SC 13D/A

               SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549

                         SCHEDULE 13D
           Under the Securities Exchange Act of 1934
                      (Amendment No. 1)*


                   UNITED CITIES GAS COMPANY
                       (Name of Issuer)

                COMMON STOCK, WITHOUT PAR VALUE
                (Title of Class of Securities)

                          909823106000
                         (CUSIP Number)

                    STEPHEN A. BOUCHARD, ESQ.
                   FLEISCHMAN AND WALSH, L.L.P.
                   1400 SIXTEENTH STREET, N.W.
                     WASHINGTON, D.C.  20036
                         (202) 939-7900
          (Name, Address and Telephone Number of Person
        Authorized to Receive Notices and Communications)

                        AUGUST 20, 1996
     (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [  ].

Check the following box if a fee is being paid with this state-
ment [ ].  (A fee is not required only if the reporting person:
1) has a previous statement on file reporting beneficial owner-
ship of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class. See Rule 13d-7.)

Note:  Six copies of this statement, including all exhibits,
should be filed with the Commission.  See Rule 13d-1(a) for other
parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
information which would alter disclosures provided in a prior
cover page.

The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise sub-
ject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the
Notes.)

This Amendment No. 1 amends and supplements the Schedule 13D
filed with the Securities and Exchange Commission on August 1,
1996 on behalf of the Reporting Person.  Capitalized terms used
herein without definition shall have the respective meanings
ascribed thereto in such Schedule 13D.

Item 4.  Purpose of Transaction
- -------------------------------

Item 4 is hereby amended and supplemented in its entirety to read
as follows:

(a)-(j)

The Reporting Person intends to continuously review its invest-
ment in the Issuer, and to explore all options that may be avail-
able to it relating to its investment in the Issuer.

(a)

The Reporting Person may purchase additional shares of Common
Stock, or may in the future decide to sell a portion or all of
any shares of Common Stock that it may now or hereafter own.  The
Reporting Person's decisions as to additional purchases or any
sales of any shares of Common Stock will be made in light of mar-
ket conditions, applicable legal and regulatory considerations,
and other factors that the Reporting Person may from time to time
deem appropriate.

(b)-(j)

Although the Reporting Person presently has no definite plans or
proposals relating to or that would result in any transaction of
the types described in paragraphs (b) through (j) of Item 4 to
Schedule 13D, the Reporting Person is exploring options that
could relate to or result in plans or proposals in the future
with respect to one or more such transactions, including opposing
or proposing alternatives to the sale of the Issuer to Atmos
Energy Corporation (NYSE: ATO; "Atmos") as presently proposed by
the Issuer's board of directors.  Such alternatives may include
transactions involving or affecting the Issuer or its securities,
either directly or indirectly, including transactions involving
or affecting the Issuer's proposed purchaser, Atmos, or its
securities.

To assist it in its exploration of such options, on August 20,
1996, the Reporting Person filed a complaint in the United States
District Court for the Middle District of Tennessee (Nashville
Division) (the "Tennessee Complaint"), alleging that the Issuer's
board of directors failed to exercise their fiduciary duties
properly in approving the proposed merger into Atmos.  The
Tennessee Complaint seeks preliminary and permanent injunctive
relief against the Issuer (1) to prevent its taking any further
action to consummate the proposed merger until such time as the
Issuer's board has properly exercised its fiduciary duties and
(2) directing the Issuer to provide the Reporting Person with
confidential information in order to provide the Reporting Person
with the option of making an informed offer for the Issuer, in
the event it determines to do so.  A copy of the Tennessee Com-
plaint is filed as Exhibit 3 hereto.

