<SUBMISSION>
<ACCESSION-NUMBER>0000950137-08-013400
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>11
<PERIOD>20080930
<FILING-DATE>20081104
<DATE-OF-FILING-DATE-CHANGE>20081104
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>NISOURCE INC/DE
<CIK>0001111711
<ASSIGNED-SIC>4931
<IRS-NUMBER>352108964
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-16189
<FILM-NUMBER>081160057
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>801 EAST 86TH AVE
<CITY>MERRILLVILLE
<STATE>IN
<ZIP>46410-6272
<PHONE>2196475200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>801 EAST 86TH AVE
<CITY>MERRILLVILLE
<STATE>IN
<ZIP>46410-6272
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>NEW NISOURCE INC
<DATE-CHANGED>20000412
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c47397e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the quarterly period ended September&nbsp;30, 2008</B>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>or</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number <U>001-16189</U></B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">NiSource Inc.</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Delaware
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">35-2108964</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">801 East 86th Avenue</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Merrillville, Indiana
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">46410</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><FONT style="border-bottom: 1px solid #000000">(877)&nbsp;647-5990</FONT><BR>
(Registrant&#146;s telephone number, including area code)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. <BR>
Yes <FONT face="Wingdings">&#254;</FONT> &nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of &#147;large
accelerated filer,&#148; &#147;accelerated filer&#148; and
&#147;smaller reporting company&#148; in Rule 12b-2 of the Exchange Act. (Check one):</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Large accelerated filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Non-accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Smaller reporting company <FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>(Do not check if a smaller reporting company)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act).<BR>
 Yes <FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date: Common Stock, $0.01 Par Value:
274,243,476 shares outstanding at October
31, 2008.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.<BR>
FORM 10-Q QUARTERLY REPORT<BR>
FOR THE QUARTER ENDED SEPTEMBER 30, 2008</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Table of Contents</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#101">Defined Terms</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">PART I FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">Item&nbsp;1. Financial Statements &#150; unaudited</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Condensed Statements of Consolidated Income (Loss) (unaudited) </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Condensed Consolidated Balance Sheets (unaudited) </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#106">Condensed Statements of Consolidated Cash Flows (unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#107">Notes to Condensed Consolidated Financial Statements (unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">PART II OTHER INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">Item&nbsp;2. Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#115">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#116">Item&nbsp;4. Submission of Matters to a Vote of Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#117">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#118">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#119">Signature</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w2.htm">EX-10.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w3.htm">EX-10.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w4.htm">EX-10.4</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w5.htm">EX-10.5</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w6.htm">EX-10.6</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv10w7.htm">EX-10.7</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv31w1.htm">EX-31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv31w2.htm">EX-31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv32w1.htm">EX-32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c47397exv32w2.htm">EX-32.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>DEFINED TERMS</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a list of frequently used abbreviations or acronyms that are found in this report:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NiSource Subsidiaries and Affiliates</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bay State </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bay State Gas Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital Markets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Capital Markets, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CER </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Energy Resources, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CNR </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Natural Resources, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Energy Group</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Deep Water </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Deep Water Service Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Energy Services </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Energy Services Corporation</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Gulf </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gulf Transmission Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia of Kentucky </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas of Kentucky, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia of Maryland </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas of Maryland, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia of Ohio </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas of Ohio, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia of Pennsylvania </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas of Pennsylvania, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia of Virginia </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas of Virginia, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Transmission </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia Gas Transmission Corporation</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CORC </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Columbia of Ohio Receivables Corporation</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Crossroads Pipeline </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Crossroads Pipeline Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granite State Gas </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Granite State Gas Transmission, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hardy Storage </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hardy Storage Company, L.L.C.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kokomo Gas </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kokomo Gas and Fuel Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lake Erie Land </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lake Erie Land Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Millennium </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Millennium Pipeline Company, L.P.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NDC Douglas Properties </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NDC Douglas Properties, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NiSource </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NiSource Corporate Services </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Corporate Services Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NiSource Development Company </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Development Company, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NiSource Finance </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Finance Corp.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Northern Indiana </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Northern Indiana Public Service Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Northern Indiana Fuel and Light </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Northern Indiana Fuel and Light Company</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Northern Utilities </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Northern Utilities, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NRC </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NIPSCO Receivables Corporation</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PEI </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PEI Holdings, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TPC </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">EnergyUSA-TPC Corp.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Whiting Clean Energy </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Whiting Clean Energy, Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Abbreviations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">AFUDC </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Allowance for funds used during construction</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Algonquin </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Algonquin Gas Transmission Co.</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ANPR </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advance Notice of Proposed Rulemaking</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">AOC </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Administrative Order by Consent</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARRs </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Auction Revenue Rights</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ASM </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ancillary Services Market</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BBA </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">British Banker Association</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bcf </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Billion cubic feet</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BPAE </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BP Alternative Energy North America Inc</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CAA </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Clean Air Act</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CAIR </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Clean Air Interstate Rule</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CAMR </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Clean Air Mercury Rule</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CCGT </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Combined Cycle Gas Turbine</TD>
</TR>
<TR valign="top">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CERCLA </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Comprehensive Environmental Response Compensation and Liability Act (Also known as Superfund)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CPCN </DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Public Convenience and Necessity</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>DEFINED TERMS (continued)</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Day 2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Began April&nbsp;1, 2005 and refers to the operational control of the energy markets by MISO, including the
dispatching of wholesale electricity and generation, managing transmission constraints, and managing the
day-ahead, real-time and financial transmission rights markets</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DPU
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Massachusetts Department of Public Utilities</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DSM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Demand Side Management</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">dekatherms</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ECOS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental Council of the States</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ECR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental Cost Recovery</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ECRM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental Cost Recovery Mechanism</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ECT
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental cost tracker</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EERM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Environmental Expense Recovery Mechanism</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EITF Issue No.&nbsp;02-3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">EITF Issue No.&nbsp;02-3, &#147;Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes
and Contracts Involved in Energy Trading and Risk Management Activities&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Empire
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Empire State Pipeline</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EPA
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">United States Environmental Protection Agency</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EPS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Earnings per share</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FAC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fuel adjustment clause</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FASB
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Financial Accounting Standards Board</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FERC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Federal Energy Regulatory Commission</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FIN 47
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Interpretation No.&nbsp;47, &#147;Accounting for Conditional Asset Retirement Obligations&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FIN 48
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Interpretation No.&nbsp;48, &#147;Accounting for Uncertainty in Income Taxes,&#148; an interpretation of SFAS No.&nbsp;109</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FIP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Federal Implementation Plan</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FSP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Staff Position</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FSP FAS 157-2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Staff Position FAS 157-2: Effective Date of FASB Statement No.&nbsp;157</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FSP FAS 157-3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Staff Position FAS 157-3: Determining the Fair Value of a Financial Asset in a Market that is Not
Active</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FSP FIN 39-1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FASB Staff Position FIN 39-1: Amendment of FASB Interpretation No.&nbsp;39</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FTRs
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Financial Transmission Rights</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">GAAP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Generally Accepted Accounting Principles</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">gwh
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Gigawatt hours</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IBM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">International Business Machines Corp.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IBM Agreement
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Agreement for Business Process &#038; Support Services</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IDEM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indiana Department of Environmental Management</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Iroquois
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Iroquois Gas Transmission System LP</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IRP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Integrated Resource Plan</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">IURC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indiana Utility Regulatory Commission</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">LDCs
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Local distribution companies</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">LIBOR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">London InterBank Offered Rate</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MGP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manufactured gas plant</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MISO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Midwest Independent Transmission System Operator</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MLP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master Limited Partnership</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MMDth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Million dekatherms</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">mw
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Megawatts</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NAAQS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">National Ambient Air Quality Standards</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NOV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Notice of Violation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NOx
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nitrogen oxides</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NPDES
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">National Pollutant Discharge Elimination System</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NYDEC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">State of New York Department of Environmental Conservation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NYMEX
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York Mercantile Exchange</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">OUCC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indiana Office of Utility Consumer Counselor</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>DEFINED TERMS (continued)</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PADEP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pennsylvania Department of Environmental Protection</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PCB
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Polychlorinated biphenyls</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Piedmont
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Piedmont Natural Gas Company, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PPS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Price Protection Service</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PUCO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Public Utilities Commission of Ohio</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">RCRA
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Resource Conservation and Recovery Act</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SAB No.&nbsp;92
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Staff Accounting Bulletin No.&nbsp;92, &#147;Accounting and Disclosures Relating to Loss Contingencies&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SEC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities and Exchange Commission</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;5, &#147;Accounting for Contingencies&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;71
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;71, &#147;Accounting for the Effects of Certain Types of
Regulation&#148;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS
No.&nbsp;109
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting
Standard No. 109, &#147;Accounting for Income Taxes&#148; </TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;123R
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;123R, &#147;Share-Based Payment&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;130
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;130, &#147;Reporting Comprehensive Income&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;133
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;133, &#147;Accounting for Derivative Instruments and Hedging
Activities,&#148; as amended</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;140
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;140, &#147;Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities &#151; a replacement of FASB Statement 125&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;141R
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;141R, &#147;Business Combinations&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;142
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;143
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;143, &#147;Accounting for Asset Retirement Obligations&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;157
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;157, &#147;Fair Value Measurements&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;158
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;158, &#147;Employers&#146; Accounting for Defined Benefit Pension
and Other Postretirement Plans&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;159
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;159, &#147;The Fair Value Option for Financial Assets and
Financial Liabilities &#150; Including an amendment of FASB Statement No.&nbsp;115&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;160
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;160, &#147;Noncontrolling Interests in
Consolidated Financial Statements &#151; an amendment of ARB No.&nbsp;51&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SFAS No.&nbsp;161
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Financial Accounting Standards No.&nbsp;161, &#147;Disclosures about Derivative
Instruments and Hedging &#151; an amendment of SFAS No.&nbsp;133&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SIP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">State Implementation Plan</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SO2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sulfur dioxide</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SOP 96-1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statement of Position 96-1, &#147;Environmental Remediation Liabilities&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">VaR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Value-at-risk and instrument sensitivity to market factors</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">VADEQ
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Virginia Department of Environmental Quality</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>PART I</B></U>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Condensed Statements of Consolidated Income (Loss) (unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions, except per share amounts)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gas Distribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>544.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">452.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3,697.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,049.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gas Transportation and Storage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>217.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>810.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">778.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Electric</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>379.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">377.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,050.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,037.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>268.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>929.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">794.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,409.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,249.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,488.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,660.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of Sales (excluding depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>792.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,162.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,328.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Net Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>616.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">611.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,326.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,331.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operation and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>313.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,067.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,021.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>141.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>424.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">405.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment and (gain)&nbsp;loss on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(2.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>58.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>225.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>511.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">504.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,714.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Equity Earnings in Unconsolidated Affiliates</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>107.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>619.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">684.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Income (Deductions)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(100.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(101.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(279.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(298.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Other Income (Deductions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(79.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(99.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(258.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(300.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income From Continuing Operations Before Income Taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>28.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>360.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">383.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income Taxes (Benefit)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>(4.1</B></TD>
    <TD>)&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income from Continuing Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>242.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (Loss) from Discontinued Operations &#151; net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(221.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain (Loss) on Disposition of Discontinued Operations &#151; net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(104.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Income (Loss)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(83.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">254.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic Earnings (Loss) Per Share ($)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.12</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.89</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.04</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1.19</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic Earnings Per Share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.30</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted Earnings (Loss) Per Share ($)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Continuing operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.11</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.88</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.04</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1.18</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted Earnings Per Share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.07</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.30</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Dividends Declared Per Common Share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.23</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.92</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic Average Common Shares Outstanding (millions)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>274.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>274.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted Average Common Shares (millions)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>275.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>275.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;are an integral part of these unaudited statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Condensed Consolidated Balance Sheets (unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property, Plant and Equipment</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Utility Plant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>18,227.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,295.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(8,078.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,787.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net utility plant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,149.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,508.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other property, at cost, less accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>112.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Property, Plant and Equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,261.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,575.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investments and Other Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Assets of discontinued operations and assets held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>295.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">593.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unconsolidated affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>70.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>119.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Investments and Other Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>485.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>243.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable (less reserve of $40.6 and $37.0, respectively)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>586.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gas inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>706.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">452.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Underrecovered gas and fuel costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>313.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Materials and supplies, at average cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>83.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Electric production fuel, at average cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>48.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>106.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exchange gas receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>407.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Regulatory assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>306.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Assets of discontinued operations and assets held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>70.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>228.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Current Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,126.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,460.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>85.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Regulatory assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>822.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">867.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,677.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,677.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>333.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">341.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Postretirement and postemployment benefits assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>188.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred charges and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Other Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,224.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,190.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19,097.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,010.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;are an integral
part of these unaudited statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR><B>
Condensed Consolidated Balance Sheets (unaudited) (continued)</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions, except share amounts)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CAPITALIZATION AND LIABILITIES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Capitalization</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stockholders&#146; Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock &#151; $0.01 par value, 400,000,000 shares authorized; 274,229,624
and 274,176,752 shares issued and outstanding, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,017.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,011.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>739.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,074.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated other comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(65.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(23.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Common Stockholders&#146; Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,670.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,076.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding amounts due within one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,323.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,594.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Capitalization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,994.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,671.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,263.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,061.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>498.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends declared</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>63.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>120.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Taxes accrued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>145.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest accrued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>101.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Overrecovered gas and fuel costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>201.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exchange gas payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>649.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">441.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Regulatory liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued liability for postretirement and postemployment benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Liabilities of discontinued operations and liabilities held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Legal and environmental reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>467.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>381.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">393.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Current Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,019.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,398.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Liabilities and Deferred Credits</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,540.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,466.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred investment tax credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>47.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>76.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued liability for postretirement and postemployment benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>550.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">547.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Liabilities of discontinued operations and liabilities held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>86.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Regulatory liabilities and other removal costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,400.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,337.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Asset retirement obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>128.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>168.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Other Liabilities and Deferred Credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,084.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,941.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commitments and Contingencies (Refer to Note 17)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Capitalization and Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19,097.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,010.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;are an integral
part of these unaudited statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Condensed Statements of Consolidated Cash Flows (unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Nine Months Ended September 30, <I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(83.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">254.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income to net cash from continuing operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>424.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">405.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net changes in price risk management assets and liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>21.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes and investment tax credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>92.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(27.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Stock compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on impairment of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income from unconsolidated affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(20.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">(Gain) loss on disposition of discontinued operations &#151; net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>104.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">(Income) loss from discontinued operations &#151; net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>221.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Amortization of discount/premium on debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">AFUDC Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(4.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>405.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(248.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(120.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(259.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(230.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Taxes accrued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(51.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest accrued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">(Under) Overrecovered gas and fuel costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(165.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Exchange gas receivable/payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(17.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(12.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Regulatory assets/liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(89.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Postretirement and postemployment benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred charges and other noncurrent assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(36.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Operating Activities from Continuing Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>263.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">386.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Operating Activities from or (used for) Discontinued Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(13.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Cash Flows from Operating Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>250.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(679.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(505.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Sugar Creek purchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(329.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from disposition of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>42.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(186.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Investing Activities used for Continuing Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,172.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(434.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Investing Activities from or (used for) Discontinued Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>203.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Cash Flows used for Investing Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(968.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(446.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>960.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">802.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Retirement of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(37.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Repurchase of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(254.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Change in short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>202.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(520.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Acquisition of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(0.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Dividends paid &#151; common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(189.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(189.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Cash Flows from Financing Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>681.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Decrease in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(36.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash inflows from or (contributions to) discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>27.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents at end of period</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental Disclosures of Cash Flow Information</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>290.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">300.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest capitalized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>40.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149.7</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;are an integral
part of these unaudited statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Notes to Condensed Consolidated Financial Statements (unaudited)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Basis of Accounting Presentation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited condensed consolidated financial statements for NiSource reflect all
normal recurring adjustments that are necessary, in the opinion of management, to present fairly
the results of operations in accordance with GAAP in the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying financial statements should be read in conjunction with the consolidated financial
statements and notes thereto included in NiSource&#146;s Annual Report on Form 10-K for the fiscal year
ended December&nbsp;31, 2007. Income for interim periods may not be indicative of results for the
calendar year due to weather variations and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following unaudited condensed consolidated financial statements have been prepared pursuant to
the rules and regulations of the SEC. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with GAAP have been condensed or omitted
pursuant to those rules and regulations, although NiSource believes that the disclosures made are
adequate to make the information not misleading.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Recent Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Recently Adopted Accounting Pronouncements</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;157 &#151; Fair Value Measurements. </I></B>In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157 to define
fair value, establish a framework for measuring fair value and to expand disclosures about fair
value measurements. SFAS No.&nbsp;157 does not change the requirements to apply fair value in existing
accounting standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under SFAS No.&nbsp;157, fair value refers to the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the market in
which the reporting entity transacts. The standard clarifies that fair value should be based on
the assumptions market participants would use when pricing the asset or liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To increase consistency and comparability in fair value measurements, SFAS No.&nbsp;157 establishes a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three levels. The level in the fair value hierarchy disclosed is based on the lowest level of
input that is significant to the fair value measurement. The three levels of the fair value
hierarchy defined by SFAS No.&nbsp;157 are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 1 inputs are quoted prices (unadjusted)&nbsp;in active markets for identical asset or
liabilities that the company has the ability to access as of the reporting date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly through corroboration
with observable market data.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 3 inputs are unobservable inputs, such as internally developed pricing models for
the asset or liability due to little or no market activity for the asset or liability.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS No.&nbsp;157 became effective for NiSource as of January&nbsp;1, 2008. The provisions of SFAS No.&nbsp;157
are to be applied prospectively, except for the initial impact on the following three items, which
are required to be recorded as an adjustment to the opening balance of retained earnings in the
year of adoption: (1)&nbsp;changes in fair value measurements of existing derivative financial
instruments measured initially using the transaction price under EITF Issue No.&nbsp;02-3, (2)&nbsp;existing
hybrid financial instruments measured initially at fair value using the transaction price and (3)
blockage factor discounts. The adoption of SFAS No.&nbsp;157 did not have an impact on NiSource&#146;s
January&nbsp;1, 2008 balance of retained earnings and is not anticipated to have a material impact
prospectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2008, the FASB issued FSP FAS 157-2, which delays the effective date of SFAS No.&nbsp;157
for all nonrecurring fair value measurements of non-financial assets and liabilities until fiscal
years beginning after November&nbsp;15, 2008. NiSource has elected to defer the adoption of the
nonrecurring fair value measurement disclosures of non-financial assets and liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In October&nbsp;2008, the FASB issued FSP FAS 157-3, which clarifies the application of SFAS No.&nbsp;157 in
a market that is not active and provides an example to illustrate key considerations in determining
the fair value of a financial asset when the market for that financial asset is not active. The
FSP was effective upon issuance, including prior periods for which financial statements have not
been issued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 11, &#147;Fair Value of Financial Assets and Liabilities,&#148; in the Notes to Condensed
Consolidated Financial Statements (unaudited)&nbsp;for additional information regarding the adoption of
SFAS No.&nbsp;157.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;158 &#151; Employers&#146; Accounting for Defined Benefit Pension and Other Postretirement Plans.</I></B>
In September&nbsp;2006, the FASB issued SFAS No.&nbsp;158 to improve existing reporting for defined benefit
postretirement plans by requiring employers to recognize in the statement of financial position the
overfunded or underfunded status of a defined benefit postretirement plan, among other changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the fourth quarter of 2006, NiSource adopted the provisions of SFAS No.&nbsp;158. Based on the
measurement of the various defined benefit pension and other postretirement plans&#146; assets and
benefit obligations at September&nbsp;30, 2006, the pretax impact of adopting SFAS No.&nbsp;158 decreased
intangible assets by $46.5&nbsp;million, decreased deferred charges and other assets by $1.1&nbsp;million,
increased regulatory assets by $538.8&nbsp;million, increased accumulated other comprehensive income by
$239.8&nbsp;million and increased accrued liabilities for postretirement and postemployment benefits by
$251.4&nbsp;million. In addition, NiSource recorded a reduction in deferred income taxes of
approximately $96&nbsp;million. With the adoption of SFAS No.&nbsp;158 NiSource determined that for certain
rate-regulated subsidiaries the future recovery of pension and other postretirement plans costs is
probable in accordance with the requirements of SFAS No.&nbsp;71. These rate-regulated subsidiaries
recorded regulatory assets and liabilities that would otherwise have been recorded to accumulated
other comprehensive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2007, NiSource adopted the SFAS No.&nbsp;158 measurement date provisions requiring
employers to measure plan assets and benefit obligations as of the fiscal year-end. The pre-tax
impact of adopting the SFAS No.&nbsp;158 measurement date provisions increased deferred charges and
other assets by $9.4&nbsp;million, decreased regulatory assets by $89.6&nbsp;million, decreased retained
earnings by $11.3&nbsp;million, increased accumulated other comprehensive income by $5.3&nbsp;million and
decreased accrued liabilities for postretirement and postemployment benefits by $74.2&nbsp;million.
