August 2, 2000

MERRILLVILLE, Ind. - Northern Indiana Public Service Company (NIPSCO), a subsidiary of NiSource Inc., announced today a change in its gas cost adjustment (GCA) for August 2000.

This adjustment, which was approved subject to refund by the Indiana Utility Regulatory Commission (IURC), represents a 3.25 percent decrease in a typical residential customer's bill from July 2000 and a 42.81 percent increase when compared with August 1999. NIPSCO's business and commercial gas customers will see similar impacts on their August billing statements.

For example, a typical NIPSCO residential customer using 50 therms of natural gas during August should expect a $1.32 decrease in their August billing statement when compared to last month and an $11.79 increase when compared to August last year.

The GCA is an allowed monthly adjustment to the gas supply portion of NIPSCO's natural gas service rates. The adjustment, which must be approved by the IURC, reflects the fluctuations in the price NIPSCO pays in the marketplace for natural gas. The GCA is separate from NIPSCO's base gas service rates, which have not changed since 1988.

While it is difficult for utilities to accurately predict what future natural gas prices will be, across the country they have been steadily increasing since spring.

If the trend continues, which the American Gas Association (AGA) and most industry analysts believe will be the case, NIPSCO customers should expect to see increases this coming heating season as compared to last winter's bills.

In addition to higher natural gas prices, NIPSCO customers who heat their homes with natural gas may be using more this winter. The winter of 1999 - 2000 was milder than normal. A return to even normal winter temperatures this heating season could result in both higher prices and increased usage of natural gas.

Current natural gas prices are not expected to become a "permanent fixture" in the natural gas market however, according to the AGA, these prices represent a temporary imbalance between production and demand.

"The outlook for natural gas supply is solid, both in the short term and the long term," said Paul Wilkinson, AGA's vice president of policy analysis. "The market had been temporarily out of balance. But it is currently in the process of moving back into balance."

The AGA stated low natural gas prices during the past two years caused producers to delay drilling new wells, causing natural gas production to actually decline during this period. On the demand side, however, a strong economy has fueled higher natural gas usage by business and industry. While producers are now drilling new wells in response to higher natural gas prices, these additional supplies are not expected to reach the market soon enough to affect this winter's natural gas prices.

Regardless of current changes in the natural gas market, NIPSCO wants to assure our customers that adequate supplies of natural gas will be available, and our distribution system will be ready to meet the needs of our customers this winter and beyond. Natural gas remains a clean, safe and reliable energy source.

"NIPSCO's primary objective in its natural gas operations is to provide our customers with safe and reliable gas services at competitive prices," said Peg Landini, NIPSCO's vice president of Commercial Operations. "Despite the continuously fluctuating market price of natural gas, NIPSCO is working diligently to minimize the cost to our customers through its diversified natural gas supply portfolio and energy cost management programs."

Aside from the gas cost, other components of the bill include service costs for gas delivery and state and local taxes. The charge appearing on customers' bills for these services, which are also regulated by the IURC, will vary with monthly usage.

Customers may call NIPSCO's customer service center at 1-800-4-NIPSCO (1-800-464-7726) to receive information on ways to prepare for this year's heating season. The following are services available to help customers with winter heating bills:

• For natural gas customers who are more comfortable with price stability, NIPSCO continues to offer its Budget Plan as an option to stabilize their monthly gas bill.
• Customers may also inquire about similar pricing options with the qualified suppliers participating in the NIPSCO Choice program. NIPSCO Choice allows customers to purchase natural gas from a supplier other than NIPSCO.
• NIPSCO has information available about state and local agencies that can help customers with their winter heating bills.

For additional information or questions about NIPSCO's adjustment to its gas supply charge, the NIPSCO Choice program, or any of NIPSCO's products or services, call our customer service center, 24 hours-a-day, seven days a week, to speak with a NIPSCO customer service representative.

Customers may also contact the Indiana Office of the Utility Consumer Counselor toll-free at (888) 441-2494, or visit their website at www.state.in.us/oucc. The OUCC is the state agency that represents the interests of Indiana consumers in matters related to the provision of utility services.

The Indiana Utility Regulatory Commission (IURC) may be contacted toll-free at (800) 851-4268, or visit the their website at www.state.in.us/iurc. An advocate of neither the public nor the utilities, the IURC is required by state statute to make decisions that balances the interests of all parties to ensure that utilities provide adequate and reliable service at reasonable prices.

Northern Indiana Public Service Company (NIPSCO), a subsidiary of NiSource Inc., is a regulated utility that provides natural gas to nearly 700,000 customers and electricity to 416,000 customers across the northern third of Indiana. NIPSCO is the largest natural gas distribution company and the second largest electric distribution company in Indiana. Information about NiSource Inc. and its subsidiaries is available via the Internet at www.nisource.com.