On August 6, 1996, the Issuer and Atmos filed a joint Complaint
(the "MPSC Complaint") against the Reporting Person with the
Public Service Commission of the State of Missouri (the "MPSC").
The MPSC Complaint alleges, among other things, that the
Reporting Person purchased Common Stock without the prior
approval of the MPSC in violation of Missouri law.  The MPSC
Complaint seeks, among other things, (i) a declaration by the
MPSC that the purchases of Common Stock by the Reporting Person
are in violation of Missouri law and are void and of no effect,
(ii) an order by the MPSC requiring the Reporting Person to
submit a plan of divestiture of the Common Stock for approval of
the MPSC, (iii) an order by the MPSC requiring that the Reporting
Person cease and desist any further purchases of the Common
Stock, (iv) an order by the MPSC requiring the Reporting Person
to refrain from exercising any incidents of ownership in the
Common Stock, and (v) maximum penalties in the amount of two
thousand dollars ($2,000) for each separate and distinct offense
of Missouri Law by the Reporting Person.  The Reporting Person
intends to defend vigorously against the MPSC Complaint.

On August 19, 1996, the Reporting Person filed a complaint in the
United States District Court for the Eastern District of Missouri
(Southern Division) (the "Missouri Complaint") seeking a declara-
tory judgment that the Reporting Person is entitled to all the
usual and customary rights and privileges of ownership of its
shares of Common Stock because the Missouri statute that is the
basis of the MPSC Complaint is not applicable to the Reporting
Person's purchases of the Common Stock or otherwise is unconsti-
tutional under the federal and Missouri constitutions.  A copy of
the Missouri Complaint is filed as Exhibit 4 hereto.

Item 7.  Material to be Filed as Exhibits
- -----------------------------------------

Item 7 is hereby amended and supplemented by adding the following
at the end thereof:

Exhibit 3  Complaint of Southern Union Company filed in the
United States District Court for the Middle District of Tennessee
(Nashville Division) on August 20, 1996

Exhibit 4  Complaint of Southern Union Company filed in the
United States District Court for the Eastern District of Missouri
(Southern Division) on August 19, 1996

Exhibit 5  Press release of Southern Union Company issued on
August 20, 1996



                            SIGNATURE
                            ---------


After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.


August 20, 1996
- ---------------
(Date)


STEPHEN A. BOUCHARD
- -------------------
(Signature)


Stephen A. Bouchard
Attorney-in-fact
- -------------------
                                  (Name and Title)


                       Index to Exhibits
                       -----------------



Exhibit 3  Complaint of Southern Union Company filed in the
United States District Court for the Middle District of Tennessee
(Nashville Division) on August 20, 1996

Exhibit 4  Complaint of Southern Union Company filed in the
United States District Court for the Eastern District of Missouri
(Southern Division) on August 19, 1996

Exhibit 5  Press release of Southern Union Company issued on
August 20, 1996

EX-3

                            EXHIBIT - 3


                   UNITED STATES DISTRICT COURT
                   MIDDLE DISTRICT OF TENNESSEE
                        NASHVILLE DIVISION


SOUTHERN UNION COMPANY,              )   
                                     )

       Plaintiff,                    )
                                     )
v.                                   )        Case No.
                                     )
UNITED CITIES GAS COMPANY,           )
JERRY H. BALLENGEE,                  )
DWIGHT C. BAUM,                      )
RICHARD W. CARDIN,                   )
THOMAS J. GARLAND,                   )
DALE A. KEASLING,                    )
GENE C. KOONCE,                      )
VINCENT J. LEWIS,                    )
DENNIS L. NEWBERRY,                  )
STIRTON OMAN, JR.,                   )
TIMOTHY W. TRIPLETT,                 )
GEORGE C. WOODRUFF, JR.,             )
JAMES B. FORD,                       )
THOMAS R. BLOSE, JR.,                )
                                     )
        Defendants.                  )

                            COMPLAINT
                            ---------

For its complaint against the Defendant, United Cities Gas Com-
pany ("United") and the individual officers and directors of
United named herein, Plaintiff Southern Union Company
("Southern") states:

                     JURISDICTION AND VENUE
                     ----------------------

1.   This is an action for injunctive relief to enforce
     Southern's rights.

2.   This Court has subject matter jurisdiction over this con-
     troversy pursuant to 28 U.S.C. Section 1332 because the
     parties are citizens of different states and the amount in
     controversy exceeds $50,000, exclusive of interest and
     costs.