NiSource also recorded a reduction in deferred income taxes of approximately $2.6&nbsp;million. In
addition, 2007 expense for pension and postretirement benefits reflects the updated measurement
date valuations. Refer to Note 14, &#147;Pension and Other Postretirement Benefits,&#148; in the Notes to
Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;159 &#151; The Fair Value Option for Financial Assets and Financial Liabilities &#151; Including an
amendment of FASB Statement No.&nbsp;115. </I></B>In February&nbsp;2007, the FASB issued SFAS No.&nbsp;159 which permits
entities to choose to measure certain financial instruments at fair value that are not currently
required to be measured at fair value. Upon adoption, a cumulative adjustment would be made to
beginning retained earnings for the initial fair value option remeasurement. Subsequent unrealized
gains and losses for fair value option items will be reported in earnings. SFAS No.&nbsp;159 is
effective for fiscal years beginning after November&nbsp;15, 2007 and should not be applied
retrospectively, except as permitted for certain conditions for early adoption. NiSource has
chosen not to elect to measure any applicable financial assets or liabilities at fair value
pursuant to this standard when SFAS No.&nbsp;159 was adopted on January&nbsp;1, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>FSP FIN 39-1 &#151; FASB Staff Position Amendment of FASB Interpretation No.&nbsp;39. </I></B>In April&nbsp;2007, the
FASB posted FSP FIN 39-1 to amend paragraph 3 of FIN 39 to replace the terms <I>conditional contracts</I>
and e<I>xchange contracts </I>with the term <I>derivative instruments </I>as defined in SFAS No.&nbsp;133. This FSP
also amends paragraph 10 of FIN 39 to permit a reporting entity to offset fair value amounts
recognized for the right to reclaim cash collateral or the obligation to return cash collateral
against fair value amounts recognized for derivative instruments executed with the same
counterparty under a master netting arrangement. This FSP became effective for NiSource as of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">January&nbsp;1, 2008. NiSource has not elected to net fair value amounts for its derivative instruments
or the fair value amounts recognized for its right to receive cash collateral or obligation to pay
cash collateral arising from those derivative instruments recognized at fair value, which are
executed with the same counterparty under a master netting arrangement. This is consistent with
NiSource&#146;s current accounting policy prior to the adoption of this amended standard. NiSource
discloses amounts recognized for the right to reclaim cash collateral within &#147;Restricted cash&#148; and
amounts recognized for the right to return cash collateral within current liabilities on the
Consolidated Balance Sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>FIN 48 &#151; Accounting for Uncertainty in Income Taxes. </I></B>In June&nbsp;2006, the FASB issued FIN 48 to
reduce the diversity in practice associated with certain aspects of the recognition and measurement
requirements related to accounting for income taxes. Specifically, this interpretation requires
that a tax position meet a &#147;more-likely-than-not recognition threshold&#148; for the benefit of an
uncertain tax position to be recognized in the financial statements and requires that benefit to be
measured at the largest amount of benefit that is greater than 50% likely of being realized upon
ultimate settlement. The determination of whether a tax position meets the more-likely-than-not
recognition threshold is based on whether it is probable of being sustained on audit by the
appropriate taxing authorities, based solely on the technical merits of the position.
Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December&nbsp;15, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2007, NiSource adopted the provisions of FIN 48. As a result of the implementation
of FIN 48, NiSource recognized a charge of $0.8&nbsp;million to the opening balance of retained
earnings. Refer to Note 13, &#147;Income Taxes,&#148; in the Notes to Condensed Consolidated Financial
Statements (unaudited)&nbsp;for additional information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Recently Issued Accounting Pronouncements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;161 &#151; Disclosures about Derivative Instruments and Hedging &#151; an amendment of SFAS No.&nbsp;133.</I></B>
In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161 to amend and expand the disclosure requirements of
SFAS No.&nbsp;133 with the intent to provide users of the financial statement with an enhanced
understanding of how and why an entity uses derivative instruments, how these derivatives are
accounted for and how the respective reporting entity&#146;s financial statements are affected. SFAS
No.&nbsp;161 is effective for fiscal years and interim periods beginning after November&nbsp;15, 2008, and
earlier application is encouraged. NiSource is currently reviewing the provisions of SFAS No.&nbsp;161
to determine the impact it may have on its disclosures within the Notes to Condensed Consolidated
Financial Statements (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;160 &#151; Noncontrolling Interests in Consolidated Financial Statements &#151; an amendment of ARB
No.&nbsp;51. </I></B>In December&nbsp;2007, the FASB issued SFAS No.&nbsp;160 to improve the relevance, comparability,
and transparency of the financial information that a reporting entity provides in its consolidated
financial statements regarding non-controlling ownership interests in a business and for the
deconsolidation of a subsidiary. SFAS No.&nbsp;160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December&nbsp;15, 2008 and earlier adoption is
prohibited. NiSource is currently reviewing the provisions of SFAS No.&nbsp;160 to determine the impact
it may have on the Condensed Consolidated Financial Statements (unaudited)&nbsp;and Notes to Condensed
Consolidated Financial Statements (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;141R &#151; Business Combinations. </I></B>In December&nbsp;2007, the FASB issued SFAS No.&nbsp;141R to improve
the relevance, representational faithfulness, and comparability of information that a reporting
entity provides in its financial reports regarding business combinations and its effects, including
recognition of assets and liabilities, the measurement of goodwill and required disclosures. SFAS
No.&nbsp;141R is effective for fiscal years, and interim periods within those fiscal years, beginning on
or after December&nbsp;15, 2008 and earlier adoption is prohibited. NiSource is currently reviewing the
provisions of SFAS No.&nbsp;141R to determine the impact on future business combinations.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>3. Earnings Per Share</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basic EPS is computed by dividing income available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period. The weighted average shares
outstanding for diluted EPS include the incremental effects of the various long-term incentive
compensation plans. The numerator in calculating both basic and diluted EPS for each period is
reported net income. The computation of diluted average common shares follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic average common shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>273,992</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>273,962</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dilutive potential common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Nonqualified stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Shares contingently issuable under employee stock plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,285</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,285</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Shares restricted under employee stock plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>209</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>188</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted Average Common Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>275,486</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>275,435</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274,700</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Restructuring Activities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the fourth quarter of 2005, NiSource announced a plan to reduce its executive ranks by
approximately 15% to 20% of the top-level executive group. In part, this reduction came through
anticipated attrition and consolidation of certain positions. Fourteen employees were terminated
as a result of the executive initiative.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In previous years, NiSource implemented restructuring initiatives to streamline its operations and
realize efficiencies as a result of the acquisition of Columbia. As of September&nbsp;30, 2008, 1,567
employees were terminated. All of the remaining $0.4&nbsp;million restructuring liability from the
Columbia merger and related initiatives is related to facility exit costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Restructuring reserve by restructuring initiative:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Balance at</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Balance at</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">December 31, 2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Benefits Paid</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Adjustments</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">September 30, 2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Executive initiative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia merger and related initiatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>5. Discontinued Operations and Assets Held for Sale</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The assets and liabilities of discontinued operations and held for sale on the Condensed
Consolidated Balance Sheet (unaudited)&nbsp;at September&nbsp;30, 2008 were:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(in millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Property, plant</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Materials and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Assets of discontinued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">and equipment,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accounts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">supplies, at</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Regulatory</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Intangible</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>operations and held for sale:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">net</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">receivable, net</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average cost</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Utilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>291.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granite State Gas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bay State Gas Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Lake Erie Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Corporate Services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">NDC Douglas Properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Columbia Transmission</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Columbia of Ohio</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Retail Service Corp</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Indiana</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>244.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>18.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>18.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>34.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>47.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>365.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</tr>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Liabilities of discontinued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Accounts </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Deferred income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Deferred </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Regulatory</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other </TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>operations and held for sale:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Debt</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">payable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">taxes</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">credits</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Utilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>107.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granite State Gas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">NDC Douglas Properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Retail Service Corp</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>9.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>63.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>28.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>126.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The assets and liabilities of discontinued operations and held for sale on the Consolidated Balance
Sheet at December&nbsp;31, 2007 including reclassifications of balances for entities discontinued during
2008, were:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(in millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Property, plant</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Materials and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Assets of discontinued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">and equipment,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accounts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">supplies, at</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Regulatory</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Intangible</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>operations and held for sale:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">net</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">receivable, net</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average cost</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Utilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">168.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">27.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">72.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>307.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Whiting Clean Energy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>303.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granite State Gas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Lake Erie Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Corporate Services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Columbia Transmission</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">NDC Douglas Properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Columbia Gulf Transmission</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Retail Service Corp</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Indiana</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>496.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>40.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>10.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>16.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>80.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>35.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>679.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
</tr>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Liabilities of discontinued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accounts</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Regulatory</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>operations and held for sale:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Debt</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">payable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">income taxes</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">credits</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Northern Utilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">56.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>93.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Whiting Clean Energy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>56.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">NDC Douglas Properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granite State Gas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">NiSource Retail Service Corp</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>11.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>97.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>13.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>161.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Assets classified as discontinued operations and held for sale are no longer depreciated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource reached an agreement on April&nbsp;18, 2008 with BPAE for the sale of Whiting Clean Energy. On
June&nbsp;30, 2008, NiSource sold Whiting Clean Energy to BPAE for $217.2&nbsp;million which included $16.3
million in working capital. During the first quarter of 2008 an estimated loss of $32.5&nbsp;million
was recorded to Gain (Loss) on Disposition of Discontinued Operations in the Condensed Statements
of Consolidated Income (Loss) (unaudited). During the second quarter of 2008, a $0.6&nbsp;million
adjustment was made to the estimated loss on the disposition of the asset.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;15, 2008, NiSource reached a definitive agreement under which Unitil Corporation will
acquire NiSource subsidiaries Northern Utilities and Granite State Gas. Under the terms of the
transaction, Unitil Corporation will acquire Northern Utilities, a local gas distribution company
serving 52 thousand customers in 44 communities in Maine and New Hampshire and Granite State Gas,
an 86-mile FERC regulated gas transmission pipeline primarily located in Maine and New Hampshire.
In the first quarter of 2008, net assets for Northern Utilities and Granite State Gas were
accounted for as assets and liabilities of discontinued operations. For the third quarter and nine
months ended September&nbsp;30, 2008, estimated losses of $4.8&nbsp;million and $71.7&nbsp;million were included
in Gain (Loss) on Disposition of Discontinued Operations in the Condensed Statements of
Consolidated Income (Loss) (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;27, 2008, Columbia Gulf sold a portion of Columbia Gulf&#146;s offshore assets to Tennessee Gas
Pipeline Company for $7.5&nbsp;million, which resulted in a gain of $2.9&nbsp;million that was recorded
during the second quarter of 2008. Payment was received on
July&nbsp;1, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NDC Douglas Properties, a subsidiary of NiSource Development Company, is in the process of exiting
some of its low income housing investments. One of these investments was disposed of during 2007
and two other investments
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
are expected to be sold or disposed of during 2009. NiSource has accounted for the assets and
liabilities of the investments to be sold as assets held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource Corporate Services is continuing to work with several potential buyers to sell its Marble
Cliff facility. In late February&nbsp;2008 an offer was accepted but the parties have failed to reach a
definitive agreement. As a result of the initial offer, an impairment loss of $1.6&nbsp;million was
recognized during the first quarter of 2008. During the first quarter of 2007 an impairment loss
of $3.2&nbsp;million was recognized due to the current book value exceeding the estimated fair value of
the facility. NiSource has accounted for this facility as assets held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Lake Erie Land, which is wholly-owned by NiSource, is in the process of selling real estate over a
10-year period as a part of an agreement reached in June&nbsp;2006 with a private real estate
development group. Part of the sale transaction included the assets of the Sand Creek Golf Club,
and NiSource began accounting for the operations of the Sand Creek Golf Club as discontinued
operations at that time. NiSource estimates the property to be sold to the private developer
during the next twelve months and accounts for these assets as assets held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Transmission is in the process of selling certain facilities that are non-core to the
operation of the pipeline system. During the third quarter of 2008, certain assets were
reclassified to assets held and used, which resulted in a $1.6&nbsp;million decrease to the balance of
assets held for sale. In the first quarter of 2008, certain assets in Ohio were sold, which
resulted in a $3.8&nbsp;million decrease to the balance of assets held for sale. Northern Indiana and
Columbia of Ohio are also in the process of selling non-core assets. NiSource has accounted for
these assets as assets held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the second quarter of 2008 Bay State signed a letter of intent to sell certain assets.
Beginning in the second quarter of 2008, these assets were accounted for as assets held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource Retail Services, a wholly-owned subsidiary of NiSource, is engaged in a process to sell
certain assets. These assets and liabilities of NiSource Retail Services were accounted for as
assets of discontinued operations and the results of operations and cash flows of NiSource Retail
Services were classified as discontinued operations during the third quarter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Results from discontinued operations from Whiting Clean Energy, Granite State Gas, Northern
Utilities, NDC Douglas Properties low income housing investments, the golf course assets of Lake
Erie Land, NiSource Retail Services, and reserve changes for NiSource&#146;s former exploration and
production subsidiary, CER, are provided in the following table:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues from Discontinued Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>13.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>168.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">190.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from discontinued operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(11.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(338.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(117.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income
(Loss) from Discontinued Operations - net of taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(7.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(221.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Gain (Loss) on Disposition of Discontinued Operations -
net of taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(5.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(104.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Losses from Discontinued Operations for the first nine months of 2008 are primarily attributable to
an increase to the reserve for the Tawney litigation associated with CER. Refer to Note 17-B,
&#147;Other Legal Proceedings,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)
for further discussion on the Tawney litigation. The gain (loss)&nbsp;on disposition of discontinued
operations for the first nine months of 2008 primarily include the after tax loss on disposition
related to the sale of Whiting Clean Energy and pending sales of Northern Utilities and Granite
State Gas of $32.3&nbsp;million, $56.7&nbsp;million and $14.9&nbsp;million, respectively.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>6. Purchase of Sugar Creek Plant</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;30, 2008, Northern Indiana purchased Sugar Creek for $329.7&nbsp;million. This purchase was in
response to Northern Indiana&#146;s need to add approximately 1,000 mw of new capacity. Refer to Note
8, &#147;Regulatory Matters,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)
for further discussion. The Sugar Creek facility is a CCGT located in West Terre Haute, Indiana.
Sugar Creek has a plant capacity rating of 535 mw. Sugar Creek has transmission access to and is
able to participate in both the MISO and PJM Interconnection wholesale electricity markets. The
plant is currently committed to the PJM Interconnection market until May&nbsp;31, 2010. At acquisition,
Northern Indiana recorded at fair value $328.1&nbsp;million related to utility plant. No goodwill was
recorded in conjunction with the purchase. The preliminary allocation of the purchase price was
assigned to the assets and liabilities of Sugar Creek, based on their estimated fair value in
accordance with GAAP. This allocation is subject to completion of certain analyses and allocation
of property, plant and equipment unit of accounts. Northern Indiana has up to one year from the
date of purchase to complete its final purchase price allocation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. Asset Retirement Obligations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource accounts for its asset retirement obligations in accordance with SFAS No.&nbsp;143 and FIN 47.
Certain costs of removal that have been, and continue to be, included in depreciation rates and
collected in the service rates of the rate-regulated subsidiaries are classified as regulatory
liabilities and other removal costs on the Condensed Consolidated Balance Sheets (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource activity for asset retirement obligations:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion recorded as a regulatory asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Settlements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(4.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Increase in Asset Retirement Obligation Liability</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana performed retirement activities associated with a landfill and asbestos removal
resulting in settlements of $1.7&nbsp;million and $4.9&nbsp;million for the quarter and nine months ended
September&nbsp;30, 2008 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. Regulatory Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Gas Distribution Operations Regulatory Matters</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Significant Rate Developments. </B>Columbia of Ohio filed a base rate case with the PUCO on March&nbsp;3,
2008, requesting an increase in base rates in excess of $80&nbsp;million annually. Columbia of Ohio is
seeking recovery of increased infrastructure rehabilitation costs, as well as the stabilization of
revenues and cost recovery through rate design. A settlement agreement was filed on October&nbsp;24,
2008. The agreement recommends an annual revenue increase of $47.1&nbsp;million, and also provides for
recovery of costs associated with Columbia of Ohio&#146;s infrastructure rehabilitation program. Rate
design issues are to be resolved by the PUCO. The case is currently pending, and is expected to be
resolved before the end of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;28, 2008, Columbia of Pennsylvania filed a base rate case with the Pennsylvania
Public Utility Commission, seeking an increase of approximately $60&nbsp;million annually,
effective October&nbsp;28, 2008. Through this filing, Columbia of Pennsylvania sought to recover
costs associated with its significant infrastructure rehabilitation program, as well as
stabilize revenues and cost recovery through modifications to rate design. On July&nbsp;2, 2008,
Columbia of Pennsylvania and all interested parties filed a unanimous settlement with the
Pennsylvania Public
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Utilities Commission. On October&nbsp;23, 2008, the Pennsylvania Public Utilities Commission issued an
Order approving the settlement as filed, increasing annual revenues
by $41.5 million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;17, 2007, Bay State petitioned the DPU to allow the company to collect an additional
$7.5&nbsp;million in annual revenue related to usage reductions occurring since its last rate case. Bay
State also requested approval of a steel infrastructure tracker that would allow for recovery of
ongoing infrastructure replacement program investments. The DPU held hearings on this matter in
the first quarter of 2008 and issued an order denying Bay State&#146;s petition on April&nbsp;30, 2008.
NiSource has decided not to appeal this case, and continues to weigh its options. On July&nbsp;16,
2008, the DPU issued an order in its generic decoupling proceeding for gas utilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;1, 2008, Columbia of Maryland filed a base rate case with the Maryland Public Service
Commission, seeking an increase of approximately $3.7&nbsp;million annually. New rates are expected to
take effect during the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cost Recovery and Trackers. </B>A significant portion of the distribution companies&#146; revenue is
related to the recovery of gas costs, the review and recovery of which occurs via standard
regulatory proceedings. All states require periodic review of actual gas procurement activity to
determine prudence and to permit the recovery of prudently incurred costs related to the supply of
gas for customers. NiSource distribution companies have historically been found prudent in the
procurement of gas supplies to serve customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain operating costs of the NiSource distribution companies are significant, recurring in
nature, and generally outside the control of the distribution companies. Some states allow the
recovery of such costs via cost tracking mechanisms. Such tracking mechanisms allow for
abbreviated regulatory proceedings in order for the distribution companies to implement charges and
recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as
compared with more traditional cost recovery mechanisms. Examples of such mechanisms include gas
cost recovery adjustment mechanisms, tax riders, and bad debt recovery mechanisms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Comparability of Gas Distribution Operations line item operating results is impacted by these
regulatory trackers that allow for the recovery in rates of certain costs such as bad debt
expenses. Increases in the expenses that are the subject of trackers result in a corresponding
increase in net revenues and therefore have essentially no impact on total operating income
results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2008, the PUCO issued an order approving, in all material respects, a joint Stipulation
submitted on behalf of Columbia of Ohio. This Stipulation is a result of a process that began on
April&nbsp;13, 2005 with a PUCO ordered investigation into the type of gas risers installed in the
state, the conditions of installation and overall performance. The Stipulation provides for:
establishment of accounting for and recovery of costs resulting from the Staff&#146;s investigation;
Columbia&#146;s performance of a survey to identify those customer-owned risers on its system prone to
failure; and related customer education and other program related expenses. In addition this
Stipulation provides for: Columbia&#146;s assumption of financial responsibility for the replacement of
all risers identified as prone to failure; repair or replacement of hazardous customer owned
service lines; and capitalization of this investment with recovery to be addressed in future rate
proceedings. As of September&nbsp;30, 2008, Columbia of Ohio has approximately $38.5&nbsp;million in costs
associated with the gas riser and customer service line programs recorded as a regulatory asset
and/or capitalized plant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;28, 2007, Columbia of Ohio entered into a Stipulation with the Ohio Consumers&#146; Counsel
and PUCO Staff and other stakeholders resolving litigation concerning a pending Gas Cost Recovery
audit of Columbia of Ohio. The Stipulation calls for an accelerated pass back to customers of
$36.6&nbsp;million that will occur from January&nbsp;31, 2008 through January&nbsp;31, 2009, generated through
off-system sales and capacity release programs, the development of new energy efficiency programs
for introduction in 2009, and the development of a wholesale auction process for customer supply to
take effect in 2010. Approximately $21.2&nbsp;million was passed back through September&nbsp;2008. The
Stipulation also resolves issues related to pending and future Gas Cost Recovery Management
Performance audits through 2008. The PUCO approved this agreement on January&nbsp;23, 2008.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Gas Transmission and Storage Operations Regulatory Matters</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Significant FERC Developments. </B>Columbia Gulf and Columbia Transmission are cooperating with the
FERC on an informal, non-public investigation of certain operating practices regarding tariff
services offered by those companies. Although the companies are continuing to cooperate with the
FERC in an effort to reach a consensual settlement, it is likely that any settlement will require
the payment of fines or refunds. Management does not expect these fines and refunds to be material
to the results of operations for 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Eastern Market Expansion Project. </B>On May&nbsp;3, 2007, Columbia Transmission filed a certificate
application before the FERC for approval to expand its facilities to provide additional storage and
transportation services and to replace certain existing facilities. This Eastern Market Expansion
is projected to add 97,000 Dth per day of storage and transportation deliverability and is fully
subscribed on a 15-year contracted firm basis. On January&nbsp;14, 2008, the FERC issued a favorable
order which granted a certificate to construct the project. Construction of the facilities is
underway and the project is expected to be in service by April&nbsp;2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Appalachian Expansion Project. </B>On February&nbsp;29, 2008, Columbia Transmission filed an application
before the FERC for approval to build a new 9,470 horsepower compressor station in West Virginia.
