FOR IMMEDIATE RELEASE
July 12, 2004

FOR ADDITIONAL INFORMATION
Larry Graham, Manager
NIPSCO Communications
(260) 439-1330

NIPSCO Files Testimony in City of Gary Proceeding
Plant Conditions, Regulatory Requirements, Environmental Mandates and Evolving
Market Uncertainties Cited as Factors in Determining the Future of Mitchell Station

MERRILLVILLE, Ind. --- In testimony filed with the Indiana Utility Regulatory Commission (IURC), Northern Indiana Public Service Company (NIPSCO) indicated that it can best meet future electric demand with a combination of existing generating capacity and other, more flexible, purchased power options than with the mothballed Dean H. Mitchell Generating Station.

New regulatory requirements, such as those associated with NIPSCO’s membership in the Midwest Independent System Operator (MISO), have changed the way companies dispatch electricity transmitted from their generating stations. In addition, the August 14, 2003, blackout significantly increased emphasis on system reliability.

"NIPSCO must balance how to best provide safe, reliable and competitively-priced electric power for our customers both now and in the future," said NIPSCO President Mark Maassel. "NIPSCO and the rest of the electric industry are responding to more stringent requirements to ensure system reliability for all customers and to meet increasingly rigorous environmental mandates - while controlling costs. Ultimately, we determined that Mitchell does not improve our ability to meet these requirements. Further investment in Mitchell does not make sense at this time and, therefore, we have no current plans to restart the plant."

NIPSCO’s testimony was filed as part of an IURC regulatory review of a petition by the City of Gary requesting that the City be allowed to obtain the Mitchell Station site to allow for the expansion of the existing airport and additional lakefront development.

"NIPSCO can serve the needs of our residential, commercial and small industrial customers, representing 99.9 percent of our customer base with our newer, more efficient and environmentally sound generating units," Maassel said. " The way NIPSCO’s industrial customers use electricity is among the most unique in the country and requires reliable and highly flexible electric generating capacity. Their manufacturing processes require that NIPSCO respond to demand swings that are the equivalent of 180,000 homes turning on and off all their electric power within an five-minute timeframe, several times a day. Our 45-year-old coal-fired Mitchell Station was not designed to meet such extraordinary requirements."

Maassel continued, "We will continue to look to the open market to supply flexible power to meet these changing needs as we have since Mitchell was shut down more than two years ago."

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.

Forward-looking Statements
This news release contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to various risks and uncertainties. The factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed herein include, among others things, increased competition in deregulated energy markets, weather, fluctuations in supply and demand for energy commodities, growth opportunities for NiSource's businesses, dealings with third parties over whom NiSource has no control, actual operating experience of acquired assets, NiSource's ability to integrate acquired operations into its operations, the regulatory process, regulatory and legislative changes, changes in general economic, capital and commodity market conditions, and counter-party credit risk, many of which are beyond the control of NiSource. These and other risk factors are detailed from time to time in the company's SEC reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The company does not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this news release.