3.   Venue is proper in this District and this Division because
     United resides in this District within the meaning of 28
     U.S.C. Section 1391(c) and maintains offices within this
     Division, and because a substantial part of the events or
     omissions giving rise to the claims occurred in this
     District.

                          THE PARTIES
                          -----------

4.   Southern is a corporation organized under the law of the
     State of Delaware and has its principal offices and place of
     business in the State of Texas.

5.   United is a corporation organized under the law of the
     States of Illinois and Virginia and has its principal
     offices and place of business in the State of Tennessee.

6.   Defendants Jerry H. Ballengee, Dwight C. Baum,
     Richard W. Cardin, Thomas J. Garland, Dale A. Keasling,
     Gene C. Koonce, Vincent L. Lewis, Dennis L. Newberry,
     Stirton Oman, Jr., Timothy W. Triplett and
     George C. Woodruff, Jr. are each members of United's Board
     of Directors.  None of these defendants are a citizen of
     Delaware or Texas.

7.   Defendant Gene C. Koonce is the Chief Executive Officer of
     United and a member of its Board of Directors.  He resides
     in Tennessee.

8.   Defendant James B. Ford is the Senior Vice President and
     Treasurer of United.  He resides in Tennessee.

9.   Defendant Thomas R. Blose, Jr. is the Senior Vice President
     - Operations and Engineering of United.  He resides in
     Tennessee.


                  CLAIM FOR INJUNCTIVE RELIEF
                  ---------------------------

10.  Prior to July 19, 1996, Southern acquired, in securities
     transactions executed on the NASDAQ, 585,000 shares of
     United's common stock.  These shares represented approxi-
     mately four and one-half percent (4 1/2%) of the issued and
     outstanding shares of United common stock.  At present,
     Southern owns 854,300 shares (including 100 shares held in
     Southern's name and evidenced by a certificate issued by
     United) of United's common stock for which Southern has paid
     in excess of Sixteen Million Dollars ($16,000,000).

11.  On May 6, 1996, Peter H. Kelley, President of Southern, and
     Ronald J. Endres, Executive Vice President and Chief
     Financial Officer of Southern, attended the Financial
     Analysts Conference of the American Gas Association.  Also
     present and making a presentation was James B. Ford, Senior
     Vice President and Treasurer of United.  Mr. Ford discussed
     the financial condition and results of operations of United
     at this meeting.  In response to a question he indicated
     that United was a buyer at the right price and a seller at
     the right price. 

12.  Following Mr. Ford's presentation, Mr. Kelley and Mr. Endres
     approached Mr. Ford and told him that Southern was
     interested in United and wanted to meet with United repre-
     sentatives about a possible acquisition transaction.
     Mr. Ford said United was agreeable to such a meeting.
     Thereafter, Mr. Endres spoke by telephone with Mr. Ford on
     several occasions, attempting to schedule a meeting.
     Mr. Ford offered a trip to Europe and a trip to the Olympics
     as excuses for not holding a meeting.  Finally, he agreed to
     a meeting of certain United officers with Southern officers
     on August 7, 1996 at Southern's offices in Austin, Texas.
     That meeting never took place.

13.  On or about July 22, 1996, United announced that it had
     entered into definitive agreements whereby United would be
     acquired, through a merger, by Atmos Energy Corporation
     ("Atmos").  A copy of the definitive agreements are attached
     hereto as Exhibit A.

14.  The representations of Mr. Ford concerning a meeting between
     United and Southern were part of a deliberate effort to mis-
     lead Southern into believing that it would have an oppor-
     tunity to make an offer to acquire United.  This was done
     because United's senior management did not want to consider
     an offer from Southern.  They feared they would lose their
     jobs, lucrative salaries, retirement benefits, emoluments
     and perquisites if Southern acquired United.  Instead, while
     United was stalling and postponing acquisition discussions
     with Southern, its management was actively pursuing United's
     sale to Atmos to protect their jobs and other benefits.

