September 1, 2000

Larry Graham

NIPSCO Acting Communications Manager

(219) 647-6375

Mike Leppert

IURC Executive Director of External Affairs

(317) 232-2714

Anthony Dzwonar

OUCC External Affairs Director

(317) 233-9682

Higher Natural Gas Bills Expected This Heating Season

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

This adjustment, which was approved subject to refund by the Indiana Utility Regulatory Commission (IURC), represents a 5.92 percent increase in a typical residential customer’s bill from August 2000 and a 28.98 percent increase when compared to September 1999. NIPSCO’s business and commercial gas customers will see similar increases on their September billing statements.

For example, a typical NIPSCO residential customer using 50 therms of natural gas during September should expect a $2.33 increase in their September billing statement when compared to last month and an $9.36 increase when compared to September 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.

Natural gas prices nationally have been increasing since the fourth quarter of 1999. A combination of decreased production during 1997 and 1998 due to unusually low gas prices coupled with increasing demand by business and industry due to the strong economy has created a supply imbalance in the market. While new production in response to higher gas prices has begun, it can take six to eighteen months for these new supplies to reach the market and have an impact on prices.

While early winter weather and other factors can still affect the actual gas prices we see this winter, NIPSCO is informing customers to plan on increases of 50 to 60 percent in their natural gas bills in December 2000, and January and February 2001 when compared to the same months last heating season. This comparison assumes normal winter temperatures this heating season versus last season’s milder than normal winter.

NIPSCO is committed to providing its customers with reliable natural gas supplies at the lowest possible cost. To do this, NIPSCO continuously seeks to improve its purchase contracts and its storage and transmission costs in an effort to ensure the most competitive price for its customers as well as ease the effect of market price fluctuations on their monthly billing statements.

Aside from the gas supply charge, the other components of NIPSCO’s monthly gas statements include service costs for gas delivery, and state and local taxes. These service costs, which are also regulated by the IURC, vary with monthly gas use.

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 average 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.

Customers may also contact the Indiana Office of the Utility Consumer Counselor toll-free at (888) 441-2494, or visit their Web site at www.state.in.us/oucc. Their Web site now contains consumer information specific to natural gas prices. 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 their Web site 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.

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