The Appalachian Expansion Project will add 100,000 Dth per day of transportation capacity and is
fully subscribed on a 15-year contracted firm basis. On August&nbsp;22, 2008, the FERC issued a
favorable order which granted a certificate to construct the project. Construction is in progress
and the project is expected to be in service in the fourth quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Ohio Storage Project. </B>On June&nbsp;24, 2008, Columbia Transmission filed an application before the FERC
for approval to expand two of its Ohio storage fields for additional capacity of nearly 7 MMDths
and 103,400 Dth per day of daily deliverability. If required approvals are granted as requested,
construction would begin in 2009 and the expanded facilities would be placed in service by the end
of 2009. The expansion capacity is 58% contracted on a long-term, firm basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Electric Operations Regulatory Matters </U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Significant Rate Developments. </B>Northern Indiana filed a petition for new electric base rates and
charges on June&nbsp;27, 2008 and filed its case-in-chief on August&nbsp;29, 2008. The filing requests a
two-step increase. Step One is a request for an increase in base rates calculated to produce
additional gross margin of approximately $24&nbsp;million. Step Two requests an additional increase to
incorporate the return on and recovery of the Sugar Creek facility, which Northern Indiana
purchased on May&nbsp;30, 2008. The Step Two increase, if granted, would become effective as soon as
the Sugar Creek facility is no longer committed to the PJM Interconnection market and is dispatched
into MISO, but no later than June&nbsp;1, 2010. The hearing on Northern Indiana&#146;s case-in-chief is
scheduled to begin on January&nbsp;6, 2009. Several stakeholder groups have intervened in the case,
representing customer groups and various counties and towns within Northern Indiana&#146;s electric
service territory. Testimony from the OUCC and all intervenors will be due by April&nbsp;17, 2009.
Assuming the case goes through the full procedural schedule without settlement, the final hearing
is scheduled to begin July&nbsp;27, 2009 and new rates are anticipated to take effect in early 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2002, Northern Indiana indefinitely shut down its Mitchell Station. In the base rate
case filed on August&nbsp;29, 2008, Northern Indiana stated in pre-filed testimony that it intends to
retire the Mitchell station, demolish it, and remediate the site to industrial condition, subject
to the ability to recover these costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During 2002, Northern Indiana settled certain regulatory matters related to an electric rate
review. On September&nbsp;23, 2002, the IURC issued an order adopting most aspects of the settlement.
The order approving the settlement provides that electric customers of Northern Indiana will
receive bill credits of approximately $55.1&nbsp;million each year. The credits will continue at
approximately the same annual level and per the same methodology, until the IURC enters a base rate
order that approves revised Northern Indiana electric rates. The order included a rate moratorium
that expired on July&nbsp;31, 2006. The order also provides that 60% of any future earnings beyond a
specified earnings level will be retained by Northern Indiana. The revenue credit is calculated
based on electric usage; therefore, in times of high usage the credit may be more than $55.1
million. Credits amounting to $40.5&nbsp;million and $44.3&nbsp;million were recognized for electric
customers for the first nine months of 2008 and 2007, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>MISO. </B>As part of Northern Indiana&#146;s participation in the MISO transmission service and wholesale
energy market, certain administrative fees and non-fuel costs have been incurred. IURC orders have
been issued authorizing the deferral for consideration in a future rate case proceeding of the
administrative fees and certain non-fuel related costs incurred after Northern Indiana&#146;s rate
moratorium, which expired on July&nbsp;31, 2006. During the first nine months of 2008 non-fuel costs of
$1.9&nbsp;million were deferred in accordance with the aforementioned orders. In addition,
administrative, FERC and other fees of $5.0&nbsp;million were deferred. In the first nine months of
2008 and 2007, MISO costs of $6.9&nbsp;million and $18.4&nbsp;million, respectively, were deferred. In the
base rate case filed in August&nbsp;2008, Northern Indiana proposed a tracker for these MISO charges
which are currently being deferred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;25, 2006, the FERC issued an order on the MISO&#146;s Transmission and Energy Markets Tariff,
stating that MISO had violated the tariff on several issues including not assessing revenue
sufficiency guarantee charges on virtual bids and offers and for charging revenue sufficiency
guarantee charges on imports. The FERC ordered MISO to perform a resettlement of these charges
back to the start of the Day 2 Market. The resettlement began on June&nbsp;9, 2007 and ended in January
2008. Certain charge types included in the resettlement were originally considered to be non-fuel
and were recorded as regulatory assets, in accordance with previous IURC orders allowing deferral
of certain non-fuel MISO costs. During the fourth quarter 2007, based on precedent set by an IURC
ruling for another Indiana utility, Northern Indiana reclassified these charges, totaling $16.7
million, as fuel and included them in the fuel cost recovery mechanism in its latest FAC filing.
Prior to the hearing for FAC-78 on April&nbsp;17, 2008, several intervenors objected to a portion of the
$16.7&nbsp;million and Northern Indiana agreed to remove $7.6&nbsp;million from the FAC filing. This amount
represents the portion of the resettlement costs related to periods prior to December&nbsp;9, 2005. The
$7.6&nbsp;million was recorded as a reduction to net revenues in the first quarter of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana is an active stakeholder in the process used in designing, testing and
implementing the ASM and in developing the surrounding business practices. On January&nbsp;18, 2008,
Northern Indiana as part of a Joint Petition among several other Indiana utilities &#147;Joint
Petitioners&#148; filed a request to the IURC to participate in ASM and seek approval of timely cost
recovery for the associated costs of participating. On August&nbsp;13, 2008, the IURC issued a Phase I
order, authorizing the Joint Petitioners authority to transfer additional balancing authority
functions and to implement the operational changes necessary to participate in the ASM and to seek
recovery of modified MISO charge-types via the FAC and to defer certain other MISO charge-types,
pending a final determination on the issue of cost recovery. This order also created a subdocket
for the purpose of further consideration of whether a cost-benefit analysis of participation in
MISO or the MISO ASM should be required. Phase II of this proceeding deals with how the Joint
Petitioners will approach the ASM, specifically related to operating reserves, and the specifics
regarding cost recovery. The evidentiary hearing for Phase II is scheduled for December&nbsp;22, 2008.
At this time, Northern Indiana is unable to determine what impact the ASM will have on its
operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cost Recovery and Trackers. </B>A significant portion of the Northern Indiana&#146;s revenue is related to
the recovery of fuel costs to generate power and the fuel costs related to purchased power. These
costs are recovered through a FAC, a standard, quarterly, &#147;summary&#148; regulatory proceeding in
Indiana.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;30, 2008, Northern Indiana purchased the Sugar Creek facility for $329.7&nbsp;million. The Sugar
Creek facility is a CCGT located in West Terre Haute, Indiana. Sugar Creek has a plant capacity
rating of 535 mw. Sugar Creek has transmission access to and is able to participate in both the
MISO and PJM Interconnection wholesale electricity markets. The plant is currently committed to
the PJM Interconnection market until May&nbsp;31, 2010. The purchase was in response to Northern
Indiana&#146;s need to add approximately 1,000 mw of new capacity, as filed in its bi-annual IRP with
the IURC on November&nbsp;1, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The IURC had issued an order on May&nbsp;28, 2008 approving the purchase of Sugar Creek, but denied
Northern Indiana&#146;s request for deferral of depreciation expense and carrying costs related to the
plant, beginning with the acquisition date, on the basis that the facility would not be used and
useful property under traditional regulation until the facility was operating inside of MISO. The
order also denied Northern Indiana&#146;s request for alternative regulatory treatment of the plant,
based on incomplete presentation of evidence, but provided for the establishment of a subdocket to
allow for the proper presentation and consideration of alternative regulatory treatment. On June
6, 2008, Northern Indiana filed its (a)&nbsp;Verified Petition for Rehearing; (b)&nbsp;Request for
Establishment of a Subdocket for Presentation and Consideration of an Alternative Regulatory Plan;
and (c)&nbsp;Motion for Consolidation (a single document) in Cause No.&nbsp;43396. The IURC established a
subdocket for consideration of Northern Indiana&#146;s Alternative Regulatory Plan. Northern Indiana&#146;s
case-in-chief was filed with the IURC on September&nbsp;26, 2008 and
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">an evidentiary hearing in the subdocket proceeding is scheduled for February 3 and 4, 2009. The
subdocket proposes deferral of depreciation and carrying costs associated with Sugar Creek and
creation of a regulatory asset, which would be reduced by the Sugar Creek capacity and energy
revenues, net of operation and maintenance expenses to operate the plant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The IRP included a commitment to using renewable energy, and a subsequent filing was made with the
IURC, requesting approval for Northern Indiana to enter into power purchase contracts with
subsidiaries of Iberdrola Renewables for wind-generated power in Iowa and South Dakota, and
requesting full recovery of all associated costs. On July&nbsp;24, 2008, the IURC issued an order
approving Northern Indiana&#146;s proposed purchase power agreement with subsidiaries of Iberdrola
Renewables. The agreement provides Northern Indiana the opportunity to purchase 100 mw of wind
power commencing in early 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;30, 2008, the IURC approved a settlement agreement which was reached in October&nbsp;2007
with the OUCC, LaPorte County and a group of Northern Indiana industrial customers to resolve
questions relating to purchased power costs in the period from January&nbsp;1, 2006 through September
30, 2007. The terms of the settlement called for Northern Indiana to make a one-time payment of
$33.5&nbsp;million to FAC customers. A reserve for the entire amount was recorded in the third quarter
of 2007 and the refund was made to customers via the FAC in the periods of February through July
2008. As part of this agreement, Northern Indiana implemented a new &#147;benchmarking standard,&#148; that
became effective in October&nbsp;2007, which defines the price above which purchased power costs must be
absorbed by Northern Indiana and are not permitted to be passed on to customers. The benchmark is
based upon the costs of power generated by a hypothetical natural gas fired CCGT using gas
purchased and delivered to Northern Indiana. During the first nine months of 2008, the amount of
purchased power costs exceeding the benchmark amounted to $10.8&nbsp;million, which was recognized as a
net reduction of revenues. The agreement also contemplated Northern Indiana adding generating
capacity to its existing portfolio and that the benchmark would be adjusted as new capacity is
added. It was anticipated that the addition of the Sugar Creek capacity would trigger a change in
the benchmark beginning in June&nbsp;2008. However, based on the IURC order in the CPCN as described
above, the Sugar Creek capacity will not be considered until the plant is operating inside of MISO
and therefore the benchmark is unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;26, 2002, Northern Indiana received approval from the IURC for an ECT. Under the ECT,
Northern Indiana is permitted to recover (1)&nbsp;AFUDC and a return on the capital investment expended
by Northern Indiana to implement IDEM&#146;s NOx SIP through an ECRM and (2)&nbsp;related operation and
maintenance and depreciation expenses once the environmental facilities become operational through
an EERM. Under the IURC&#146;s November&nbsp;26, 2002 order, Northern Indiana is permitted to submit filings
on a semi-annual basis for the ECRM and on an annual basis for the EERM. In December&nbsp;2006,
Northern Indiana filed a petition with the IURC for appropriate cost treatment and recovery of
emission control construction needed to address the Phase I CAIR requirements of the Indiana Air
Pollution Control Board&#146;s CAIR rules that became effective on February&nbsp;25, 2007. On July&nbsp;3, 2007,
Northern Indiana received an IURC order issuing a CPCN for the CAIR and CAMR Phase I Compliance
Plan Projects, estimated to cost approximately $23&nbsp;million. Northern Indiana will include the CAIR
and CAMR Phase I Compliance Plan costs to be recovered in the semi-annual and annual ECRM and EERM
filing six months after construction costs begin. On October&nbsp;23, 2008, Northern Indiana filed for
approval of a revised cost estimate to meet the NOx and SO2 and mercury emissions environmental
standards. Northern Indiana anticipates a total capital investment of approximately $368&nbsp;million.
On October&nbsp;1, 2008, the IURC approved ECR-12 for capital expenditures (net of accumulated
depreciation) of $267.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the electric base rate case filed in August&nbsp;2008, Northern Indiana proposed a new tracker,
referred to as the Reliability Adjustment mechanism. The case proposes that this tracker be used
for recovery of MISO charges currently being deferred. This tracker is also intended to be used to
recover purchased power energy and capacity costs and to share with customers the proceeds of
off-system sales and transmission revenues, as well as to track costs and revenues associated with
emissions allowances.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana is committed to offering DSM and energy efficiency programs to its electric
customers and plans to file a petition and case-in-chief requesting approval to implement a variety
of programs. The filing is expected to be made with the IURC in the fourth quarter of 2008, with
anticipated approval and implementation in 2009. Proposed programs will include rebates for
energy efficiency appliances and an air-conditioning cycling program, designed to reduce peak load.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;27, 2006, Indiana Gasification, LLC, Vectren Energy Delivery of Indiana, Citizens Gas &#038;
Coke Utility and Northern Indiana filed a joint petition at the IURC seeking approval for Indiana
Gasification, LLC to construct a coal gasification facility and the respective utilities to enter
into long-term contracts to purchase the energy output of the plant, both gas and electricity.
This filing was based upon a Letter of Intent that was entered into by the parties, but subject to
finalization of a contract and regulatory approval. On December&nbsp;12, 2007, Citizens Gas &#038; Coke
Utility filed a Motion with the IURC to withdraw from the petition. The parties have had frequent
negotiations during the two year period, but have not reached a definitive agreement. On October
15, 2008, Joint Petitioners filed a motion requesting that the technical conference scheduled for
November&nbsp;25, 2008 be used to establish a new procedural schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Risk Management and Energy Marketing Activities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource uses commodity-based derivative financial instruments primarily to manage commodity price
risk and interest rate risk exposure in its business as well as for commercial and industrial
sales. NiSource is not involved in speculative energy trading activity. NiSource accounts for its
derivatives in accordance with SFAS No.&nbsp;133. Under SFAS No.&nbsp;133, if certain conditions are met, a
derivative may be specifically designated as (a)&nbsp;a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, or (b)&nbsp;a hedge of the
exposure to variable cash flows of a forecasted transaction. Additionally, certain NiSource
subsidiaries enter into forward physical contracts with various third parties to procure natural
gas or power for its operational needs. These forward physical contracts are derivatives which
qualify for the normal purchase normal sales exception under SFAS No.&nbsp;133 and do not require
mark-to-market accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s derivatives on the Condensed Consolidated Balance Sheet (unaudited)&nbsp;at September&nbsp;30,
2008 were:
</DIV>
<DIV align="center">
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    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Hedge</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Non-Hedge</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">102.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">106.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">187.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">191.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">158.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">43.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">201.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">231.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">50.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">282.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s derivatives on the Consolidated Balance Sheets at December&nbsp;31, 2007 were:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Hedge</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Non-Hedge</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">88.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">102.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">113.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">127.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">26.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">79.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">55.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">81.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The hedging activity for the third quarter and nine months ended September&nbsp;30, 2008 and 2007
affecting accumulated other comprehensive income (loss), with respect to cash flow hedges included
the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions, net of taxes)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains on derivatives qualifying as cash flow
hedges at the beginning of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>34.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">34.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">31.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized hedging losses arising during the period on
derivatives qualifying as cash flow hedges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(87.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(34.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reclassification adjustment for net gain included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(9.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(35.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net unrealized gains (losses)&nbsp;on derivatives qualifying as cash
flow hedges at the end of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(62.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(62.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the third quarter of 2008 and 2007, no amounts were recognized in earnings due to the
ineffectiveness of derivative instruments being accounted for as hedges. All derivatives
classified as a hedge are assessed for hedge effectiveness, with any components determined to be
ineffective charged to earnings or classified as a regulatory asset or liability per SFAS No.&nbsp;71 as
appropriate. During the third quarter of 2008 and 2007, NiSource did not reclassify any amounts
related to its cash flow hedges from accumulated other comprehensive income to earnings due to the
probability that the underlying forecasted transactions would not occur. It is anticipated that
during the next twelve months the expiration and settlement of cash flow hedge contracts will
result in income statement recognition of amounts currently classified in accumulated other
comprehensive income (loss)&nbsp;of approximately $39.4&nbsp;million of loss, net of taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Commodity Price Risk Programs. </B>Northern Indiana, Northern Indiana Fuel and Light, Kokomo Gas,
Columbia of Pennsylvania, Columbia of Kentucky, Columbia of Maryland and Columbia of Virginia use
NYMEX derivative contracts to minimize risk associated with gas price volatility. These derivative
hedging programs must be marked to fair value, but because these derivatives are used within the
framework of the companies&#146; gas cost recovery mechanism, regulatory assets or liabilities are
recorded to offset the change in the fair value of these derivatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana offers a PPS as an alternative to the standard gas cost recovery mechanism. This
service provides Northern Indiana customers with the opportunity to either lock in their gas cost
or place a cap on the gas costs that could be charged in future months. In order to hedge the
anticipated physical purchases associated with these obligations, Northern Indiana has purchased
NYMEX futures, NYMEX options and basis contracts that correspond to a fixed or capped price in the
associated future delivery months and currently enters into forward physical purchase contracts to
secure forward gas prices. Columbia of Virginia started a program in April&nbsp;2005 similar to the
Northern Indiana PPS, which allows non-jurisdictional customers the opportunity to lock in their
future gas costs.
The NYMEX futures and option contracts associated with these programs are generally designated and
accounted </DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
for as cash flow hedges and Northern Indiana elects the normal purchase normal sale
exemption under SFAS No.&nbsp;133 for its forward physical contracts associated with this program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana also offers a DependaBill program to its customers as an alternative to the
standard tariff rate that is charged to residential customers. The program allows Northern Indiana
customers to fix their total monthly bill in future months at a flat rate regardless of gas usage
or commodity cost. In order to hedge the anticipated physical purchases associated with these
obligations, Northern Indiana has purchased NYMEX futures, NYMEX options and basis contracts that
match the anticipated future delivery needs of the program to secure forward gas prices and
currently enters into forward physical purchase contracts to secure forward gas prices. The NYMEX
futures contracts associated with this program are generally designated and accounted for as cash
flow hedges and Northern Indiana elects the normal purchase normal sale exemption under SFAS No.
133 for its forward physical contracts associated with this program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As part of the MISO Day 2 initiative, Northern Indiana was allocated and has purchased FTRs. These
FTRs help Northern Indiana offset congestion costs due to the MISO Day 2 activity. The FTRs are
marked to fair value and do not qualify for hedge accounting treatment, but since congestion costs
are recoverable through the fuel cost recovery mechanism, the related gains and losses associated
with marking these derivatives to market are recorded as a regulatory asset or liability, in
accordance with SFAS No.&nbsp;71. In the second quarter of 2008, MISO changed its allocation procedures
from an allocation of FTRs to an allocation of ARRs, whereby Northern Indiana was allocated ARRs
based on its historical use of the MISO administered transmission system. ARRs entitle the holder
to a stream of revenues or charges based on the price of the associated FTR in the FTR auction.
Northern Indiana converted the ARRs that were received in the second quarter of 2008 into FTRs.
Additionally, Northern Indiana also uses derivative contracts to minimize risk associated with
power price volatility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For regulatory incentive purposes, Northern Indiana enters into gas purchase contracts at first of
the month prices that give counterparties the daily option to either sell an additional package of
gas at first of the month prices or recall the original volume to be delivered. Northern Indiana
charges a fee for this option. The changes in the fair value of these options are primarily due to
the changing expectations of the future intra-month volatility of gas prices. These written
options are derivative instruments, must be marked to fair value and do not meet the requirement
for hedge accounting treatment. However, in accordance with SFAS No.&nbsp;71, Northern Indiana records
the related gains and losses associated with these transactions as a regulatory asset or liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For regulatory incentive purposes, Columbia of Kentucky, Columbia of Ohio, Columbia of
Pennsylvania, and Columbia of Maryland (collectively, the &#147;Columbia LDCs&#148;) enter into contracts
that allow counterparties the option to sell gas to Columbia LDCs at first of the month prices for
a particular month of delivery. Columbia LDCs charge the counterparties a fee for this option.
The changes in the fair value of the options are primarily due to the changing expectations of the
future intra-month volatility of gas prices. These Columbia LDCs defer a portion of the change in
the fair value of the options as either a regulatory asset or liability in accordance with SFAS No.