15.  On July 5, 1996, United entered into a Confidentiality
     Agreement to exchange with Atmos confidential financial
     information pertaining to United, which would give Atmos an
     opportunity to make a bid.  Thereafter on July 13, 1996,
     Atmos and United signed a Stand-Still Agreement.  Six days
     later on July 19, 1996, Atmos and United entered into
     definitive agreements (collectively, the "definitive agree-
     ment"), pursuant to which United is to be sold to Atmos.
     The definitive agreement provides that Atmos will be paid a
     break-up fee of $15,000,000 if the definitive agreement is
     terminated (i) by United in the exercise of the fiduciary
     duties of the United board of directors with respect to a
     competing transaction, (ii) by Atmos if the United board of
     directors takes a position recommending a competing trans-
     action or fails to recommend the merger with Atmos to the
     shareholders of United, or (iii) by Atmos if the share-
     holders of United approve a competing transaction.

16.  Pursuant to the definitive agreement, Mr. John B. Ford,
     Mr. Thomas R. Blose, Jr. and Mr. Gene C. Koonce will receive
     lucrative employment contracts from Atmos; Mr. Ford and
     Mr. Blose will share with others in a $5,000,000 benefit;
     and Mr. Koonce will receive a $2,247,434 benefit.

     The following allegations are made upon information and
     belief:

17.  Prior to July 1996, the Board of Directors of United had not
     considered a transaction involving the sale of United and
     had not:

     (a)  Caused to be prepared studies of United's financial
          condition with a view toward determining the maximum
          amount that could be realized by the shareholders;

     (b)  Engaged investment bankers charged with studying the
          value of United in a transaction with an unrelated
          party;

     (c)  Taken other necessary and appropriate steps prior to
          the time a corporation determines that it should be
          sold.

18.  United's senior management was aware of Southern's reputa-
     tion for entrepreneurial activities and efficient manage-
     ment.  They were concerned that their jobs, lucrative
     salaries, retirement benefits, emoluments and perquisites
     would not survive an acquisition of United by Southern.

19.  Acting in haste in response to Southern's expressions of
     interest, United's senior management determined that Atmos
     would be the company most likely to offer them jobs, lucra-
     tive salaries, retirement benefits, emoluments and
     perquisites and to retain their services for an extended
     term.  In their joint news release of July 19, 1996 the
     chairman of Atmos confirmed their belief when he said that
     the two companies had "similar management philosophies."

20.  Having determined that Atmos was their desired new employer,
     United's senior management pursued an exclusive plan of
     action designed solely to arrange a transaction with Atmos
     and thereby preclude any bid of Southern.

21.  The break-up fee is unconscionable in size, is not reason-
     ably related to any cost to Atmos and is designed to protect
     the positions sought by United's senior management.  Such
     amount, which could be an additional cost to Southern in a
     transaction involving United, together with United's agree-
     ment not to disclose confidential information to any party
     desiring to make a bid for United, precludes Southern from
     making an informed bid for United since Atmos possesses
     information concerning the financial condition and prospects
     of United that are otherwise unavailable to Southern.

22.  United's management intentionally negotiated the terms of
     the definitive agreement concerning nonsolicitation of com-
     peting offers (Section 3.2), the termination of the defini-
     tive agreements (Section 3.11(b)(i) and Section 7.1), and
     the making of any agreement with respect to a Competing
     Transaction during the term of the definitive agreement
     (Section 3.11(b)(ii)) so that, when operating in conjunction
     with the control share acquisition provisions of the laws of
     Illinois and Virginia (Paragraph 5/7.85 of the Illinois
     Business Corporations Act and Paragraph 725 of the Virginia
     Stock Corporation Act, respectively), the terms will effec-
     tively preclude United's shareholders, including Southern,
     from from securing consideration and approval of any com-
     peting offers on the same basis as that by which the trans-
     action contemplated by the definitive agreements may be
     considered and approved by United's shareholders.

