company comprised of three primary business segments: Gas Delivery, Oil and Gas Production and Energy Marketing. The Gas Delivery business serves about one million retail customers in Chicago and northeastern Illinois. Visit the Peoples Energy web site at www.PeoplesEnergy.com.

Forward-Looking Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as the expected gain on the company's sale of its interest in Southeast Chicago Energy Project. Generally, the words "may", "could", "project", "believe", "anticipate", "estimate", "plan", "forecast", "will be", and similar words identify forward-looking statements. Actual results could differ materially from such expectations because of many uncertainties, including, but not limited to, the timing of the closing of the COB Energy sale and approval of the transaction by governmental agencies. All forward-looking statements included in this press release are based upon information presently available, and Peoples Energy assumes no obligation to update any forward-looking statements.