71 based on the regulatory customer sharing mechanisms in place, with the remaining changes in fair
value recognized currently in earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008, Columbia Energy Services has fixed price gas delivery commitments to a
municipality in the United States which expires in December&nbsp;2008. Columbia Energy Services entered
into a forward purchase agreement with a gas supplier, wherein the supplier will fulfill the
delivery obligation requirements at a slight premium to index. In order to hedge this anticipated
future purchase of gas from the gas supplier, Columbia Energy Services entered into commodity swaps
priced at the locations designated for physical delivery. These commodity swap derivatives are
accounted for as cash flow hedges.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Commodity price risk programs included in price risk assets and liabilities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">September 30, 2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31, 2007</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gas price volatility program derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">49.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">PPS program derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">DependaBill program derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electric energy program derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Regulatory incentive program derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward purchase agreements derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commodity price risk programs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">48.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">55.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">29.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Interest Rate Risk Activities. </B>NiSource has entered into interest rate swap agreements to modify
the interest rate characteristics of its outstanding long-term debt from fixed to variable. On May
12, 2004, NiSource Finance entered into fixed-to-variable interest rate swap agreements in a
notional amount of $660&nbsp;million with six counterparties having a 6 1/2-year term. NiSource Finance
will receive payments based upon a fixed 7.875% interest rate and pay a floating interest amount
based on U.S. 6-month BBA LIBOR plus an average of 3.08% per annum. There was no exchange of
premium at the initial date of the swaps. In addition, each party has the right to cancel the
swaps on May&nbsp;15, 2009. On September&nbsp;15, 2008, NiSource Finance terminated a fixed-to-variable
interest rate swap agreement with Lehman Brothers having a notional amount of $110&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;22, 2003, NiSource Finance entered into fixed-to-variable interest rate swap agreements in
a notional amount of $500&nbsp;million with four counterparties with an 11-year term. NiSource Finance
will receive payments based upon a fixed 5.40% interest rate and pay a floating interest amount
based on U.S. 6-month BBA LIBOR plus an average of 0.78% per annum. There was no exchange of
premium at the initial date of the swaps. In addition, each party has the right to cancel the
swaps on July&nbsp;15, 2013.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As stated above, on September&nbsp;15, 2008, NiSource Finance terminated a fixed-to-variable interest
rate swap agreement with Lehman Brothers having a notional amount of $110&nbsp;million. NiSource
Finance elected to terminate the swap when Lehman Holdings Inc., guarantor under the applicable
International Swaps and Derivatives Association agreement, filed for Chapter&nbsp;11 bankruptcy
protection on September&nbsp;14, 2008, which constituted an event of default under the swap agreement
between NiSource Finance and Lehman Brothers Special Financing Inc. The mark-to-market close-out
value of this swap at the September&nbsp;15, 2008 termination date was determined to be $4.8&nbsp;million.
NiSource Finance recognized a $4.8&nbsp;million reserve, which increases interest expense, for the
Lehman swap and an additional $0.7&nbsp;million reserve to recognize potential additional swap
counterparty credit exposures. The termination of this swap did not impact NiSource&#146;s ability to
assert hedge accounting for its remaining fixed-to-variable interest rate swap agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the fixed-to-variable interest rate swap transactions referenced above, $1,050
million of NiSource Finance&#146;s existing long-term debt is now subject to fluctuations in interest
rates. These interest rate swaps are designated as fair value hedges. The effectiveness of the
interest rate swaps in offsetting the exposure to changes in the debt&#146;s fair value is measured
pursuant to SFAS No.&nbsp;133. NiSource had no net gain or loss recognized in earnings due to hedging
ineffectiveness from prior years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Contemporaneously with the issuance on September&nbsp;16, 2005 of the 5.25% and 5.45% notes, NiSource
Finance settled $900&nbsp;million of forward starting interest rate swap agreements with six
counterparties. NiSource paid an aggregate settlement payment of $35.5&nbsp;million which is being
amortized as an increase to interest expense over the term of the underlying debt, resulting in an
effective interest rate of 5.67% and 5.88%, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest rate risk activities programs included in price risk management assets and liabilities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">September 30, 2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31, 2007</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest rate swap derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">30.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">18.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Marketing and Other Activities. </B>The operations of TPC primarily involve commercial and industrial
gas sales, whereby TPC utilizes gas derivatives to hedge its expected future gas purchases. These
derivatives associated with commercial and industrial gas sales are accounted for as cash flow
hedges. In addition, TPC, on behalf of Whiting Clean Energy, had previously entered into power and
gas derivative contracts to manage commodity price risk associated with operating Whiting Clean
Energy prior to its sale in the second quarter of 2008 to BPAE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Marketing and power programs included in price risk management assets and liabilities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">September 30, 2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31, 2007</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Liabilities</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gas marketing derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">230.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">52.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Power forward derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total marketing and power programs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">230.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">52.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. Equity Investments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;27, 2008, NiSource Development Company sold its interest in JOF Transportation Company to
Lehigh Service Corporation for a pre-tax gain of $16.7&nbsp;million included within, &#147;Other, net,&#148; on
the Condensed Statements of Consolidated income (Loss) (unaudited). JOF Transportation Company
held 40% interest in Chicago South Shore &#038; South Bend Railroad Co. and a 40% interest in Indiana
Illinois Development Company, LLC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11. Fair Value of Financial Assets and Liabilities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource adopted the provisions of SFAS No.&nbsp;157 on January&nbsp;1, 2008. There was no impact on
retained earnings as a result of the adoption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Recurring Fair Value Measurements. </B>The following table presents assets and liabilities measured
and recorded at fair value on NiSource&#146;s Condensed Consolidated Balance Sheet (unaudited)&nbsp;on a
recurring basis and their level within the fair value hierarchy as of September&nbsp;30, 2008:
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Quoted Prices in</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Significant</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Active Markets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Significant</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">for Identical</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Observable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unobservable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Recurring Fair Value Measurements</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Assets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Inputs</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Inputs</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Balance as of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Level 1)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Level 2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Level 3)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">September 30, 2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">191.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">190.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">66.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">261.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Price risk management liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">275.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">282.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">275.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">293.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Price risk management assets and liabilities include commodity exchange-traded and
non-exchange-based derivative contracts. Exchange-traded derivative contracts are generally based
on unadjusted quoted prices in active markets and are classified within Level 1. These financial
assets and liabilities are secured with cash on deposit with the exchange; therefore nonperformance
risk has not been incorporated into these valuations. Certain non-exchange-traded derivatives are
valued using broker or over-the-counter, on-line exchanges. In such cases, these
non-exchange-traded derivatives are classified within Level 2. Non-exchange-based derivative
instruments include swaps, forwards, and options. In certain instances, these instruments may
utilize models to measure fair value. The company uses a similar model to value similar
instruments. Valuation models utilize various inputs that include quoted prices for similar assets
or liabilities in active markets, quoted prices for identical or similar assets or liabilities in
markets that are not active, other observable inputs for the asset or liability, and
market-corroborated inputs, i.e., inputs derived principally from or corroborated by observable
market data by correlation or other means. Where observable inputs are available for substantially
the full term of the asset or liability, the instrument is categorized in Level 2. Certain
derivatives trade in less active markets with a lower availability of pricing information and
models may be utilized in the valuation. When such inputs have a significant impact on the
measurement of fair value, the instrument is categorized in Level 3. Credit risk is considered in
the fair value calculation of derivative instruments that are not exchange-traded. Credit
exposures are adjusted to reflect collateral agreements which reduce exposures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Price risk management assets also include fixed-to-floating interest-rate swaps, which are
designated as fair value hedges, as a means to achieve its targeted level of variable-rate debt as
a percent of total debt. NiSource uses a calculation of future cash inflows and estimated future
outflows related to the swap agreements, which are discounted and netted to determine the current
fair value. Additional inputs to the present value calculation include the contract terms, as well
as market parameters such as current and projected interest rates and volatility. As they are
based on observable data and valuations of similar instruments, the interest-rate swaps are
categorized in Level 2 in the fair value hierarchy. Credit risk is considered in the fair value
calculation of the interest rate swap. Credit exposures are adjusted to reflect collateral
agreements which reduce exposures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Available-for-sale securities include assets in NiSource&#146;s deferred compensation trust and
investments pledged as collateral for trust accounts related to NiSource&#146;s wholly-owned insurance
company. Available-for-sale securities are included within &#147;Other investments&#148; in the Condensed
Consolidated Balance Sheets (unaudited). Securities classified within Level 1 include U.S.
Treasury debt securities which are highly liquid and are actively traded in over-the-counter
markets. NiSource values corporate and mortgage-backed debt securities using a matrix pricing
model that incorporates market-based information. These securities trade less frequently and are
classified within Level 2. Unrealized gains and losses from available-for-sale securities are
included in other comprehensive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s deferred compensation plan allows participants to defer certain cash compensation into a
notional investment account. NiSource includes the plan in other noncurrent liabilities in the
Condensed Consolidated Balance Sheets (unaudited). The value of the deferred compensation obligation is based on the
market value of the participants&#146; notional investment accounts. The notional investments include
balances which are credited based
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">upon published interest and bond yield indices and investments in
mutual funds. NiSource uses the lowest level of input significant to the valuation to determine
the fair value hierarchy classification, and therefore the liability is categorized in Level 2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables present the fair value reconciliation of Level 3 assets and liabilities
measured at fair value on a recurring basis during the three and nine months ended September&nbsp;30,
2008:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Financial</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Three Months Ended September 30, 2008 <I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Transmission Rights</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Derivatives</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of June&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(5.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD colspan="13"><DIV style="margin-left:15px; text-indent:-15px">Total
gains or losses (unrealized/realized) </div></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Included in regulatory assets/liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases, issuances and settlements (net)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Change in unrealized gains/(losses) relating to
instruments still held as of September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Financial</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Nine Months Ended September 30, 2008 <I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Transmission Rights</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Derivatives</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of January&nbsp;1, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>


<TR valign="bottom">

<TD colspan="13"><DIV style="margin-left:15px; text-indent:-15px">Total
gains or losses (unrealized/realized) </div></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">
Included in regulatory assets/liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases, issuances and settlements (net)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Change in unrealized gains/(losses) relating to
instruments still held as of September&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As part of the MISO Day 2 initiative, Northern Indiana was allocated and has purchased FTRs. These
rights help Northern Indiana offset congestion costs due to the MISO Day 2 activity. These
instruments are considered derivatives and are valued utilizing forecasted congestion source and
sink prices in the Day Ahead market. They are classified as Level 3 and reflected in the table
above. The FTRs do not qualify for hedge accounting treatment, but since congestion costs are
recoverable through the fuel cost recovery mechanism, the related gains and losses associated with
marking these derivatives to market are recorded as a regulatory asset or liability, in accordance
with SFAS No.&nbsp;71. Northern Indiana also writes options for regulatory incentive purposes which are
also considered Level 3 valuations and accounted for in accordance with SFAS No.&nbsp;71. Realized
gains and losses for these Level 3 recurring items are included in income within, &#147;Cost of Sales,&#148;
on the Condensed Statements of Consolidated Income (Loss) (unaudited). Unrealized gains and losses
from Level 3 recurring items are included within, &#147;Regulatory assets&#148; or &#147;Regulatory liabilities,&#148;
on the Condensed Consolidated Balance Sheets (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12. Goodwill Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s goodwill assets at September&nbsp;30, 2008 were $3,677.3&nbsp;million pertaining primarily to the
acquisition of Columbia on November&nbsp;1, 2000 but also includes $13.3&nbsp;million for Northern Indiana
Fuel and Light and $5.5&nbsp;million for Kokomo Gas.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the quarters ended June&nbsp;30, 2008 and June&nbsp;30, 2007, NiSource performed its annual impairment
test of goodwill associated with the purchases of Columbia, Northern Indiana Fuel and Light and
Kokomo Gas. For the purpose of testing impairment of the goodwill recorded in the acquisition of
Columbia, the related subsidiaries were aggregated into two distinct reporting units, one within
the Gas Distribution Operations segment and one within the Gas Transmission and Storage Operations
segment. The results of the June&nbsp;30 impairment tests indicated that no impairment charge was
required, as the fair values of the reporting units exceeded the carrying values. NiSource uses
the discounted cash flow method to estimate the fair value of its reporting units for the purposes
of this test. This valuation methodology and underlying financial information that are used to
determine fair value require significant judgments to be made by management. These judgments
include, but are not limited to, long term projections of future financial performance and the
selection of appropriate discount rates used to determine the present value of future cash flows.
Changes in such estimates or the application of alternative assumptions could produce significantly
different results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008, NiSource&#146;s market capitalization was approximately $4.0&nbsp;billion, while
NiSource&#146;s net assets, inclusive of goodwill, were $4.7&nbsp;billion. NiSource&#146;s market capitalization
at June&nbsp;30, 2008 of approximately $4.9&nbsp;billion was above NiSource&#146;s net asset value when the annual
impairment test was performed. In accordance with paragraph 28 of SFAS No.&nbsp;142, NiSource
considered whether there were any events or changes in circumstances during the third quarter that
would more likely than not reduce the fair value of any of the reporting units below their carrying
amounts and necessitate another goodwill impairment test and concluded that there were none.
NiSource attributes the decline in its market capitalization primarily to the overall stock market
decline resulting from the credit crisis taking place in the United States and globally, and not
any fundamental change in NiSource&#146;s regulated gas distribution and gas transmission and storage
businesses that comprise the reporting units for which goodwill is attributable. NiSource&#146;s stock
price decline of 21.9% from December&nbsp;31, 2007 compares to the overall declines of the S&#038;P Utilities
Average and Dow Jones Industrial Average, of 22.3% and 18.2% respectively, over the same nine-month
time period. Given the lack of a fundamental change in the underlying businesses and their various
assets, NiSource considers the decline in its stock price, and the underlying reasons for that
decline, as not indicative of an actual decline in the company&#146;s fair value of the underlying
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s reportable entities with goodwill consist of regulated companies. Regulated recovery
rates and approved rate of returns allow for more predictable and steady streams of revenues and
cash flows which helps mitigate the impacts that might otherwise be felt from the recessionary
trends seen in other industries and also adds more reliability to the cash flow forecasts used to
calculate fair value. NiSource reviewed its estimates and assumptions used in the discounted cash
flow model at June&nbsp;30, 2008, noting that there are no significant changes that would be made in
light of the changing economic circumstances during the third quarter. It should also be noted
that NiSource&#146;s ability to obtain credit remains strong as evidenced by a new short-term credit
facility of $500&nbsp;million that was obtained on September&nbsp;23, 2008 and Northern Indiana&#146;s re-issuance
of the Jasper County Pollution Control Bonds for $254&nbsp;million on August&nbsp;25, 2008 with a weighted
average interest rate now fixed at 5.58%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. Income Taxes</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s interim effective tax rates reflect the
 estimated annual effective tax rate for 2008 and 2007, respectively, adjusted for tax expense associated with
 certain discrete items.  The effective tax rate for the quarter ended September 30, 2008 was negative due to
 the impact of recent legislation in Massachusetts (described below) that reduced income tax expense by
$13.5 million. The effective tax rate for the quarter ended September 30, 2007 was 18.3% due the impact of
a $1.6 million reduction in tax expense that was recorded in the third quarter of 2007 for 2006 tax provision
to return adjustments.</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The effective tax rates for the nine months ended
September 30, 2008 and September 30, 2007 were 32.6% and 36.6%, respectively.  The lower effective tax rate
was primarily the result of the Massachusetts state tax
adjustment.</div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July 3, 2008, the Governor of Massachusetts
signed into law a bill that overhauls the Massachusetts corporate income tax regime.  Under the new law,
 which becomes effective for tax years beginning on or after January 1, 2009, NiSource will calculate its
 Massachusetts income tax liability on a unitary basis, meaning that the income tax obligation to the
Commonwealth of Massachusetts is determined based on an apportioned share of all of NiSource&#146;s income,
rather than just the income of NiSource&#146;s subsidiaries doing business in Massachusetts.  Because of NiSource&#146;s
substantial operations outside of Massachusetts, the new law has the impact of reducing the deferred
income tax liability to Massachusetts.  Under SFAS 109, NiSource must recognize the impact of this tax law
change in the quarter it is enacted.  As a result, income tax expense and the deferred income tax liability
have been reduced by $13.5 million in the third quarter of 2008.</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource adopted the provisions of FIN 48 on
January 1, 2007, recognizing a charge of $0.8 million to the opening balance of retained earnings.
As of December 31, 2007, the total liability for unrecognized tax
benefits, which is included in &#147;Other noncurrent liabilities&#148; on
the Consolidated Balance Sheets, was $3.7 million ($4.0 million including interest).
There have been no material changes in NiSource&#146;s FIN 48 liabilities from the December 31, 2007 amounts.
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective January 1, 2007, NiSource records interest
and penalties (if any) on prior year tax liabilities as a component
of income tax expense.</div>


<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">included in &#147;Other noncurrent liabilities&#148; on the Consolidated
Balance Sheets, was $3.7&nbsp;million ($4.0&nbsp;million including interest). There have been no material
changes in NiSource&#146;s FIN 48 liabilities from the December&nbsp;31, 2007 amounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective January&nbsp;1, 2007, NiSource records interest and penalties (if any) on prior year tax
liabilities as a component of income tax expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. Pension and Other Postretirement Benefits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource provides defined contribution plans and noncontributory defined benefit retirement plans
that cover its employees. Benefits under the defined benefit retirement plans reflect the
employees&#146; compensation, years of service and age at retirement. Additionally, NiSource provides
health care and life insurance benefits for certain retired employees. The majority of employees
may become eligible for these benefits if they reach retirement age while working for NiSource.
The expected cost of such benefits is accrued during the employees&#146; years of service. Current
rates of rate-regulated companies include postretirement benefit costs, including amortization of
the regulatory assets that arose prior to inclusion of these costs in rates. For most plans, cash
contributions are remitted to grantor trusts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2007, NiSource adopted the SFAS No.&nbsp;158 measurement date provisions requiring
employers to measure plan assets and benefit obligations as of the fiscal year-end. The pre-tax
impact of adopting the SFAS No.&nbsp;158 measurement date provisions increased deferred charges and
other assets by $9.4&nbsp;million, decreased regulatory assets by $89.6&nbsp;million, decreased retained
earnings by $11.3&nbsp;million, increased accumulated other comprehensive income by $5.3&nbsp;million and
decreased accrued liabilities for postretirement and postemployment benefits by $74.2&nbsp;million.
NiSource also recorded a reduction in deferred income taxes of approximately $2.6&nbsp;million. In
addition, 2007 expense for pension and postretirement benefits reflects the updated measurement
date valuations. In the fourth quarter of 2006, NiSource adopted the provisions of SFAS No.&nbsp;158
requiring employers to recognize in the statement of financial position the overfunded or
underfunded status of a defined benefit postretirement plan, measured as the difference between the
fair value of the plan assets and the benefit obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The key assumptions used to measure NiSource&#146;s various postretirement benefits plans&#146; funded status
at December&nbsp;31, 2007 were the same as those used for the previous January&nbsp;1, 2007 measurement date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource expects to make contributions of $6.1&nbsp;million to its pension plans and $38.3&nbsp;million to
its other postretirement benefit plans during 2008, which could change depending on market
conditions. Through September&nbsp;30, 2008, NiSource has contributed $4.8&nbsp;million to its pension plans
and $27.1&nbsp;million to its other postretirement benefit plans. At September&nbsp;30, 2008, NiSource&#146;s
pension assets have incurred a negative return of approximately 17% from asset values at December
31, 2007, which may have an impact on future pension cash contributions and expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables provide the components of the plans&#146; net periodic benefits cost for the third
quarter and nine months ended September&nbsp;30, 2008 and 2007:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Pension Benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Other Postretirement Benefits</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Three Months Ended September 30, <I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Components of Net Periodic Benefit Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>9.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>33.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expected return on assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(48.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(6.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of transitional obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of prior service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recognized actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Net Periodic Benefits Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(4.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>11.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Pension Benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Other Postretirement Benefits</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Nine Months Ended September 30, <I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Components of Net Periodic Benefit Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>28.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>7.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>99.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>35.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expected return on assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(145.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(140.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(18.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of transitional obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of prior service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Recognized actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Net Periodic Benefits Cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(14.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>33.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Long-Term Debt</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;15, 2008, NiSource Finance issued $500.0&nbsp;million of 6.80% unsecured notes that mature
January&nbsp;15, 2019 and $200.0&nbsp;million of 6.15% unsecured notes that mature on March&nbsp;1, 2013. The
notes due in 2013 constitute a further issuance of the $345.0&nbsp;million 6.15% notes issued February
19, 2003, and will form a single series having an aggregate principal amount outstanding of $545.0
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Jasper County Pollution Control Bonds. </I></B>Northern Indiana has seven series of Jasper County
Pollution Control Bonds with a total principal value of $254&nbsp;million currently outstanding. Prior
to March&nbsp;25, 2008, each of the series bore interest at rates established through auctions that took
place at either 7, 28, or 35&nbsp;day intervals. Between February&nbsp;13, 2008 and March&nbsp;5, 2008, Northern
Indiana received notice that six separate market auctions of four series of the Jasper County
Pollution Control Bonds had failed. As a result, those series representing an aggregate principal
amount of $112&nbsp;million of the Jasper County Pollution Control Bonds bore interest at default rates
equal to 15% or 18% per annum. Subsequent auctions were successful, but resulted in interest rates
between 5.13% and 11.0%, which were in excess of historical market rates. These auction failures
were attributable to the resulting lack of liquidity in the auction rate securities market, largely
driven by the turmoil in the bond insurance market. The Jasper County Pollution Control Bonds are
insured by either Ambac Assurance Corporation or MBIA Insurance Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana converted all seven series of Jasper County Pollution Control Bonds from the
auction rate mode to a variable rate demand bond mode between March&nbsp;25, 2008 and April&nbsp;11, 2008 and
repurchased the bonds as part of the conversion process. Between April&nbsp;11, 2008 and August&nbsp;24,
2008, all of the Jasper County Pollution Control Bonds were held in Northern Indiana&#146;s treasury.