23.  In authorizing the execution of the definitive agreement on
     July 19, 1996 the Board of Directors of United failed in its
     duty of care and loyalty in the following respects:

     A.  The board failed to consider and reach a judgment that
         United should be offered for sale prior to beginning the
         process;

     B.  The Board failed to meet on sufficient occasions and for
         sufficient time to consider a transaction, including the
         occasion when it approved the authorization of the
         July 19, 1996 definitive agreement, and was otherwise
         uninformed concerning the offer of Atmos and the fact
         that it might be inferior to an offer that could be made
         by another party;

     C.  The Board met in haste and without due deliberation;

     D.  The Board was not informed of Southern's willingness and
         ability to make an offer;

     E.  The Board was not informed that it was possible that
         Mr. Ford, Mr. Blose and Mr. Koonce would lose their
         positions if a sale were made to Southern, whereas they
         were to receive valuable benefits under the transaction
         with Atmos;

     F.  The definitive agreement was not made available to the
         Directors sufficiently prior to the meeting and
         financial information in sufficient detail was not made
         available prior to the meeting concerning potential
         bidders for United and the offers that they might be
         willing to make.

     G.  The Board deprived the shareholders of the opportunity
         to obtain enhanced value for their shares by first fore-
         stalling Southern from making an offer that management
         did not want to consider and then entering into the no
         shop, breakup fee and confidentiality provisions in the
         definitive agreement with Atmos to attempt to prevent
         Southern from making such an offer.

WHEREFORE, Plaintiff prays for a preliminary and permanent
injunction directing the Defendants to deliver to Plaintiff all
confidential information furnished to Atmos and enjoining the
Defendants from taking any further action to consummate the
merger with Atmos pursuant to the definitive agreement until one
of the following events has occurred:

     A.  Following receipt of an offer from Southern or a third
         party, United's Board after becoming fully informed has
         considered and determined in the exercise of their
         fiduciary responsibilities that a sale is in the best
         interest of United and its shareholders and has compared
         Southern's offer and any other person's offer to acquire
         United to Atmos' offer contained in the definitive
         agreement and determined in the exercise of reasonable
         business judgment that Atmos has offered superior value
         to the United shareholders than Southern or any third
         party has offered; or

     B.  No offer to acquire United has been made by Southern or
         any third party within thirty (30) days after all of
         such confidential information is furnished to Southern
         and United's Board after becoming fully informed has
         considered and determined in the exercise of their
         fiduciary responsibilities that a sale is in the best
         interest of United and its shareholders and that the
         Atmos' offer represents fair value to United's share-
         holders.

Plaintiff further prays that this Court retain jurisdiction after
entry of the preliminary and permanent injunctions for the pur-
pose of deciding if any determination by United's Board that
Atmos' offer is superior to Southern's offer or any third party
offer is in fact and law an exercise of reasonable business
judgment consistent with the Board's fiduciary responsibilities
to United's shareholders.

Plaintiff also prays for its costs and such other relief as the
Court may deem appropriate.


Respectfully submitted,


   Harwell Howard Hyne Gabbert & Manner, P.C.



By  GLENN B. ROSE
   ---------------
    Glenn B. Rose
    18th Floor
    First American Center
    315 Deaderick Street
    Nashville, Tennessee  37238
    615-256-0500
    FAX 615-251-1057

    Thompson Coburn

By  W. STANLEY WALCH
   ------------------
    W. Stanley Walch
    Kenton E. Knickmeyer
    One Mercantile Center
    St. Louis, Missouri  63101
    314-552-6000
    FAX 314-552-7000

Attorneys for Plaintiff
Southern Union Company

Fleischman and Walsh, LLP
  Stephen A. Bouchard
  1400 16th St. NW
  Washington, D.C. 20036
  202-939-7900
  FAX 202-265-5706
Of Counsel

EX-4

                             EXHIBIT - 4


                    UNITED STATES DISTRICT COURT
                    EASTERN DISTRICT OF MISSOURI
                         SOUTHERN DIVISION


SOUTHERN UNION COMPANY,         )
                                )
        Plaintiff,              )
                                )
v.                              )     Case No.
                                )
UNITED CITIES GAS COMPANY,      )
                                )
        Defendant.              )

                           COMPLAINT
                           ---------

For its complaint against the Defendant, United Cities Gas Com-
pany ("United"), Plaintiff Southern Union Company ("Southern")
states:

                    JURISDICTION AND VENUE
                    ----------------------

1.   This is an action for declaratory judgment (pursuant to 28
     U.S.C. Section 2201) to establish Southern's status as a
     shareholder of United.

