MERRILLVILLE, Ind. - Northern Indiana Public Service Company (NIPSCO) announced today that the Indiana Utility Regulatory Commission (IURC) had approved the utility's request for recovery of capital costs on $58 million in environmental expenditures incurred through Dec. 31, 2002. These expenditures were made to meet new federal and state clean air standards for the reduction of nitrogen oxide (NOx) emissions.

As approved, a typical NIPSCO electric customer using 1,000-kilowatt hours (KWH) of electricity per month can expect a $.53 increase in their monthly electric bill. The additional charge will begin with May 2003 electric usage and will be part of the electric bill calculation.

NIPSCO has estimated total NOx compliance cost could total approximately $234 million once all equipment installation is complete. To mitigate the impact on customers and to potentially take advantage of new technology that might reduce the total cost, future expenditures and the subsequent cost recovery filings will be phased-in over six month periods.

"NIPSCO has always taken a leadership role in meeting federal and state environmental regulations and has already achieved a 30 percent reduction in NOx emission rates in the past three years, prior to any request for cost recovery," said Barrett Hatches, president and CEO of NIPSCO. "Studies have found NOx emissions contribute to ozone, which is a component of smog. While costly, these expenditures are viewed as an investment in our environment."

The request by NIPSCO was made through the Environment Cost Recovery Mechanism (ECRM) approved by the IURC on Nov. 26, 2002. The ECRM allows the utility to recover its capital cost associated with the construction of facilities required to meet NOx reduction requirements at its coal fired electric generating stations.

Under Indiana law, electric utilities are allowed to file with the IURC to recover expenditures associated with meeting new state and federal NOx emission standards.

The IURC will have full regulatory oversight of costs submitted by NIPSCO for recovery through the ECRM filings.

Once all equipment is fully operational, NIPSCO's NOx emissions from the operation of its generating stations will be reduced 70 percent during the May through September ozone season.

NIPSCO, with headquarters in Merrillville, Ind., is one of the 10 energy distribution companies of NiSource Inc. (NYSE: NI). With nearly 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 3.7 million natural gas and electric customers primarily in nine states. More information about NIPSCO is available at www.nipsco.com.