On August&nbsp;25, 2008, Northern Indiana converted all of the Jasper County Pollution Control Bonds
from a variable rate demand mode to a fixed rate mode, and reoffered the bonds to external
investors. As a result of the fixed rate conversion and reoffering process, the weighted average
interest rate is now fixed at 5.58%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana reflected the Jasper County Pollution Control Bonds as an offset to long-term debt
within the Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of March&nbsp;31 and June&nbsp;30, 2008 upon
repurchase and the debt was considered extinguished per SFAS No.&nbsp;140. As such, unamortized debt
expense of $4.6&nbsp;million previously recorded under deferred charges and other was reclassified to a
regulatory asset. The Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of September&nbsp;30, 2008
reflects the reissuance of the long term debt. The repurchase and the subsequent re-issuance of
these bonds are included under, &#147;Financing Activities,&#148; in the Condensed Statement of Consolidated
Cash Flow (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16. Share-Based Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource currently issues long-term incentive grants to key management employees under a long-term
incentive plan approved by stockholders on April&nbsp;13, 1994 (1994 Plan). The 1994 Plan, as amended
and restated, permits the following types of grants, separately or in combination: nonqualified
stock options, incentive stock options, restricted stock awards, stock appreciation rights,
restricted stock units, contingent stock units and dividend
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->31<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">

equivalents payable on grants of options, performance units and contingent stock awards. At
September&nbsp;30, 2008, there were 28,099,237 shares reserved for future awards under the amended and
restated 1994 Plan.
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource recognized stock-based employee compensation expense of $7.2&nbsp;million and $2.7&nbsp;million
during the first nine months of 2008 and 2007, respectively, as well as related tax benefits of
$2.6&nbsp;million and $1.0&nbsp;million, respectively. There were no modifications to awards as a result of
the adoption of SFAS No.&nbsp;123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008, the total remaining unrecognized compensation cost related to nonvested
awards amounted to $14.1&nbsp;million, which will be amortized over the weighted-average remaining
requisite service period of 1.9&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Stock Options. </I></B>As of September&nbsp;30, 2008, approximately 5.0&nbsp;million options were outstanding and
exercisable with a weighted average option price of $22.64.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Restricted and Contingent Stock Unit Awards. </I></B>In the first, second, and third quarter 2008,
NiSource granted restricted stock units of 197,311, 2,962, and 42,651, respectively, subject to
service conditions. The total grant date fair value of the restricted units was $4.1&nbsp;million,
based on the average market price of NiSource&#146;s common stock at the date of each grant, which will
be expensed net of forfeitures over the vesting period of approximately three years. The service
conditions lapse on January&nbsp;31, 2011. If before January&nbsp;31, 2011, the employee terminates
employment (1)&nbsp;due to retirement, having attained age 55 and completed ten years of service, or (2)
due to death or disability, the employment conditions will lapse with respect to a pro rata portion
of the restricted units on the date of termination. Termination due to any other reason will
result in all restricted units awarded being forfeited effective the employee&#146;s date of
termination. Employees will be entitled to receive dividends upon vesting. As of September&nbsp;30,
2008, 242,924 nonvested restricted stock units were granted and outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the first, second, and third quarter 2008, NiSource granted contingent stock units of 394,604,
5,923, 12,704, respectively, subject to performance conditions. The total grant date fair value of
the award was $7.0&nbsp;million, based on the average market price of NiSource&#146;s common stock at the
date of each grant, which will be expensed net of forfeitures over the vesting period of
approximately three years. The performance conditions are based on achievement of a non-GAAP
financial measure, cumulative net operating earnings, that NiSource defines as income from
continuing operations adjusted for certain items and cumulative funds from operations that NiSource
defines as net operating cash flows provided by continuing operations. Per the agreement, to the
extent base performance conditions are exceeded during the three year performance period, the award
will be increased in increments of 10% up to 50%. If prior to the lapse of the performance
conditions, the employee terminates employment (1)&nbsp;due to retirement, having attained age 55 and
completed ten years of service, (2)&nbsp;due to disability, or (3)&nbsp;due to death with less than or equal
to 12&nbsp;months remaining in the performance period, the employee will receive a pro rata portion of
the contingent shares if the performance conditions have been met. If prior to the lapse of the
performance conditions, the employee terminates employment due to death with more than 12&nbsp;months
remaining in the performance period, the employee will receive a pro rata portion of the contingent
shares as if the performance conditions had been met. Termination due to any other reason will
result in all contingent shares awarded being forfeited effective the employee&#146;s date of
termination. Employees will be entitled to receive dividends upon vesting. As of September&nbsp;30,
2008, 413,231 nonvested contingent stock units were granted and outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2007, 320,330 contingent stock units were granted. The grant date fair value of the award
was $7.5&nbsp;million, based on the average market price of NiSource&#146;s common stock at the date of grant
of $23.46, which will be expensed net of forfeitures over the vesting period of approximately three
years. The shares are subject to both performance and service conditions. The performance
conditions were based on achievement of a non-GAAP financial measure (net operating earnings) as
described above. Per the agreement, to the extent base performance conditions were exceeded, the
award would be increased in increments of 10% up to 50%. If the performance conditions were not
met, the grants would be cancelled and the shares would be forfeited. Subsequent to meeting the
performance conditions, an additional two year service period will then be required before the
shares vest on December&nbsp;31, 2009. If after completing the performance conditions but prior to
completing the service conditions the employee terminates employment (1)&nbsp;due to retirement, having
attained age 55 and completed ten years of service, or (2)&nbsp;due to death or disability, the
employment conditions will lapse with respect to a pro rata portion of the contingent shares on the
date of termination. Termination due to any other reason will result in all contingent shares
awarded being forfeited effective the employee&#146;s date of termination. During 2007, base
performance
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">conditions were exceeded, resulting in an increase of the number of shares to be issued upon
vesting by 20%. Accordingly, 62,319 additional shares were granted in January&nbsp;2008. As of
September&nbsp;30, 2008, 357,799 nonvested contingent shares were outstanding. Employees will be
entitled to receive dividends upon vesting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Time-accelerated Awards. </I></B>NiSource awarded restricted shares and restricted stock units that
contain provisions for time-accelerated vesting to key executives under the 1994 Plan. Most of
these awards were issued in January&nbsp;2003 and January&nbsp;2004. The total shareholder return measures
established were not met; therefore these grants do not have an accelerated vesting period. At
September&nbsp;30, 2008, NiSource had 504,633 awards outstanding which contained the time-accelerated
provisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Non-employee Director Awards. </I></B>The Amended and Restated Non-employee Director Stock Incentive Plan
provides for awards of restricted stock, stock options and restricted stock units, which vest in
20% increments per year, with full vesting after five years. Effective March&nbsp;25, 2008, the board
approved to amend the vesting provisions of the plan such that all outstanding grants and future
grants of restricted stock units will vest immediately. The plan requires that restricted stock
units be distributed to the directors after their separation from the board. As of September&nbsp;30,
2008, 89,860 restricted shares and 203,412 restricted stock units had been issued under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Other Commitments and Contingencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A.&nbsp;Guarantees and Indemnities. </B>As a part of normal business, NiSource and certain subsidiaries
enter into various agreements providing financial or performance assurance to third parties on
behalf of certain subsidiaries. Such agreements include guarantees and stand-by letters of credit.
These agreements are entered into primarily to support or enhance the creditworthiness otherwise
attributed to a subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient
credit to accomplish the subsidiaries&#146; intended commercial purposes. The total commercial
commitments in existence at September&nbsp;30, 2008 and the years in which they expire were:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">After</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantees of subsidiaries debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,814.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">460.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">315.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,039.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantees supporting commodity
transactions of subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">512.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lines of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Letters of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other guarantees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">610.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">529.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commercial commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,290.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,500.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">868.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,002.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">331.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,573.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Guarantees of Subsidiaries Debt. </B>NiSource has guaranteed the payment of $5.8&nbsp;billion of debt for
various wholly-owned subsidiaries including NiSource Finance, and through a support agreement,
Capital Markets, which is reflected on NiSource&#146;s Condensed Consolidated Balance Sheet (unaudited)
as of September&nbsp;30, 2008. The subsidiaries are required to comply with certain financial covenants
under the debt instruments and in the event of default, NiSource would be obligated to pay the
debt&#146;s principal and related interest. NiSource does not anticipate its subsidiaries will have any
difficulty maintaining compliance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Guarantees Supporting Commodity Transactions of Subsidiaries. </B>NiSource has issued guarantees,
which support up to approximately $512.7&nbsp;million of commodity-related payments for its current
subsidiaries involved in energy marketing to satisfy requirements under forward gas sales. These
guarantees were provided to counterparties in order to facilitate physical and financial
transactions involving natural gas and electricity. To the extent liabilities exist under the
commodity-related contracts subject to these guarantees, such liabilities are included in the
Condensed Consolidated Balance Sheets (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Lines and Letters of Credit. </B>NiSource Finance maintains a five-year revolving line of credit with
a syndicate of financial institutions which can be used either for borrowings or the issuance of
letters of credit. On July&nbsp;7, 2006, NiSource Finance amended the $1.25&nbsp;billion five-year revolving
credit facility, increasing the aggregate
commitment level to $1.5&nbsp;billion and extending the termination date by one year to July&nbsp;2011.
During September&nbsp;2008, NiSource Finance entered into a new $500&nbsp;million six-month revolving credit
agreement with a syndicate of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">banks led by Barclays Capital that expires March&nbsp;23, 2009. At
September&nbsp;30, 2008, NiSource had $1,263.0&nbsp;million in short-term borrowings outstanding under the
credit facility. Through the five-year revolver and through other letter of credit facilities,
NiSource has issued stand-by letters of credit of approximately $90.1&nbsp;million for the benefit of
third parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Other Guarantees or Obligations. </B>NiSource reached an agreement on April&nbsp;18, 2008 with BPAE for the
sale of Whiting Clean Energy. On June&nbsp;30, 2008, NiSource sold Whiting Clean Energy to BPAE for
$217.2&nbsp;million which included $16.3&nbsp;million in working capital. The agreement with BPAE contains
customary representations, warranties, covenants and closing conditions. NiSource has executed
purchase and sales agreement guarantees totaling $220&nbsp;million which guarantee performance of PEI&#146;s
covenants, agreements, obligations, liabilities, representations and warranties under the agreement
with BPAE. No amounts related to the purchase and sales agreement guarantees are reflected in the
Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of September&nbsp;30, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has additional purchase and sales agreement guarantees totaling $77.5&nbsp;million, which
guarantee performance of the seller&#146;s covenants, agreements, obligations, liabilities,
representations and warranties under the agreements. No amounts related to the purchase and sales
agreement guarantees are reflected in the Condensed Consolidated Balance Sheets (unaudited).
Management believes that the likelihood NiSource would be required to perform or otherwise incur
any significant losses associated with any of the aforementioned guarantees is remote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;29, 2007, Millennium entered into a bank credit agreement to finance the construction of
the Millennium Pipeline project. As a condition precedent to the credit agreement, NiSource issued
a guarantee securing payment for 47.5%, its indirect ownership interest percentage, of amounts
borrowed under the credit agreement up until such time as the amounts payable under the agreement
are paid in full. As of September&nbsp;30, 2008, Millennium borrowed $772.0&nbsp;million under the financing
agreements, of which NiSource guaranteed $366.7&nbsp;million. NiSource recorded an accrued liability of
approximately $7.3&nbsp;million related to the fair value of this guarantee. The permanent financing
for Millennium is expected to be completed when debt capital market conditions improve. In the
interim, Millennium will continue to be funded by the $800&nbsp;million credit agreement, which extends
through August&nbsp;2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource also has guarantees issued to two Millennium customers that have associated long-term
transportation service agreements with Millennium, Consolidated Edison Company and KeySpan Gas East
Corporation, should Millennium not meet certain performance conditions and upon the customer
exercising certain rights under their respective precedent agreements upon a triggering event. The
total amount for which NiSource has guaranteed payment under these
guarantees is $ 24.3 million. No amounts related to these Millennium customer guarantees are reflected in
the Condensed Consolidated Balance Sheets (unaudited), as management believes that the likelihood
NiSource would be required to perform under these guarantees is remote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;29, 2006, Columbia Transmission, Piedmont, and Hardy Storage entered into multiple
agreements to finance the construction of the Hardy Storage project, which is accounted for by
NiSource as an equity investment. Under the financing agreement, Columbia Transmission issued
guarantees securing payment for 50% of any amounts issued in connection with Hardy Storage up until
such time as the project is placed in service and operated within certain specified parameters. As
of September&nbsp;30, 2008, Hardy Storage borrowed $123.4&nbsp;million under the financing agreement, for
which Columbia Transmission recorded an accrued liability of approximately $1.2&nbsp;million related to
the fair value of its guarantee securing payment for $61.7&nbsp;million, which is 50% of the amount
borrowed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has issued other guarantees supporting derivative related payments associated with
interest rate swap agreements issued by NiSource Finance, operating leases for many of its
subsidiaries and for other agreements entered into by its current and former subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>B.&nbsp;Other Legal Proceedings. </B>In the normal course of its business, NiSource and its subsidiaries
have been named as defendants in various legal proceedings. NiSource assesses liabilities and
contingencies in connection with asserted or potential legal matters on a regular basis, and
establishes reserves when appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the case of Tawney, et al. v. Columbia Natural Resources, Inc., the Plaintiffs, who are West
Virginia landowners, filed a lawsuit in early 2003 against CNR alleging that CNR underpaid
royalties on gas produced on their land by
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->34<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">improperly deducting post-production costs and not
paying a fair value for the gas. In December&nbsp;2004, the court granted plaintiffs&#146; motion to
add NiSource and Columbia as defendants. Plaintiffs also claimed that the defendants
fraudulently concealed the deduction of post-production charges. The court certified the case
as a class action that includes any person who, after July&nbsp;31, 1990, received or is due
royalties from CNR (and its predecessors or successors) on lands lying within the boundary of
the state of West Virginia. All claims by the government of the United States are excluded
from the class. Although NiSource sold CNR in 2003, NiSource remains obligated to manage this
litigation and for the majority of any damages ultimately awarded to the plaintiffs. On
January&nbsp;27, 2007, the jury hearing the case returned a verdict against all defendants in the
amount of $404.3&nbsp;million; this is comprised of $134.3&nbsp;million in compensatory damages and $270
million in punitive damages. In January&nbsp;2008, the Defendants filed their petition for appeal,
and on March&nbsp;24, 2008, the Defendants filed their amended petition for appeal with the West
Virginia Supreme Court of Appeals. On May&nbsp;22, 2008, the West Virginia Supreme Court of
Appeals refused the Defendants petition for appeal. On August&nbsp;22, 2008, Defendants filed
their petitions to the United States Supreme Court for writ of certiorari. The Plaintiffs
filed their response on September&nbsp;22, 2008. On September&nbsp;19, 2008, the West Virginia Supreme
Court issued an order extending the stay of the judgment until proceedings before the United
States Supreme Court are fully concluded. Given the West Virginia Court&#146;s refusal of the
appeal, NiSource adjusted its reserve in the second quarter of 2008 to reflect the portion of
the trial court judgment for which NiSource would be responsible, inclusive of interest. This
amount was included in &#147;Legal and environmental reserves,&#148; on the Condensed Consolidated
Balance Sheet (unaudited)&nbsp;as of September&nbsp;30, 2008. On October&nbsp;24, 2008, the West Virginia
Circuit Court for Roane County, West Virginia, preliminarily approved a settlement agreement
with a total settlement amount of $380&nbsp;million. The settlement is subject to final approval
by the Court, following a fairness hearing currently scheduled for November&nbsp;22, 2008. The
settlement agreement is contingent upon a final ruling on the settlement by the trial court
prior to the resolution of the petitions for writ of certiorari filed with the United States
Supreme Court. NiSource&#146;s share of the settlement liability would be up to $338.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Environmental Matters.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>General. </B>The operations of NiSource are subject to extensive and evolving federal, state and local
environmental laws and regulations intended to protect the public health and the environment. Such
environmental laws and regulations affect operations as they relate to impacts on air, water and
land.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A reserve of $76.7&nbsp;million and $77.2&nbsp;million has been recorded as of September&nbsp;30, 2008 and
December&nbsp;31, 2007, respectively, to cover probable corrective actions at sites where NiSource has
environmental remediation liability. Regulatory assets have been recorded to the extent
environmental expenditures are expected to be recovered in rates. NiSource accrues for costs
associated with environmental remediation obligations when the incurrence of such costs is probable
and the amounts can be reasonably estimated, regardless of when the expenditures are actually made.
The undiscounted estimated future expenditures are based on many factors including currently
enacted laws and regulations, existing technology and estimated site-specific costs whereby
assumptions may be made about the nature and extent of site contamination, the extent of cleanup
efforts, costs of alternative cleanup methods and other variables. NiSource&#146;s estimated
environmental remediation liability will be refined as events in the remediation process occur.
Actual remediation costs may differ materially from NiSource&#146;s estimates due to the dependence on
the factors listed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Proposals for voluntary initiatives and mandatory controls are being discussed both in the United
States and worldwide to reduce so-called &#147;greenhouse gases&#148; such as carbon dioxide, a by-product of
burning fossil fuels, and methane, a component of natural gas. Certain NiSource affiliates engage
in efforts to voluntarily report and reduce their greenhouse gas emissions. NiSource is currently
a participant in the EPA&#146;s Climate Leaders program. On April&nbsp;2, 2007, in Massachusetts v. EPA, the
Supreme Court ruled that the EPA does have authority under the CAA to regulate emissions of
greenhouse gases if it is determined that greenhouse gases have a negative impact on human health
or the environment. On July&nbsp;11, 2008, in response to the April&nbsp;2, 2007, U.S. Supreme Court
decision in <I>Massachusetts v. EPA</I>, the EPA released an ANPR soliciting public input on the effects
of climate change and the potential ramifications of the CAA in relation to greenhouse gas
emissions. In the ANPR, the EPA presents and requests comment on the best-available science,
requests relevant data, and poses questions about the advantages and disadvantages of using the CAA
to potentially regulate stationary and mobile sources of greenhouse gases. The
ANPR also reviews various petitions, lawsuits and court deadlines before the agency, and the
profound effect </DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->35<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
regulating under the CAA could have on the economy. NiSource will continue to
monitor and participate in developments related to efforts to register and potentially regulate
greenhouse gas emissions.
</div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The EPA is developing a mandatory greenhouse gas reporting rule that would require reporting of
greenhouse gas emissions from large sources. The emission information collected would be used by
the EPA to develop comprehensive and accurate data relevant to future climate policy decisions,
including potential future regulation of greenhouse gases. The final reporting rule is scheduled
to be finalized by June&nbsp;2009. NiSource will continue to monitor development of this rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;12, 2008, the EPA announced the tightening of the 8-hour ozone NAAQS from 0.08 parts per
million to 0.075 parts per million. The number of areas that do not meet the new standards could
significantly increase across the country. Over the next several years, states will be required to
develop ozone attainment plans to implement the standards and improve air quality in these areas.
This could lead to additional emission reductions of NOx, an ozone precursor, from facilities owned
by NiSource. NiSource will closely monitor developments in these matters and cannot at this time
accurately estimate the timing or cost of emission controls that may eventually be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Gas Distribution Operations. </B>Several Gas Distribution Operations subsidiaries are potentially
responsible parties at waste disposal sites under the CERCLA (commonly known as Superfund) and
similar state laws, as well as at MGP sites, which such subsidiaries, or their corporate
predecessors, own or previously owned or operated. Gas Distribution Operations subsidiaries may be
required to share in the cost of cleanup of such sites. In addition, some Gas Distribution
Operations subsidiaries have responsibility for corrective action under the RCRA for closure and
cleanup costs associated with underground storage tanks and under the Toxic Substances Control Act
for cleanup of PCBs. The final costs of cleanup have not yet been determined. As site
investigations and cleanup proceed and as additional information becomes available reserves are
adjusted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A program has been instituted to identify and investigate former MGP sites where Gas Distribution
Operations subsidiaries or predecessors are the current or former owner. The program has
identified up to 86 such sites and initial investigations have been conducted at 54 sites.