2.   This Court has subject matter jurisdiction over this con-
     troversy (a) pursuant to 28 U.S.C. Section 1332 because the
     parties are citizens of different states and the amount in
     controversy exceeds $50,000, exclusive of interest and
     costs, and (b) pursuant to 28 U.S.C. Section 1331 because
     Southern's action arises, in part, under the Constitution
     and laws of the United States.

3.   Venue is proper in this District and this Division because
     United resides in this District within the meaning of 28
     U.S.C. Section 1391(c) and maintains offices within this
     Division.

                           THE PARTIES
                           -----------

4.   Southern is a corporation organized under the law of the
     State of Delaware and has its principal offices and place of
     business in the State of Texas.  Southern has a distinct
     operating division, Missouri Gas Energy ("MGE"), which sells
     natural gas to customers in western Missouri pursuant to a
     certificate of public convenience and necessity granted to
     MGE by the Missouri Public Service Commission ("PSC").

5.   United is a corporation organized under the law of the
     States of Illinois and Virginia and has its principal
     offices and place of business in the State of Tennessee. 
     United has operations in northeastern and southeastern
     Missouri in which it sells natural gas to customers pursuant
     to certificates of public convenience and necessity granted
     to United by the PSC.

                      DECLARATORY JUDGMENT
                      --------------------

6.   Prior to July, 1996, Southern acquired, in securities trans-
     actions executed on the NASDAQ, 585,000 shares of United's
     common stock.  MGE did not participate in any way in pur-
     chasing these shares of United's common stock.  These shares
     represented approximately four and one-half percent (4 1/2%)
     of the issued and outstanding shares of United common stock.

7.   On or about July 22, 1996, United announced that it had
     entered into definitive agreements whereby United would be
     acquired, through a merger, by Atmos Energy Corporation
     ("Atmos").

8.   Between July 23, 1996 and July 31, 1996, Southern acquired
     an additional 269,300 shares of common stock of United
     through transactions executed on the NASDAQ.  MGE did not
     participate in any way in purchasing these shares of
     United's common stock.  As a result, Southern now holds a
     total of 854,300 shares of United common stock, representing
     approximately six and one-half percent (6 1/2%) of the issued
     and outstanding shares of United common stock.  All of such
     shares are held by Southern in street name, except 100
     shares that, as of August 6, 1996, are held of record.  None
     of the United shares owned by Southern are treated as assets
     of MGE.

9.   Southern's cash investment in the shares of United common
     stock exceeds sixteen million dollars ($16,000,000).

10.  On August 1, 1996, Southern timely filed with the Securities
     and Exchange Commission (the "SEC") a Schedule 13D,
     reporting its ownership of in excess of five percent (5%) of
     the issued and outstanding common stock of United.

11.  On or about August 6, 1996, United, joined by Atmos, filed a
     complaint with the PSC in which it is asserted, among other
     matters, that Southern's purchases of United common stock
     are void pursuant to R.S.Mo. Section 393.190.3 because
     Southern did not, prior to purchasing the shares of United
     common stock described above, apply for or obtain approval
     of the acquisition by the PSC pursuant to R.S.Mo. Section
     393.190.2.  A copy of that complaint is annexed hereto as
     Exhibit 1.

12.  Southern believes that the statute relied on by United and
     Atmos does not apply to its open market purchases of shares
     of United common stock because (a) the shares purchased by
     Southern constitute an investment by Southern unrelated to
     MGE's operation of a "gas plant", and consequently, pursuant
     to R.S.Mo. Section 393.140(12), no approval was required
     by the PSC; and (b) Southern's purchases of United shares do
     not constitute a purchase of "the stock" of United within
     the meaning of R.S.Mo. Section 393.190.2.

