FOR IMMEDIATE RELEASE
May 7, 2001

FOR INFORMATION CONTACT
Regina D. Biddings, Director
NIPSCO Communications
(219)-647-6388

NIPSCO FILES MOTION SEEKING DISMISSAL OF IURC INVESTIGATION

Merrillville, IN - Northern Indiana Public Service Company (NIPSCO) today will file a motion to dismiss the investigation of its electric rates undertaken by the Indiana Utility Regulatory Commission (IURC) in January of this year. In its filing, the company states that the IURC staff recommendation which prompted the investigation is unlawfully based and ignores Indiana legal requirements that public utilities be allowed to earn a fair return on the current fair value of their assets used to provide services to customers.

"The energy industry in Indiana has never experienced this kind of review. It is unprecedented," said Jeffrey W. Yundt, Energy Distribution Group president. "Fair value is a firmly established doctrine rooted in Indiana statute and we believe the IURC staff in using 'original cost' as the basis for its analysis ignored this doctrine."

The difference between "original cost" and "fair value" can be explained as roughly the same as the difference between what you paid to build or buy your home compared to what you could sell it for today.

"NIPSCO has worked diligently to keep its electric costs stable. The company hasn't sought an electric rate increase in over 14 years, while investing in the reliability and efficiency of our electric generating and distribution system. It is time to bring our rates in line with the value our customers receive.

"NIPSCO didn't seek this proceeding. However, if the investigation continues, the company will demonstrate that its electric rates are, in fact, inadequate based on the fair market value and the operating expenses of its generation, transmission and distribution assets, which have consistently delivered electricity reliably and safely to our 430,000 electric customers," stated Yundt.

Customer's current electric rates will remain unchanged during the IURC proceeding.

NIPSCO, with headquarters in Merrillville, Ind., is one of the 10 energy distribution companies of NiSource Inc. (NYSE: NI). With approximately 700,000 natural gas customers and 430,000 electric customers across the northern third of Indiana, NIPSCO is the largest natural gas distribution company, and the second largest electric distribution company, in the state. NiSource distribution companies serve 3.6 million natural gas and electric customers primarily in nine states. More information about NIPSCO is available at www.nipsco.com.