Additional investigation activities have been completed or are in progress at 50 sites and remedial
measures have been implemented or completed at 37 sites. This effort includes the sites contained
in the January&nbsp;2004 agreement entered into with the IDEM, Northern Indiana, Kokomo Gas, and other
Indiana utilities under the Indiana Voluntary Remediation Program. Only those site investigation,
characterization and remediation costs currently known and determinable can be considered &#147;probable
and reasonably estimable&#148; under SFAS No.&nbsp;5. As costs become probable and reasonably estimable,
reserves will be adjusted. As reserves are recorded, regulatory assets are recorded to the extent
environmental expenditures are expected to be recovered through rates. NiSource is unable, at this
time, to accurately estimate the time frame and potential costs of the entire program. Management
expects that, as characterization is completed, additional remediation work is performed and more
facts become available, NiSource will be able to develop a probable and reasonable estimate for the
entire program or a major portion thereof consistent with the SEC&#146;s SAB No.&nbsp;92, SFAS No.&nbsp;5 and SOP
96-1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Gas Transmission and Storage Operations. </B>Columbia Transmission continues to conduct
characterization and remediation activities at specific sites under a 1995 EPA AOC. The program
pursuant to the AOC covers approximately 245 facilities, approximately 13,000 liquid removal
points, approximately 2,200 mercury measurement stations and about 3,700 storage well locations.
Field characterization has been performed at all sites. Site characterization reports and
remediation plans, which must be submitted to the EPA for approval, are in various stages of
development and completion. Remediation has been completed at the mercury measurement stations,
liquid removal point sites and storage well locations and at all but 48 of the 245 facilities. The
AOC was amended in 2007 to facilitate payment of EPA oversight costs and to remove remediated sites
from the AOC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Transmission and Columbia Gulf are potentially responsible parties at several waste
disposal sites under CERCLA and similar state laws. The potential liability is believed to be de
minimis. However, the final allocation of cleanup costs has yet to be determined. As site
investigations and cleanups proceed and as additional information becomes available reserves will
be adjusted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;21, 2007, the PADEP provided representatives of Columbia Transmission with a proposed
Consent Order and Agreement covering an unmanned equipment storage site located in rural southwest
Pennsylvania. The
</div>
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</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">proposed order alleges that Columbia Transmission has violated the state&#146;s Clean
Streams Act and Solid Waste Management Act by discharging petroleum products onto the property and
into the waters of the state. In addition to requiring remediation and monitoring activities at
the site, the state has proposed penalties for these violations. Columbia Transmission plans to
engage in further discussions with the agency regarding the proposed order, including the rationale
for the proposed penalty. The site was remediated via an EPA approved Remedial Action Work Plan in
the summer of 2008. The PADEP had provided written notification that it would not attempt to stop
the EPA approved work and would seek the aforementioned Order after the remedy is completed.
Columbia Transmission has not received any communication from the PADEP regarding the
aforementioned Order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;26, 2007, Columbia Transmission received an NOV related to bentonite discharge
associated with a horizontal directional drill operation for the Hardy Storage project. On
November&nbsp;29, 2007, Columbia Transmission received an NOV related to the collapse of Swift Run
stream bed associated with the same horizontal directional drill operation. Columbia Transmission
received the final Consent Special Order on July&nbsp;31, 2008. The total penalty paid to the State of
Virginia was $39,635.57. Stream restoration activities are complete. Continued monitoring of the
stream will occur for two years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During installation of the Millennium Pipeline, petroleum hydrocarbon impacted soils and ground
water were encountered above State of New York standards at two locations on and adjacent to the
Columbia Transmission line A-5. These impacts were reported to the NYDEC. The State of New York
required that Columbia Transmission enter into Stipulation Agreements with the NYDEC to address
remediation of the impacted media. Reserves have been established for initial response and cleanup
activities. Additional cleanup obligations may be identified after more information is available,
but costs to address the contamination are not expected to be material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Electric Operations.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Remediation. </B>Northern Indiana is a potentially responsible party under the CERCLA and similar
state laws at two waste disposal sites and shares in the cost of their cleanup with other
potentially responsible parties. At one site, the Remedial Investigation and Feasibility Study was
submitted to the EPA in 2007. The EPA has issued a proposed plan to remediate the site which is
in the public comment period. At the second site, Northern Indiana has agreed to conduct a
Remedial Investigation and Feasibility Study in the vicinity of the third party, state-permitted
landfill where Northern Indiana contracted for fly ash disposal. In addition, Northern Indiana has
corrective action liability under the RCRA for three facilities that historically stored hazardous
waste.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008 and December&nbsp;31, 2007, reserves of $2.9&nbsp;million and $3.1&nbsp;million,
respectively, have been recorded to cover probable environmental response actions for Electric
Operations. The ultimate liability in connection with these sites cannot be estimated at this
time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Air. </B>In December&nbsp;2001, the EPA approved regulations developed by the State of Indiana to comply
with the EPA&#146;s NOx SIP call. The NOx SIP call requires certain states, including Indiana, to
reduce NOx levels from several sources, including industrial and utility boilers, to lower regional
transport of ozone. Compliance with the NOx limits contained in these rules was required by May
31, 2004. To comply with the rule, Northern Indiana developed a NOx compliance plan, which
included the installation of Selective Catalytic Reduction NOx reduction technology at each of its
active generating stations and is currently in compliance with the NOx limits. In implementing the
NOx compliance plan, Northern Indiana has expended approximately $312.8&nbsp;million as of September&nbsp;30,
2008. Total costs to comply may vary depending on a number of factors including market demand and
resource constraints, uncertainty of future equipment and construction costs, and the potential
need for additional control technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;10, 2005, the EPA issued the CAIR final regulations. The rule establishes phased
reductions of NOx and SO2 from 28 Eastern states, including electric utilities in Indiana, by
establishing an annual emissions cap for NOx and SO2 and an additional cap on NOx emissions during
the ozone control season. On March&nbsp;15, 2006, the EPA signed three related rulemakings providing
final regulatory decisions on implementing the CAIR. The EPA, in one of the rulings, denied
several petitions for reconsideration of various aspects of the CAIR, including requests by
Northern Indiana to reconsider SO2 and NOx allocations. On March&nbsp;25, 2008, the U. S. Court of
Appeals for the D. C. Circuit held oral arguments in litigation challenging the CAIR. Northern
Indiana, along with other utilities,
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
directly participated in one of the arguments addressing the legality of using the allowance
allocations of the Acid Rain program for the purpose of complying with the CAIR SO2 reduction
requirements.
</div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;11, 2008, the court vacated the CAIR and the CAIR FIP in their entirety, and remanded them
back to the EPA to promulgate a rule consistent with the court&#146;s opinion. Per the Court&#146;s rules,
issuance of the mandate is deferred during the 45-day period allowed for the filing of any
petitions for rehearing. On September&nbsp;24, 2008, four petitions were submitted seeking rehearing by
the original panel and the full panel (en banc). Among the petitioners were the EPA as well as
industry and environmental groups. Numerous issues were raised including: the appropriateness of
the vacatur instead of only remanding key contested points; compliance dates; the interstate
trading issue; allowance allocations; and emission budgets. In addition, Congressional efforts to
achieve an acceptable legislative remedy have been initiated but are facing an uncertain future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In anticipation of the issuance of the Court&#146;s mandate to vacate CAIR upon the conclusion of legal
proceedings, on October&nbsp;23, 2008, the IDEM took the initial step in a multi-phased process to
develop a new state rule to replace CAIR and obtain the emission reductions it would have achieved.
Northern Indiana will continue to interact with the IDEM on this matter and can not predict the
outcome or impact at this time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;3, 2007, the Indiana Air Pollution Control Board adopted, with minor changes from the
EPA CAMR, the state rule to implement EPA&#146;s CAMR. The rule became effective on February&nbsp;3, 2008,
with compliance required in 2010. On February&nbsp;8, 2008, the United States Court of Appeals for the
District of Columbia Circuit vacated two EPA rules addressing utility mercury emissions that are
the stimulus for the Indiana Air Pollution Control Board&#146;s CAMR. The first is the EPA&#146;s rule
delisting coal and oil-fired electric generating units from the list of sources whose emissions are
regulated under section 112 of the CAA, 42 U.S.C. &#167; 7412. <I>Revision of December&nbsp;2000 Regulatory
Finding </I>(&#147;Delisting Rule&#148;), 70 Fed. Reg. 15,994 (March&nbsp;29, 2005). The second is the EPA&#146;s rule
that set performance standards for new coal-fired electric generating units and established total
mercury emission limits for states along with a cap-and-trade program for new and existing
coal-fired electric generating units. <I>Standards of Performance for New and Existing Stationary
Sources: Electric Utility Steam Generating Units </I>(&#147;CAMR&#148;), 70 Fed. Reg. 28,606 (May&nbsp;18, 2005). On
March&nbsp;24, 2008, the EPA and industry filed petitions with the court for rehearing of these
decisions and on May&nbsp;20, 2008, the D.C. Circuit denied the rehearing requests. Industry has filed
a petition for <I>certiorari </I>with the U. S. Supreme Court appealing the decision. The EPA has sought
and received extensions of the appeal submittal deadline and filed their appeal on October&nbsp;17,
2008. The resolution of this legal action and the EPA&#146;s response will affect the implementation
and timing of the installation of controls to address potential mercury reduction obligations.
Northern Indiana will closely monitor developments regarding any further action by the EPA and
subsequent regulatory developments from the EPA and/or the Indiana Air Pollution Control Board in
this matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Local air quality has improved in three counties in which Northern Indiana generating assets are
located. In recognition of this improvement the IDEM submitted petitions to the EPA seeking
redesignation of the Indiana counties of Lake, Porter, and LaPorte to attainment of the eight-hour
ozone NAAQS. Final EPA rulemaking approving the LaPorte County redesignation became effective on
July&nbsp;19, 2007. The EPA approval for Lake and Porter counties is undergoing further evaluation and
may be delayed until after the 2008 ozone season due to monitored values in 2007 at one site that
put the design value just above the NAAQS. On October&nbsp;3, 2007, the Air Pollution Control Board
adopted the redesignation of LaPorte County to attainment as part of a reformatting of the state
attainment designation rule. The rule became effective January&nbsp;28, 2008. Upon promulgation of the
EPA and subsequent IDEM regulations to implement the redesignations to attainment, new source
review rules are expected to change from nonattainment new source review rules to prevention of
significant deterioration while measures responsible for existing emission reductions would
continue. The March&nbsp;12, 2008 EPA tightening of the 8-hour ozone NAAQS may preclude the approval of
the redesignation requests and may result in these counties remaining and/or again being designated
as nonattainment of the ozone NAAQS. As discussed above under &#147;General,&#148; the EPA ozone NAAQS
revision could lead to additional emission reductions of NOx, an ozone precursor, from facilities
owned by Northern Indiana. Northern Indiana will closely monitor developments in these matters and
cannot at this time accurately estimate the timing or cost of emission controls that may eventually
be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The U. S. Court of Appeals for the D. C. Circuit, in late 2006, ruled a requirement to impose CAA
&#167;185 fees on emissions sources located in counties that failed to timely attain the previous
(one-hour) ozone standard, which had been rescinded by the EPA in May&nbsp;2005, remained applicable
retroactive to November&nbsp;2005. The court remanded
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the issue to the EPA for reconsideration. In January&nbsp;2008, the U. S. Supreme Court denied a
petition to hear an appeal on this matter. The EPA has announced that it intends to propose
regulations in fall 2008 to specify how CAA &#167;185 fees will be imposed and calculated. One of
Northern Indiana&#146;s operating generating assets is located in Porter County where this fee could
potentially be applied. On July&nbsp;7, 2008, the EPA proposed a finding of attainment of the one-hour
ozone NAAQS for the Illinois and Indiana one-hour ozone nonattainment area which includes Porter
County. Included in the proposed rule is a finding that the area, including Porter County, is not
subject to the imposition of the CAA &#167;185 penalty fees. The EPA indicated it anticipates
finalization of the attainment rule by the end of 2008. Northern Indiana will closely monitor
developments in this matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In late 1999, the EPA initiated a New Source Review enforcement action against several industries,
including the electric utility industry, concerning rule interpretations that have been the subject
of recent (prospective)&nbsp;reform regulations. Northern Indiana has received and responded to the EPA
information requests on this subject, most recently in June&nbsp;2002. The EPA issued an NOV to
Northern Indiana on September&nbsp;29, 2004, for alleged violations of the CAA and the SIP.
Specifically, the NOV alleges that modifications were made to certain boiler units at the Michigan
City, Schahfer, and Bailly Generating Stations between the years of 1985 and 1995 without obtaining
appropriate air permits for the modifications. The ultimate resolution could require additional
capital expenditures and operations and maintenance costs as well as payment of substantial
penalties and require development of supplemental environmental projects. Northern Indiana is
unable, at this time, to predict the timing or outcome of this EPA action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;15, 2008, the EPA announced it is first strengthening of the NAAQS for lead in 30&nbsp;years
by tightening the standards from the current 1.5 micrograms per cubic meter to 0.15 micrograms per
cubic meter and changing both the calculation method and averaging time. Also included are
provisions for the EPA to improve the existing lead monitoring network by requiring placement of
monitors in areas with industrial facilities that emit one or more tons per year of lead.
Designations of whether or not areas meet the standards are to be finalized by January&nbsp;2012 with
the state plans for reducing emissions to meet the standards due in June&nbsp;2013 and compliance by
January&nbsp;2017. Northern Indiana is unable, at this time, to predict the outcome of this EPA action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Water. </B>The Great Lakes Water Quality Initiative program added new water quality standards for
facilities that discharge into the Great Lakes watershed. The State of Indiana has promulgated its
regulations for this water discharge permit program and has received final EPA approval. The
permit for the Bailly Generating Station was issued on June&nbsp;26, 2006, and became effective on
August&nbsp;1, 2006. Northern Indiana appealed the Bailly Generating Station NPDES permit, due to an
unacceptable internal outfall monitoring permit condition. On February&nbsp;18, 2008, the Bailly
Generating Station NPDES permit was modified to resolve the monitoring issue and to address the
316(b) rule status due to the remand mentioned below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;16, 2004, the EPA Administrator signed the Phase II Rule of the Clean Water Act Section
316(b) which requires all large existing steam electric generating stations meet certain
performance standards to reduce the effects on aquatic organisms at their cooling water intake
structures. The rule became effective on September&nbsp;7, 2004. Under this rule, stations will either
have to demonstrate that the performance of their existing fish protection systems meet the new
standards or develop new systems, such as a closed-cycle cooling tower. On January&nbsp;25, 2007, the
Second Circuit in a court decision on the Phase II 316(b) rule, remanded for EPA reconsideration
the options providing flexibility for meeting the requirements of the rule. On March&nbsp;20, 2007, the
EPA issued a guidance memo advising its Regional Administrators that the Agency considers the
316(b), Phase II Rule governing cooling water withdrawals suspended and will be issuing a Federal
Register notice to that effect. On July&nbsp;9, 2007, the EPA published a notice in the Federal
Register suspending the Phase II rule. The notice explained that the EPA is not accepting comments
on the suspension and notes that &#147;best professional judgment&#148; is to be used in making 316(b)
decisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;5, 2007, the Second Circuit Court of Appeals denied the petitions for rehearing asking the
court to reconsider its remand of the Phase II 316(b) ruling. Various parties submitted petitions
for a <I>writ of certiorari </I>to the U. S. Supreme Court in early November&nbsp;2007 seeking to reverse the
Second Circuit Court&#146;s decision. Several parties on both sides of the issue have filed <I>amicus
curiae </I>briefs on the matter. The U.S. Supreme Court has agreed to hear the appeal which is based
on the role of cost-benefit analysis in establishing standards for compliance with the rule. The
case is scheduled to be heard in December&nbsp;2008. The EPA may eventually need to propose a revised
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->39<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 1.</U> <U>FINANCIAL STATEMENTS (continued)</U></DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR>
<B>Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">316(b) rule or provide guidance to address the impact of the court decision. Northern Indiana will
continue to closely monitor this activity and at this time cannot estimate the costs associated
with the ultimate outcome.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Coal Combustion Products. </B>The Federal government has recently shown an increased interest in
evaluating the advisability of Federal regulation of coal combustion waste products because of
concern over potential health and environmental risks. A House subcommittee has begun to study
this issue building on the EPA&#146;s ongoing activities in this matter. On September&nbsp;22, 2008, the
ECOS approved a resolution stating that federal regulations regarding the management and disposal
of coal combustion wastes should not be adopted. ECOS is a national non-profit, non-partisan
association of state and territorial environmental agency leaders. Northern Indiana will continue
to monitor this activity for any future regulatory actions and cannot predict the potential
financial impact at this time.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->40<!-- /Folio -->
</DIV>




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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 1. FINANCIAL STATEMENTS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. Changes in Common Stockholders&#146; Equity and Comprehensive Income (Loss)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table displays the changes in Common Stockholders&#146; Equity and Comprehensive Income
(Loss) for the nine months ended September&nbsp;30, 2008 and 2007.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accum</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Comp</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Common</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Treasury</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Paid-In</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Retained</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Comp</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Income</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Capital</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Income/(Loss)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(Loss)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance January&nbsp;1, 2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(23.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,011.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,074.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>11.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,076.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive Income (Loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(83.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(96.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(96.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss), net of tax:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain/loss on available for sale securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized losses on derivatives
qualifying as cash flow hedges (b)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(69.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(69.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(69.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Unrecognized Pension Benefit
and OPEB cost (c )</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(173.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(252.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(252.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Treasury stock acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Employee stock purchase plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term incentive plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of Long-term
incentive Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance September&nbsp;30, 2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(23.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,017.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>739.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(65.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,670.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Accum</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Common</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Treasury</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Paid-In</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Retained</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Comp</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Comp</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Capital</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Income/(Loss)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Income</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance January&nbsp;1, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(21.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3,998.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,012.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,013.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustment to initially apply new measurement
date pursuant to SFAS No.&nbsp;158, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustment to initially apply
FIN 48, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Beginning balance, as adjusted</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(21.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3,998.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,005.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>20.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,005.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive Income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income, net of tax:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain/loss on available for sale securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net unrealized losses on derivatives
qualifying as cash flow hedges (b)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Unrecognized Pension Benefit
and OPEB cost (c )</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(252.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(252.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Treasury stock acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Employee stock purchase plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term incentive plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of Long-term
incentive Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance September&nbsp;30, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(23.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,008.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,007.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>8.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5,004.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net unrealized gains (losses)&nbsp;on available for sale securities, net of $2.4
million tax benefit and $0.5&nbsp;million tax expense in the first nine months of
2008 and 2007, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net unrealized losses on derivatives qualifying as cash flow hedges, net of
$45.4&nbsp;million and $6.6&nbsp;million tax benefit in the first nine months of 2008 and
2007, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unrecognized pension benefit and OPEB costs, net of $1.8&nbsp;million tax
benefit and 2.1&nbsp;million tax expense in the first nine months of 2008 and 2007,
respectively.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->41<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 1. FINANCIAL STATEMENTS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>19. Accumulated Other Comprehensive Income (Loss)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table displays the components of Accumulated Other Comprehensive Income (Loss), which
is included in &#147;Common Stockholders&#146; Equity,&#148; on the Condensed Consolidated Balance Sheets
(unaudited).