13.  To the extent, if any, that R.S. Mo. Section 393.190
     applies in the factual context of this situation and pur-
     ports to render void Southern's acquisition of United's
     shares, the statute is unconstitutional and, therefore, void
     for each of the following reasons:

     A.  The statute impermissibly delegates legislative
         authority to an administrative agency in violation of
         Art. II, Section 1 of the Missouri Constitution because
         it fails to prescribe the standards by which the PSC
         shall determine whether or not to approve applications
         for the acquisition of the stock of a gas corporation;

     B.  As applied in the context of this case, the statute
         impermissibly purports to permit the State of Missouri
         and the PSC to exercise jurisdiction over the internal
         affairs of a foreign (Illinois and Virginia) corpora-
         tion, which exercise is a void attempt by the State of
         Missouri to make extraterritorial application of the law
         of the State;

     C.  As applied in the context of this case, the statute
         impermissibly attempts to regulate the time and manner
         and the types of notification required to purchase and
         sell securities in interstate commerce, a field which is
         occupied to the exclusion of state law by the provisions
         of the Securities Exchange Act of 1934, 15 U.S.C. Sec-
         tion 78a et seq., and particularly by Sections 13 and 14
         of the Exchange Act, 15 U.S.C. Sections 78m, 78n.  As
         such, the Missouri statute (R.S.Mo. Section 393.190) is
         preempted by federal law and void under the Supremacy
         Clause of the Constitution of the United States, U.S.
         Const. Art. VI, Clause 2;

     D.  As applied in the context of this case, the statute
         constitutes an unreasonable burden on, and constitutes
         an impermissible attempt by the State of Missouri to
         regulate the purchase and sale of securities in inter-
         state commerce and is, therefore, void under the Com-
         merce Clause of the Constitution of the United States,
         U.S. Const. Art. I, Sec. 8, Clause 3.

14.  Based on United's stated position in its Complaint to the
     PSC, Southern is informed and believes that United is
     refusing or will refuse to recognize Southern's beneficial
     ownership of the 854,300 shares of United common stock
     purchased by Southern by refusing to permit the United
     shares purchased by Southern to be voted by Southern or its
     proxy, suspending Southern's right to transfer the shares to
     a third party and otherwise impeding Southern's rights and
     priviledges as a United shareholder, all in reliance on the
     alleged voidness -- pursuant to R.S.Mo. Section 393.190.3
     -- of Southern's purchases of the 854,300 United shares made
     in open market transactions on the NASDAQ.

15.  A controversy also exists by virtue of United's filing of
     the Complaint in the PSC in an attempt to obtain an admini-
     strative declaration that Southern's purchases of 854,300
     shares of United are void.  The PSC's jurisdiction only
     extends to the statutorily delegated authority to approve or
     disapprove an application to acquire the stock of a gas
     corporation.  It has no statutory authority on the applica-
     tion of an interested party to declare particular transac-
     tions void or to deprive Southern of its property rights in
     the shares.  Any attempt to determine such issues by the PSC
     would be an exercise of judicial authority in violation of
     constitutional separation of powers principles reposing all
     judicial authority in the courts.  Althogh the PSC has made
     no attempt to exercise such jurisdiction in response to the
     Complaint filed by United, the filing thereof by United
     demonstrates tha a controversy exists which is ripe for
     judicial resolution by this Court.

16.  By reason of the foregoing, an actual controversy exists
     between Southern and United concerning Southern's status as
     a shareholder of United.

