Nugent fired home his eighth penalty of the season to move Leicester to the top of the Sky Bet Championship standings.
Nugent scored from the spot in the 21st minute after Anthony Knockaert had been brought down by Shaun Cummings to claim his 12th goal of the season.
A series of power failures in the first half threatened the game but it was completed with the use of an emergency generator as Leicester kept on course in the promotion race.
Leicester were looking to further boost their promotion hopes by capitalising on back-to-back home games against Reading and Bolton after the win at QPR.
Not surprisingly they remained unchanged while Reading made one change from the side beaten by Wigan, with Nick Blackman replacing Billy Sharp.
But a series of power failures in the stadium and surrounding areas during the first half, looked to be the biggest threat to Leicester's progress after they had taken the lead midway through the first half.
Three times the floodlights went out along with all the lighting and power inside the stadium but referee Michael Naylor allowed play to continue until half-time.
At one stage the fans in the stands switched on their mobile phone lights as they chanted "We'll play in the dark."
It was a farcical 45 minutes but Leicester dominated the game with Knockaert in the thick of the action. Some early trickery from the Frenchman led to a shot by Lloyd Dyer being saved by Alex McCarthy.
Reading attacks were few and far between and after Matty James and Jamie Vardy fired shots off target City took the lead they had been threatening.
Another great run by Knockaert was brought to a halt when he flattened by a challenge from Shaun Cummings. It was a clear penalty and Nugent scored with ease from the spot.
The lights continued to go on and off but City remained in charge with Nugent clipping the outside of a post in the 32nd minute. He then fired a volley wide before the half ended with Danny Drinkwater bringing McCarthy to a low save.
It was announced that the power was now being run off an emergency generator at the club but Reading kept City waiting before coming out for the second half.
The Foxes almost scored a second goal in the 50th minute when Vardy raced onto a long through ball from James, rounded McCarthy but fired into the side net.
Four minutes later Reading created their best chance so far when Royston Drenthe whipped in a free kick and Kasper Schmeichel denied Kaspars Gorkss with a point blank save. Alex Pearce had a header cleared off the line by Ritchie De Laet from the resulting corner.
Reading were now giving a much better account of themselves and both Drenthe and Gorkss went close with two more good chances. Pavel Pogrebnyak then had the ball in the net only to be denied by the offside flag.
A 60-yard run by Dyer put Reading in danger but the winger finished with a shot into the side net from a tight angle.
City finished strongly and with Burnley losing at Middlesbrough, the Foxes went to the top of the table.