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2007</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income (loss), before taxes:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Tax (expense)&nbsp;on unrealized gains on securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains (losses)&nbsp;on cash flow hedges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(105.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Tax (expense)&nbsp;benefit on unrealized gains on cash flow hedges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>42.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrecognized pension benefit and OPEB costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Tax benefit on unrecognized pension benefit and OPEB costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Accumulated Other Comprehensive Income (Loss), net of taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(65.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Millennium, in which Columbia Transmission has an equity investment, entered into three interest
rate swap agreements with a notional amount totaling $420&nbsp;million with seven counterparties. In
accordance with paragraph 121 of SFAS No.&nbsp;130, Columbia Transmission recorded an unrecognized loss
of $1.5&nbsp;million as a decrease in its investment in Millennium and a corresponding decrease in
accumulated other comprehensive, representing its ownership portion of the fair value of these
swaps as of September&nbsp;30, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20. Business Segment Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating segments are components of an enterprise for which separate financial information is
available that is evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The NiSource Chief Executive Officer is the chief
operating decision maker.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s operations are divided into four primary business segments. The Gas Distribution
Operations segment provides natural gas service and transportation for residential, commercial and
industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and
Massachusetts. The Gas Transmission and Storage Operations segment offers gas transportation and
storage services for LDCs, marketers and industrial and commercial customers located in
northeastern, mid-Atlantic, midwestern and southern states and the District of Columbia. The
Electric Operations segment provides electric service in 20 counties in the northern part of
Indiana. The Other Operations segment primarily includes gas marketing, and ventures focused on
distributed power generation technologies, including fuel cells and storage systems.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->42<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 1. FINANCIAL STATEMENTS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information about business segments. NiSource uses operating income
as its primary measurement for each of the reported segments and makes decisions on finance,
dividends and taxes at the corporate level on a consolidated basis. Segment revenues include
intersegment sales to affiliated subsidiaries, which are eliminated in consolidation. Affiliated
sales are recognized on the basis of prevailing market, regulated prices or at levels provided for
under contractual agreements. Operating income is derived from revenues and expenses directly
associated with each segment. Gas Distribution, Gas Transmission and Storage, Electric, Other
Operations, and Corporate operating income was positively impacted by $6.9&nbsp;million, $3.3&nbsp;million,
$8.6&nbsp;million, $0.1&nbsp;million, and $0.7&nbsp;million, respectively, for adjustments to medical expenses
during the third quarter 2008 due to a misclassification of certain claims in prior periods. This
adjustment had no impact on actual medical claims paid and was not material to the results of
operations and consolidated financial statements. Electric Operations operating income was
negatively impacted by an $8.3&nbsp;million depreciation expense adjustment recorded by Northern Indiana
during the second quarter of 2008. The non-cash adjustment to depreciation expense was not
material to the results of operations and consolidated financial statements and will not materially
impact depreciation charges in future periods.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Gas Distribution Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unaffiliated</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>617.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">519.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,079.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,420.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>621.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,095.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,435.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Gas Transmission and Storage Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unaffiliated</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>157.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>476.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">457.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>44.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>151.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>201.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>628.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">618.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Electric Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unaffiliated</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>380.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">378.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,054.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,039.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>380.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">378.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,054.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,040.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unaffiliated</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>250.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>869.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">735.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intersegment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>32.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>257.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>902.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments and eliminations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(51.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(63.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(192.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(209.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,409.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,249.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6,488.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,660.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Income (Loss)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gas Distribution Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(56.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(41.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>188.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">226.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gas Transmission and Storage Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>82.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>265.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Electric Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>81.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>170.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Operating Income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>107.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">109.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>619.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">684.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>21. Hartsville and Delhi Compressor Stations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;5, 2008, tornados struck Columbia Gulf&#146;s Hartsville Compressor Station in Macon County,
Tennessee. The damage to the facility forced Columbia Gulf to declare force majeure because no gas
was flowing through this portion of the pipeline system while a facility assessment was being
performed and the current contractual transportation agreements of 2.156 Bcf per day could not be
met. Since that time Columbia Gulf has constructed
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 1. FINANCIAL STATEMENTS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">both temporary and permanent facilities at
Hartsville. On July&nbsp;19, 2008, the station completed the installation of
temporary horsepower and restored capacity to flow up to 2.156 Bcf per day. During the next 12 to
14&nbsp;months, the temporary facilities that were constructed to restore system capabilities will be
replaced with a permanent solution. The temporary capacity will remain in place while the
permanent solution is installed. NiSource expects the majority of the reconstruction costs for the
compressor station and ancillary facilities and the business interruption losses caused by this
event to be recovered through insurance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;14, 2007, Columbia Gulf&#146;s Line 100 ruptured approximately two miles north of its Delhi
Compressor Station in Louisiana. The damage to the pipeline forced Columbia Gulf to declare force
majeure because no gas was flowing through this portion of the pipeline system on Lines 100, 200
and 300 while a facility assessment was performed. One day later, Lines 200 and 300 were returned
to service and gas flow was restored on December&nbsp;16, 2007. On December&nbsp;19, 2007, the U.S.
Department of Transportation issued a Corrective Action Order. The Order required Columbia Gulf to
develop a remedial work plan to restore Line 100 pipeline&#146;s pressure and capacity. Between
December&nbsp;22, 2007 and June&nbsp;30, 2008, the Line 100 pipeline operated at less than full pressure and
full capacity. On July&nbsp;1, 2008, Columbia Gulf received permission from the U.S. Department of
Transportation to restore full pressure and full capacity on the Line 100 pipeline. Columbia Gulf
continues to operate under this Order. NiSource expects to recover a portion of the pipeline
replacement costs plus business interruption losses through insurance.
</DIV>


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<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS </u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Note regarding forward-looking statements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Management&#146;s Discussion and Analysis, including statements regarding market risk sensitive
instruments, contains &#147;forward-looking statements,&#148; within the meaning of Section&nbsp;27A of the
Securities Act of 1933, as amended, and Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended. Investors and prospective investors should understand that many factors govern whether
any forward-looking statement contained herein will be or can be realized. Any one of those
factors could cause actual results to differ materially from those projected. These
forward-looking statements include, but are not limited to, statements concerning NiSource&#146;s plans,
objectives, expected performance, expenditures and recovery of expenditures through rates, stated
on either a consolidated or segment basis, and any and all underlying assumptions and other
statements that are other than statements of historical fact. From time to time, NiSource may
publish or otherwise make available forward-looking statements of this nature. All such subsequent
forward-looking statements, whether written or oral and whether made by or on behalf of NiSource,
are also expressly qualified by these cautionary statements. All forward-looking statements are
based on assumptions that management believes to be reasonable; however, there can be no assurance
that actual results will not differ materially.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Realization of NiSource&#146;s objectives and expected performance is subject to a wide range of risks
and can be adversely affected by, among other things, weather, fluctuations in supply and demand
for energy commodities, growth opportunities for NiSource&#146;s businesses, increased competition in
deregulated energy markets, the success of regulatory and commercial initiatives, dealings with
third parties over whom NiSource has no control, the effectiveness of NiSource&#146;s restructured
outsourcing agreement, actual operating experience of NiSource&#146;s assets, the regulatory process,
regulatory and legislative changes, changes in general economic, capital and commodity market
conditions, and counterparty credit risk, many of which risks are beyond the control of NiSource.
In addition, the relative contributions to profitability by each segment, and the assumptions
underlying the forward-looking statements relating thereto, may change over time. NiSource
expressly disclaims a duty to update any of the forward-looking statements contained in this
report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following Management&#146;s Discussion and Analysis should be read in conjunction with NiSource&#146;s
Annual Report on Form 10-K for the fiscal year ended December&nbsp;31, 2007.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CONSOLIDATED REVIEW</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Executive Summary</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource is an energy holding company whose subsidiaries are engaged in the transmission, storage
and distribution of natural gas in the high-demand energy corridor stretching from the Gulf Coast
through the Midwest to New England and the generation, transmission and distribution of electricity
in Indiana. NiSource generates virtually 100% of its operating income through these rate-regulated
businesses. A significant portion of NiSource&#146;s operations is subject to seasonal fluctuations in
sales. During the heating season, which is primarily from November through March, net revenues
from gas are more significant, and during the cooling season, which is primarily from June through
September, net revenues from electric sales and transportation services are more significant than
in other months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource is a holding company under the Public Utility Holding Company Act of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the nine months ended September&nbsp;30, 2008, NiSource reported income from continuing operations
of $242.8&nbsp;million, or $0.89 per basic share, essentially flat with to $243.4&nbsp;million, or $0.89 per basic share
in 2007.
</DIV>

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</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Increases in income from continuing operations were due primarily to the following items:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>

    <TD width="1%">&nbsp;</TD>

    <TD width="97%">    Income tax expense decreased $22.8 million due to recent legislation in Massachusetts that reduced income tax expense by $13.5 million in the third quarter of 2008.
 Income tax expense also decreased due to lower pre-tax book income for the nine months ended September 30, 2008 versus the comparable period in 2007.
  Refer to Note 13, &#147;Income Taxes,&#148; in the Notes to Condensed Consolidated Financial Statements for additional detail.</TD>
    <TD></TD>
</TR>

</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest expense decreased $19.2&nbsp;million due to lower short-term interest rates and the
retirement late in 2007 of high cost debt associated with the Whiting Clean Energy facility.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Gas Transmission and Storage Operations&#146; net revenues increased by $10.2&nbsp;million due
primarily to greater subscriptions for firm transportation services related to new
interconnects along the Columbia Gulf pipeline system, deliveries from the Hardy Storage field
and incremental demand revenues on the Columbia Transmission system.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other, net increased by $22.4&nbsp;million due primarily to NiSource Development Company&#146;s sale
of its interest in JOF Transportation Company to Lehigh Service Corporation on August&nbsp;27,
2008, for a pre-tax gain of $16.7&nbsp;million. JOF Transportation Company held 40% interest in
Chicago South Shore &#038; South Bend Railroad Co. and a 40% interest in Indiana Illinois
Development Company, LLC.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Decreases in income from continuing operations were due primarily to the following items:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating expenses increased by $59.1&nbsp;million primarily due to higher employee and
administrative expenses of $29.6&nbsp;million across NiSource&#146;s business segments, a $19.1&nbsp;million
increase in depreciation which includes an $8.3&nbsp;million depreciation expense adjustment
recorded by Northern Indiana during the second quarter of 2008 and higher electric generation
and maintenance costs of $11.8&nbsp;million. The increased electric generation
 and maintenance costs resulted primarily from planned turbine and boiler maintenance and a
generator overhaul, as well as $2.3&nbsp;million in incremental costs associated with the Sugar Creek
facility.</TD>
</TR>
<TR><!-- Blank Space -->
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lower Electric Operations net revenues, which were negatively impacted by $20.4&nbsp;million due
to non-recoverable power purchased and non-recoverable MISO charges. Additionally, lower
residential and commercial margins contributed to lower net revenues and were partially offset
by higher industrial usage and margins.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These factors and other impacts to the financial results are discussed in more detail within the
following discussions of &#147;Results of Operations&#148; and &#147;Results and Discussion of Segment
Operations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Four-Point Platform for Growth</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has established four key initiatives to build a platform for long-term, sustainable
growth: commercial and regulatory initiatives; commercial growth and expansion of the gas
transmission and storage business; financial management of the balance sheet; and process and
expense management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Commercial and Regulatory Initiatives</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Rate Development and Other Regulatory Matters. </I></B>NiSource is moving forward on regulatory
initiatives across several distribution company markets. Whether through full rate case filings or
other approaches, NiSource&#146;s goal is to develop strategies that benefit all stakeholders as it
addresses changing customer conservation patterns, develops more contemporary pricing structures,
and embarks on long-term investment programs to enhance its infrastructure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana filed a petition for new electric base rates and charges on June&nbsp;27, 2008 and
filed its case-in-chief on August&nbsp;29, 2008. The filing requests a two-step increase. Step One is
a request for an increase in base rates calculated to produce additional gross margin of
approximately $24&nbsp;million. Step Two requests an additional increase to incorporate the return on
and recovery of the Sugar Creek facility, which Northern Indiana purchased on May&nbsp;30, 2008. The
Step Two increase, if granted, would become effective as soon as the Sugar Creek facility is no
longer committed to the PJM Interconnection market and is dispatched into MISO, but no later than
June&nbsp;1, 2010. The hearing on Northern Indiana&#146;s case-in-chief is scheduled to begin on January&nbsp;6,
2009. Several stakeholder groups have intervened in the case, representing customer groups and
various counties and towns within Northern Indiana&#146;s electric service territory. Testimony from
the OUCC and all intervenors will be due by April&nbsp;17, 2009. Assuming the case goes through the
full procedural schedule without settlement, the final hearing is scheduled to begin July&nbsp;27, 2009
and new rates are anticipated to take effect in early 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia of Ohio filed a base rate case with PUCO on March&nbsp;3, 2008, requesting an increase in base
rates in excess of $80&nbsp;million annually. Columbia of Ohio is seeking recovery of increased
infrastructure rehabilitation costs, as well as the stabilization of revenues and cost recovery
through rate design. A settlement agreement was filed on
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">October&nbsp;24, 2008. The agreement recommends an annual revenue increase of $47.1&nbsp;million, and also
provides for recovery of costs associated with Columbia of Ohio&#146;s infrastructure rehabilitation
program. Rate design issues are to be resolved by the PUCO. The case is currently pending, and is
expected to be resolved before the end of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;28, 2008, Columbia of Pennsylvania filed a base rate case with the Pennsylvania Public
Utility Commission, seeking an increase of approximately $60&nbsp;million annually, effective October
28, 2008. Through this filing, Columbia of Pennsylvania sought to recover costs associated with
its significant infrastructure rehabilitation program, as well as stabilize revenues and cost
recovery through modifications to rate design. On July&nbsp;2, 2008, Columbia of Pennsylvania and all
interested parties filed a unanimous settlement with the Pennsylvania Public Utilities Commission.
On October&nbsp;23, 2008, the Pennsylvania Public Utilities Commission issued an Order approving the
settlement as filed, increasing annual revenues by $41.5 million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;1, 2008, Columbia of Maryland filed a base rate case with the Maryland Public Service
Commission, seeking an increase of approximately $3.7&nbsp;million annually. New rates are expected to
take effect during the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2008, the PUCO issued an order approving, in all material respects, a joint Stipulation
submitted on behalf of Columbia of Ohio. This Stipulation is a result of a process that began on
April&nbsp;13, 2005 with a PUCO ordered investigation into the type of gas risers installed in the
state, the conditions of installation and overall performance. The Stipulation provides for:
establishment of accounting for and recovery of costs resulting from the Staff&#146;s investigation;
Columbia&#146;s performance of a survey to identify those customer-owned risers on its system prone to
failure; and related customer education and other program related expenses. In addition this
Stipulation provides for: Columbia&#146;s assumption of financial responsibility for the replacement of
all risers identified as prone to failure; repair or replacement of hazardous customer owned
service lines; and capitalization of this investment with recovery to be addressed in future rate
proceedings. As of September&nbsp;30, 2008, Columbia of Ohio has approximately $38.5&nbsp;million in costs
associated with the gas riser and customer service line programs recorded as a regulatory asset
and/or capitalized plant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2008, Columbia of Ohio filed an application with the PUCO for permission to create a new
comprehensive energy conservation program. If approved by the PUCO, Columbia of Ohio&#146;s DSM program
would offer a wide range of services to residential and small commercial customers. Columbia of
Ohio proposes to recover the three-year, $24.9&nbsp;million cost of the DSM conservation program through
a rider that would be added to residential and small commercial customer bills beginning in May
2010. On July&nbsp;23, 2008, the PUCO issued an order approving Columbia of Ohio&#146;s proposal subject to
the approval of the DSM cost recovery rider proposed in the currently pending rate case, and any
other conditions that may be imposed in the rate case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;30, 2008, Northern Indiana purchased Sugar Creek for $329.7&nbsp;million. This purchase was in
response to Northern Indiana&#146;s need to add approximately 1,000 mw of new capacity. Refer to Note
8, &#147;Regulatory Matters,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)
for further discussion. The Sugar Creek facility is a CCGT located in West Terre Haute, Indiana.
Sugar Creek has a plant capacity rating of 535 mw. Sugar Creek has transmission access to and is
able to participate in both the MISO and PJM Interconnection wholesale electricity markets. The
plant is currently committed to the PJM Interconnection market until May&nbsp;31, 2010. At acquisition,
Northern Indiana recorded at fair value $328.1&nbsp;million related to utility plant. No goodwill was
recorded in conjunction with the purchase. The preliminary allocation of the purchase price was
assigned to the assets and liabilities of Sugar Creek, based on their estimated fair value in
accordance with GAAP. This allocation is subject to completion of certain analyses and allocation
of property, plant and equipment unit of accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Refer to the &#147;Results and Discussion of Segment Operations&#148; for a complete discussion of regulatory
matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sale of Whiting Clean Energy. </I></B>On June&nbsp;30, 2008, NiSource sold Whiting Clean Energy to BPAE for
$217.2&nbsp;million, which included $16.3&nbsp;million in working capital, resulting in an after-tax loss of
$31.9&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sale of Northern Utilities and Granite State Gas. </I></B>On February&nbsp;15, 2008, NiSource reached a
definitive agreement under which Unitil Corporation will acquire NiSource subsidiaries Northern
Utilities and Granite State Gas. Under
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the terms of the transaction, Unitil Corporation will acquire Northern Utilities, a local gas
distribution company serving 52 thousand customers in 44 communities in Maine and New Hampshire and
Granite State Gas, an 86-mile FERC regulated gas transmission pipeline primarily located in Maine
and New Hampshire. In the first quarter of 2008, net assets for Northern Utilities and Granite
State Gas were reclassified to assets and liabilities of discontinued operations and held for sale
on the Consolidated Balance Sheets. During the third quarter and nine months ended September&nbsp;30,
2008, estimated losses of $4.8&nbsp;million and $71.7&nbsp;million were recorded to Gain (Loss) on
Disposition of Discontinued Operations in the Condensed Statements of Consolidated Income (Loss)
(unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource acquired Northern Utilities and Granite State Gas in 1999 as part of the company&#146;s larger
acquisition of Bay State. NiSource is retaining its ownership of Bay State as a core component of
the company&#146;s long-term, investment-driven growth strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sale of Columbia Gulf&#146;s Offshore Assets. </I></B>On June&nbsp;27, 2008, Columbia Gulf sold a portion of
Columbia Gulf&#146;s offshore assets to Tennessee Gas Pipeline Company for $7.5&nbsp;million, which resulted
in a gain of $2.9&nbsp;million that was recorded during the second quarter of 2008. Payment was
received on July&nbsp;1, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Commercial Growth and Expansion of the Gas Transmission and Storage Business</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Master Limited Partnership. </I></B>On December&nbsp;21, 2007, NiSource Energy Partners, L.P., an MLP and
subsidiary of NiSource, filed a Form S-1 registration statement with the SEC in which it proposed
making an initial public offering of common units in the MLP and NiSource proposed contributing its
interest in Columbia Gulf to the MLP. NiSource management believes the formation of an MLP is a
natural complement to NiSource&#146;s gas transmission and storage growth strategy, and should provide
NiSource access to competitively priced capital to support future growth investment. The initial
public offering will not occur in 2008 due to the damage sustained at Columbia Gulf&#146;s Hartsville,
Tennessee, compressor station, following the tornados at the facility as described previously, as
well as overall financial market conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Millennium Pipeline Project</I></B><B>. </B>In June&nbsp;2007, construction began on the Millennium Pipeline, a
182-mile-long, 30-inch-diameter pipeline across New York&#146;s Southern Tier and lower Hudson Valley.
The project is expected to be completed in the fourth quarter of 2008 and will transport up to
525,400 Dth per day of natural gas to markets along its route, as well as to the New York City
markets through its pipeline interconnections. Millennium is jointly owned by affiliates of
NiSource, KeySpan Corporation, and DTE Energy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Hardy Storage Project. </I></B>Hardy Storage completed its sixth full quarter of operations, receiving
customer injections and withdrawing natural gas from its new underground natural gas storage
facility in West Virginia. Injections this year will allow the field to deliver up to 150,000 Dth
of natural gas per day during the 2008-2009 winter heating season. Customers withdrew over 5.44
Bcf from the storage field during the 2007-2008 winter heating season. When fully operational in
2009, the field will have a working storage capacity of 12 Bcf, delivering more than 176,000 Dth of
natural gas per day. Hardy Storage is a joint venture of subsidiaries of Columbia Transmission and
Piedmont.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Transmission, the operator of Hardy Storage, has expanded its natural gas transmission
system by 176,000 Dth per day to provide the capacity needed to deliver Hardy Storage supplies to
customer markets. Construction of these transmission facilities is complete and the facilities
were placed into full service during the first half of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Florida Gas Transmission Expansion Project. </I></B>An open season to solicit interest and contracts for
expanded capacity on Columbia Gulf&#146;s system for delivery to Florida Gas Transmission was held in
late 2007 and contracts for 100,000 Dth per day of capacity were executed. This project was placed
into service in May&nbsp;2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Eastern Market Expansion Project</I></B><B>. </B>On May&nbsp;3, 2007, Columbia Transmission filed a certificate
application before the FERC for approval to expand its facilities to provide additional storage and
transportation services and to replace certain existing facilities. This Eastern Market Expansion
project is projected to add 97,000 Dth per day of storage and transportation deliverability and is
fully subscribed on a 15-year contracted firm basis. On January&nbsp;14, 2008, the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">FERC issued a favorable order which granted a certificate to construct the project. Construction
of the facilities is underway and the project is expected to be in service by April&nbsp;2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Appalachian Expansion Project. </I></B>On February&nbsp;29, 2008, Columbia Transmission filed an application
before the FERC for approval to build a new 9,470 horsepower compressor station in West Virginia.