WHEREFORE, Southern Union Company prays that this Court enter its
Declaratory Judgment determining:

     A.  that Southern Union Company is the owner of 854,300
         shares of common stock of United Cities Gas Company;

     B.  that Southern Union Company is entitled to have such
         shares transferred to its name on the books of United
         Cities Gas Company;

     C.  that Southern Union Company is entitled to all the usual
         and customary rights and privileges of shareholders of
         United Cities Gas Company, including, but not limited
         to:

         1.  the right to receive dividends in respect of
             Southern's shares of United common stock as such
             dividends shall be declared;

         2.  the right to vote Southern's shares of United common
             stock on all matters which shall be presented to
             United's shareholders for vote;

         3.  the right to inspect United's books and records;

         4.  the right to receive a list of the names and
             addresses of United's other shareholders;

         5.  the right to submit resolutions for consideration by
             United's shareholders;

         6.  the right to submit nominations for the election of
             Directors of United;

and awarding Southern Union Company its costs and such other and
further relief to which it is entitled.
Respectfully submitted,

Thompson Coburn



By  W. STANLEY WALCH
   ------------------------
    W. Stanley Walch, #4623
    Kenton E. Knickmeyer, #3577
    One Mercantile Center
    St. Louis, Missouri  63101
    314-552-6000
    314-552-7000 fax

Attorneys for Plaintiff
Southern Union Company


OF COUNSEL:
Stephen A. Bouchard
Fleischman and Walsh, LLP
1400 16th St. N.W.
Waxhington, DC  20036
202-939-7900
FAX 202-265-5706

EX-5

                            EXHIBIT - 5


            SOUTHERN UNION COMPANY SEEKS TO ENJOIN
      UNITED CITIES GAS COMPANY FROM FURTHER ACTIONS TO
              MERGE INTO ATMOS ENERGY CORPORATION



AUSTIN, TEXAS (August 20, 1996) -- Southern Union Company
(NYSE:SUG) announced today that it has filed suit against United
Cities Gas Company (NASDAQ:UCIT), its Board of Directors and cer-
tain of its Executive Officers in U.S. District Court for the
Middle District of Tennessee (Nashville Division) with respect to
United Cities' sale by merger into Atmos Energy Corporation
(NYSE:ATO). Southern Union alleges that United Cities' Board and
Officers failed to exercise their fiduciary duties properly in
approving the proposed merger with Atmos.  Southern Union seeks
preliminary and permanent injunctive relief against United
Cities: (1) to prevent its taking any further action to consum-
mate the proposed merger until such time as the Board has
properly exercised its fiduciary duties, and (2) to direct United
Cities to provide Southern Union with confidential information in
order to provide Southern Union with the option of making an
informed offer for United Cities.  Southern Union is the owner of
854,300 common shares, or 6.5 percent of shares outstanding, of
United Cities.

On August 6, 1996, United Cities and Atmos jointly filed a com-
plaint with the Missouri Public Service Commission (MPSC) against
Southern Union alleging that Southern Union's purchases of United
Cities shares violated a Missouri utility regulatory statute.
Their complaint seeks, among other things, a declaration by the
MPSC that the purchases by Southern Union are null and void, and
an order prohibiting Southern Union from making additional pur-
chases of United Cities shares.  Southern Union intends to defend
vigorously against the United Cities and Atmos complaint before
the MPSC.

Southern Union filed a complaint yesterday against United Cities
in the U.S. District Court for the Eastern District (Southern
Division) of Missouri seeking a declaratory judgment that
Southern Union is entitled to all the usual and customary rights
and privileges of ownership of its United Cities shares because
the Missouri statute that is the basis of the United Cities/
Atmos complaint at the MPSC is not applicable to Southern
Union's purchases of United Cities shares or otherwise is uncon-
stitutional under the federal and Missouri constitutions.

Southern Union Company headquartered in Austin, Texas, dis-
tributes natural gas to approximately 968,000 customers in Texas
and Missouri through two divisions, Southern Union Gas and
Missouri Gas Energy.  Southern Union Gas serves approximately
497,000 in Texas (including cities of Austin, Brownsville, El
Paso, Galveston and Port Arthur).  Missouri Gas Energy serves
approximately 471,000 customers in western Missouri (including
the cities of Kansas City, St. Joseph, Joplin and Monett).