The Appalachian Expansion Project will add 100,000 Dth per day of transportation capacity and is
fully subscribed on a 15-year contracted firm basis. On August&nbsp;22, 2008, the FERC issued a
favorable order which granted a certificate to construct the project. Construction is in progress
and the project is expected to be in service in the fourth quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Ohio Storage Project</I></B><B>. </B>On June&nbsp;24, 2008, Columbia Transmission filed an application before the FERC
for approval to expand two of its Ohio storage fields for additional capacity of nearly 7 MMDths
and 103,400 Dth per day of daily deliverability. If required approvals are granted as requested,
construction would begin in 2009 and the expanded facilities would be placed in service by the end
of 2009. The expansion capacity is 58% contracted on a long-term, firm basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>New Penn Transmission Project. </I></B>During the first quarter of 2008, Columbia Transmission concluded
an open season to gauge customer interest in a new pipeline system to provide 500,000 Dth per day
of firm service from storage facilities near Leidy, PA to a new interconnection with Millennium
Pipeline in Steuben County, New York in 2010. NiSource is continuing to explore interest in this
project and other demand for capacity in the region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Centerville Expansion Project. </I></B>An open season to solicit interest and receive bids for expanded
capacity on Columbia Gulf&#146;s system for delivery to Southern Natural Gas and the Louisiana
intrastate pipeline market was held during the first quarter of 2008, and bids for 60,000 Dth per
day of capacity were submitted. The remaining 175,000 Dth per day of capacity is expected to be
sold under firm contracts prior to the facilities being placed into service. The project is
expected to be placed into service in late 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>MarkWest Energy Partners, LP Joint Venture Project. </I></B>In August&nbsp;2008, Columbia Transmission and
MarkWest Energy Partners, LP, announced their intention to jointly develop several natural gas
gathering and processing projects to support increased natural gas production in the Appalachian
Basin. The two companies are in discussions with several natural gas producers to provide new
gathering and gas processing services in association with Columbia Transmission&#146;s existing
Majorsville, WV, compressor station, located in the northern panhandle area of West Virginia and
Western Pennsylvania.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Columbia Penn Project</I></B><B>. </B>In September&nbsp;2008, Columbia Transmission announced its intention to develop
additional natural gas transmission, gathering and processing services along and around its
existing pipeline corridor between Waynesburg, PA, and Corning, NY, referred to as the &#147;Columbia
Penn&#148; corridor. This two-phased development will accelerate access to pipeline capacity in
conjunction with production increases in the Marcellus Shale formation which underlies Columbia
Transmission&#146;s transmission and storage network in the region. Phase I is anticipated to give
customers access to capacity in early 2009, while Phase II would be available by the end of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Financial Management of the Balance Sheet</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Despite recent turmoil in business and financial markets, enhancing shareholder value through
disciplined, investment-driven earnings growth continues to be the foundation of NiSource&#146;s
balanced business plan. NiSource is committed to maintaining its strong liquidity position.
NiSource recently supplemented its $1.5&nbsp;billion revolving credit facility which extends through
July&nbsp;2011, with a new $500&nbsp;million temporary credit facility which expires in March&nbsp;2009. This
agreement helps ensure ample liquidity to accommodate the company&#146;s seasonable cash flow
requirements, such as the purchase of natural gas supplies to meet customer needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource will continue to closely monitor events in the credit markets, as well as overall economic
conditions in the nation and the markets we serve. Maintaining financial flexibility as we work
through this challenging period will remain a key priority for the company&#146;s management and its
board of directors.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s interest expense decreased $19.2&nbsp;million for the first nine months of 2008 compared to
the first nine months of last year. This decrease was due primarily to lower short-term interest
rates and the retirement late in 2007 of high cost debt associated with the Whiting Clean Energy
facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the second quarter of 2008, NiSource issued long-term debt of $700&nbsp;million to fund future
capital expenditures. While the capital markets have recently been adversely impacted by a variety
of negative economic events, NiSource believes these events will not impact its continued access to
the traditional capital markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;25, 2008, Northern Indiana converted all of the Jasper County Pollution Control Bonds
from a variable rate demand mode to a fixed rate mode, and reoffered the bonds to external
investors. As a result of the fixed rate conversion and reoffering process, the weighted average
interest rate is now fixed at 5.58%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Process and Expense Management</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>IBM Agreement. </I></B>In December&nbsp;2007, NiSource and IBM finalized a restructuring of their business
services agreement. Under the restructured agreement, IBM will primarily provide information
technology services, with a number of other business service functions to be transitioned back to
the NiSource organization. Through the third quarter of 2008, certain Meter to Cash, Human
Resources, Sales Center, remaining Finance and Accounting (except for Accounts Payable) and Supply
Chain Management support services transitioned back to the company. NiSource has made a decision
to transition certain Accounts Payable functions to another Service Provider.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2008, NiSource and IBM also agreed to move forward with the Indiana deployment of a Work
Management System and its associated transformation initiatives. The Work Management System
project will provide technologies that standardize, integrate and support transformation of
processes and eliminate costly and inefficient manual work processes while meeting
regulatory/compliance standards. Implementation planned for late 2008 has been delayed. The
project team is currently working on adjusting the project roll out schedule into 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Results of Operations<BR>
Quarter Ended September&nbsp;30, 2008</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Income</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource reported net income of $20.0&nbsp;million, or $0.08 per basic share, for the three months ended
September&nbsp;30, 2008, compared to net income of $11.0&nbsp;million, or $0.04 per basic share, for the
third quarter 2007. Income from continuing operations was $32.6&nbsp;million, or $0.12 per basic share,
for the three months ended September&nbsp;30, 2008, compared to $7.9&nbsp;million, or $0.03 per basic share,
for the third quarter 2007. Operating income was $107.9&nbsp;million, a decrease of $1.6&nbsp;million from
the same period in 2007. All per share amounts are basic earnings per share. Basic average shares
of common stock outstanding at September&nbsp;30, 2008 were 274.0&nbsp;million compared to 273.9&nbsp;million at
September&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Total consolidated net revenues (gross revenues less cost of sales) for the three months ended
September&nbsp;30, 2008, were $616.4&nbsp;million, a $4.6&nbsp;million increase from the same period last year.
This increase in net revenues was attributable to higher net revenues from Electric Operations, Gas
Transmission and Storage Operations and Other Operations of $2.8&nbsp;million, $1.8&nbsp;million and $1.2
million, respectively. Net revenues from Electric Operations increased primarily due to the impact
of a $33.5&nbsp;million settlement in third quarter of 2007 related to the cost of power purchased by
Northern Indiana in 2006 and 2007, incremental revenues of $3.8&nbsp;million from the new Sugar Creek
plant and $2.6&nbsp;million in increased industrial net revenues. These increases in net revenues were
partially offset by lower wholesale sales of $13.9&nbsp;million, lower residential and commercial sales
volumes and margins of $8.9&nbsp;million, the impact of cooler weather of approximately $7&nbsp;million and
$4.3&nbsp;million of non-recoverable purchased power. The non-recoverable purchased power costs are due
to the settlement reached in 2007 by Northern Indiana with regulatory stakeholders and large
customers as noted previously. The increase in Gas Transmission and Storage net revenues was due
to increased subscriptions for firm transportation services of $7.2&nbsp;million related to new
interconnects along the Columbia Gulf pipeline system, deliveries from the Hardy Storage field and
incremental demand revenues on the Columbia Transmission system partially offset by $3.0&nbsp;million of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM
2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">lower shorter-term transportation and storage services. Increased net revenues from Other
Operations resulted from higher commercial and industrial gas marketing revenues. These increases
in net revenues from Electric, Gas Transmission and Storage and Other Operations were partially
offset by slightly lower net revenues from Gas Distribution Operations of $2.7&nbsp;million due
primarily to decreased revenues of $4.4&nbsp;million from the implementation of the Columbia of Ohio
Stipulation entered into with the Ohio Consumers&#146; Counsel and PUCO at the end of 2007, partially
offset by increases from regulatory trackers of $3.1&nbsp;million, and increases in rate proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Expenses</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating expenses for the third quarter 2008 were $511.9&nbsp;million, an increase of $7.0&nbsp;million from
the 2007 period. This increase was primarily due to higher electric generation and maintenance
expenses of $5.0&nbsp;million, which include incremental costs associated with the Sugar Creek facility,
a $3.6&nbsp;million increase in depreciation, higher uncollectible accounts of $2.8&nbsp;million and higher
property and other taxes of $3.0&nbsp;million. These increases in expense were partially offset by
lower NiSource Insurance Corporation costs of $5.4&nbsp;million. Higher employee and administrative
costs for the quarter were mostly offset by an adjustment decreasing employee benefits expense.
Third quarter results include a $19.6&nbsp;million adjustment decreasing medical expenses due to a
misclassification of certain claims in prior periods. This adjustment had no impact on actual
medical claims paid or coverage to active or retiree benefit participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Other Income (Deductions)</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest expense, net was $100.2&nbsp;million for the quarter, a decrease of $0.9&nbsp;million compared to
the third quarter of 2007. This decrease was due primarily to lower short-term interest rates and
the retirement late in 2007 of high cost debt associated with the Whiting Clean Energy facility.
Other, net was income of $20.8&nbsp;million for the current quarter compared to income of $1.2&nbsp;million
for the comparable 2007 period due to the sale of an investment and lower costs associated with the
sale of accounts receivable. On August&nbsp;27, 2008, NiSource Development Company sold its interest in
JOF Transportation Company to Lehigh Service Corporation for a pre-tax gain of $16.7&nbsp;million. JOF
Transportation Company held 40% interest in Chicago South Shore &#038; South Bend Railroad Co. and a 40%
interest in Indiana Illinois Development Company, LLC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Income Taxes</U></div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
NiSource recognized an income tax benefit for the third quarter of 2008 of $4.1 million
 due to recent legislation in Massachusetts (described below) compared to income tax expense of $1.7 million in
 the third quarter of 2007.  This tax benefit was partially offset by income taxes recorded on higher pretax income in
the third quarter of 2008 versus the third quarter of 2007.  In addition, a $1.6 million reduction in tax expense was
recorded in the third quarter of 2007 for 2006 tax provision to return adjustments.</div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July 3, 2008, the Governor of Massachusetts
signed into law a bill that overhauls the Massachusetts corporate income tax regime.  Under the new law, which becomes
 effective for tax years beginning on or after January 1, 2009, NiSource will calculate its Massachusetts income tax
liability on a unitary basis, meaning that the income tax obligation to the Commonwealth of Massachusetts is determined
based on an apportioned share of all of NiSource&#146;s income, rather than just the income of NiSource&#146;s subsidiaries doing
business in Massachusetts.  Because of NiSource&#146;s substantial operations outside of Massachusetts, the new law has the
impact of reducing the deferred income tax liability to Massachusetts.  Under SFAS 109, NiSource must recognize the
impact of this tax law change in the quarter it is enacted.  As a result, income tax expense and the deferred income
tax liability have been reduced by $13.5 million in the third quarter of 2008.





</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Discontinued Operations</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the three months ended September&nbsp;30, 2008, NiSource recognized a $12.6&nbsp;million loss from
discontinued operations compared to a gain from discontinued operations of $3.1&nbsp;million in the
comparable 2007 period. NiSource recorded $6.1&nbsp;million for the after-tax loss from discontinued
operations associated with CER for interest cost related to the Tawney proceedings. In the first
quarter of 2008, NiSource began accounting for the operations of Northern Utilities, Granite State
Gas and Whiting Clean Energy as discontinued operations. As such, a net loss of $1.4&nbsp;million was
classified as net income (loss)&nbsp;from discontinued operations for the three months ended September
30, 2008, and net income of $1.8&nbsp;million was reclassified for the three months ended September&nbsp;30,
2007. In the third quarter of 2008, NiSource recorded an estimated after-tax loss adjustment of
$5.1&nbsp;million for the disposition of Northern Utilities, Granite State Gas and Whiting Clean Energy.
In the third quarter of 2008, NiSource began accounting for the operations of NiSource Retail
Services as discontinued operations. As such, income from continuing operations of $0.1&nbsp;million
was classified as net income (loss)&nbsp;from discontinued operations for the three months ended
September&nbsp;30, 2008, and net income of $0.1&nbsp;million was reclassified for the three months ended
September&nbsp;30, 2007.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Results of Operations<BR>
Nine Months Ended September&nbsp;30, 2008</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Income</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource reported a net loss of $83.0&nbsp;million, or $0.30 loss per basic share, for the nine months
ended September&nbsp;30, 2008, compared to net income of $254.4&nbsp;million, or $0.93 per basic share, for
the first nine months of 2007. Income from continuing operations was $242.8&nbsp;million, or $0.89 per
basic share, for the nine months ended September&nbsp;30, 2008, compared to $243.4&nbsp;million, or $0.89 per
basic share, for the comparable 2007 period. Operating income was $619.0&nbsp;million, a decrease of
$65.0&nbsp;million from the same period in 2007. All per share amounts are basic earnings per share.
Basic average shares of common stock outstanding at September&nbsp;30, 2008 were 274.0&nbsp;million compared
to 273.8&nbsp;million at September&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Total consolidated net revenues (gross revenues less cost of sales) for the nine months ended
September&nbsp;30, 2008, were $2,326.5&nbsp;million, a $5.1&nbsp;million decrease from the same period last year.
Lower Electric Operations net revenues of $15.5&nbsp;million and a slight decrease of $2.2&nbsp;million in
Gas Distribution net revenues were partially offset by higher Gas Transmission and Storage net
revenues of $10.2&nbsp;million. The decrease in Electric Operations net revenues was primarily due to
lower residential and commercial sales volumes and margins of $22.0&nbsp;million, lower wholesale
transactions of $12.8&nbsp;million, $10.8&nbsp;million of non-recoverable purchased power, the impact of
cooler weather of approximately $10&nbsp;million and $9.6&nbsp;million of higher non-recoverable MISO
charges. These decreases in Electric Operations net revenues were partially offset by the impact
of a $33.5&nbsp;million settlement in third quarter of 2007 related to the cost of power purchased by
Northern Indiana in 2006 and 2007, $10.9&nbsp;million in increased industrial net revenues and
incremental revenues of $5.1&nbsp;million from the new Sugar Creek plant. Gas Distribution net revenues
decreased $2.2&nbsp;million due primarily to warmer weather of approximately $14&nbsp;million, reduced
revenues of $7.7&nbsp;million from the implementation of the Columbia of Ohio Stipulation entered into
with the Ohio Consumers&#146; Counsel and PUCO at the end of 2007 and decreased industrial and
commercial margins of $5.7&nbsp;million, partially offset by increased residential usage of $7.9
million, increased net revenues of $8.6&nbsp;million from rate proceedings and an increase in the gas
cost adjustment. Gas Transmission and Storage Operations&#146; increase in net revenues was primarily
due to higher subscriptions for firm transportation services of $18.5&nbsp;million related to new
interconnects along the Columbia Gulf pipeline system, deliveries from the Hardy Storage field and
incremental demand revenues on the Columbia Transmission system partially offset by lower
shorter-term transportation and storage services and commodity related charge revenues of $6.7
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Expenses</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating expenses for the first nine months of 2008 were $1,714.5&nbsp;million, an increase of $59.1
million from the comparable 2007 period. This increase was primarily due to higher employee and
administrative expenses of $29.6&nbsp;million, a $19.1&nbsp;million increase in depreciation which includes
an $8.3&nbsp;million depreciation expense adjustment recorded by Northern Indiana during the second
quarter of 2008, higher electric generation and maintenance expenses of $11.8&nbsp;million and higher
property and other taxes of $5.8&nbsp;million. These increases in expense were partially offset by a
$6.6&nbsp;million impairment charge recognized in the comparable 2007 period related to base gas at a
storage field, lower NiSource Insurance Corporation costs of $5.4&nbsp;million and a $2.9&nbsp;million gain
recognized on the sale of certain Columbia Gulf offshore assets. Employee and administrative costs
were partially offset by an adjustment decreasing employee benefits expense. The year-to-date
results include a $12.7&nbsp;million adjustment decreasing medical expenses due to a misclassification
in 2007 of certain claims. This adjustment had no impact on actual medical claims paid or coverage
to active or retiree benefit participants. The higher generation and maintenance expenses were
primarily attributable to a planned turbine and boiler maintenance and a generator overhaul, as
well as $2.3&nbsp;million in incremental costs associated with the Sugar Creek facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Other Income (Deductions)</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest expense, net was $279.4&nbsp;million for the first nine months of 2008 compared to $298.6
million for the first nine months of last year. This decrease of $19.2&nbsp;million was mainly due to
lower short-term interest rates and credit facility fees, and the retirement late in 2007 of high
cost debt associated with the Whiting Clean Energy facility. Other, net was income of $20.6
million for the first nine months of 2008 compared to a loss of $1.8&nbsp;million for the comparable
2007 period due to the sale of an investment and lower costs associated with the sale of accounts
receivable. On August&nbsp;27, 2008, NiSource Development Company sold its interest in JOF
Transportation Company
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to Lehigh Service Corporation for a pre-tax gain of $16.7&nbsp;million. JOF Transportation Company held
40% interest in Chicago South Shore &#038; South Bend Railroad Co. and a 40% interest in Indiana
Illinois Development Company, LLC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Income Taxes</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Income taxes for the first nine months of 2008 were
$117.4 million, a decrease of $22.8 million compared to the first nine months of 2007 due primarily to recent
legislation in Massachusetts that reduced income tax expense by $13.5 million in the third quarter of 2008
(discussed above) and lower pretax income.  The effective
tax rate for the first nine months of 2008 was 32.6% compared to 36.6% for the comparable
period last year due to the impact of the recent legislation in Massachusetts.  Absent the adjustment
for Massachusetts deferred income taxes discussed above, the effective tax rates for the nine months ended
September 30, 2008 and September 30, 2007 are comparable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Discontinued Operations</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the nine months ended September&nbsp;30, 2008, NiSource recognized a $325.8&nbsp;million loss from
discontinued operations compared to income from discontinued operations of $11.0&nbsp;million in the
comparable 2007 period. This loss is primarily attributable to an adjustment to the reserve for
the Tawney litigation discussed previously. In addition, in the first quarter of 2008, NiSource
began accounting for the operations of Northern Utilities, Granite State Gas and Whiting Clean
Energy as discontinued operations. As such, net income of $3.2&nbsp;million was classified as net
income (loss)&nbsp;from discontinued operations for the nine months ended September&nbsp;30, 2008, and net
income of $3.7&nbsp;million was reclassified for the nine months ended September&nbsp;30, 2007. For the nine
months ended September&nbsp;30, 2008, NiSource recorded an estimated after-tax loss of $103.9&nbsp;million
for the dispositions of Northern Utilities, Granite State Gas and Whiting Clean Energy. In the
third quarter of 2008, NiSource began accounting for the operations of NiSource Retail Services as
discontinued operations. As such, net income from continuing operations of $0.4&nbsp;million was
classified as net income (loss)&nbsp;from discontinued operations for the nine months ended September
30, 2008, and no amount was reclassified for the nine months ended September&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A significant portion of NiSource&#146;s operations, most notably in the gas distribution, gas
transportation and electric businesses, is subject to seasonal fluctuations in cash flow. During
the heating season, which is primarily from November through March, cash receipts from gas sales
and transportation services typically exceed cash requirements. During the summer months, cash on
hand, together with the seasonal increase in cash flows from the electric business during the
summer cooling season and external short-term and long-term financing, is used to purchase gas to
place in storage for heating season deliveries, perform necessary maintenance of facilities, make
capital improvements in plant and expand service into new areas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;23, 2008, NiSource supplemented its $1.5&nbsp;billion revolving credit facility (which
extends into 2011) with a new $500&nbsp;million credit agreement. This agreement is designed to provide
ample liquidity to fund ongoing operations and accommodate the company&#146;s seasonal cash flow
requirements, such as the purchase of natural gas supplies to meet customer needs, as well as to
provide for short-term payment requirements related to the Tawney settlement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Activities</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash flows from operating activities for the nine months ended September&nbsp;30, 2008 were $250.3
million, a decrease of $148.6&nbsp;million from the first nine months
of 2007. A $116.4&nbsp;million
increase in deferred taxes was more than offset by net changes in assets and liabilities. The
weather and gas prices significantly impacted working capital. Higher gas prices in 2008 increased
the cash requirements for inventories and unrecovered gas cost. Periodic rate filings will
generally allow for recovery of higher gas prices in future periods. In addition, increases in
regulatory assets, including a bad debt tracker, Percentage of Income Payment Plan, and the pass
back to customers per the Columbia of Ohio stipulation settlement, generated a use of working
capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Pension and Other Postretirement Plan Funding. </I></B>Consistent with the overall stock market decline,
NiSource&#146;s pension assets have incurred a negative return on assets of approximately 17% for 2008
through September&nbsp;30, 2008. As a result, NiSource expects that cash contributions for pension
benefit plans and pension expense will likely be higher in 2009 and future periods. NiSource
expects to make contributions of $6.1&nbsp;million to its pension plans and $38.3&nbsp;million to its other
postretirement benefit plans during 2008, which could change depending on
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
 market conditions. Through September&nbsp;30, 2008, NiSource has contributed $4.8&nbsp;million to its
pension plans and $27.1&nbsp;million to its other postretirement benefit plans.
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Investing Activities</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash capital expenditures of $679.4&nbsp;million during the first nine months of 2008 were $173.8
million higher than the comparable 2007 period. The spending for the first nine months primarily
reflected on-going system improvements and upgrades to maintain service and reliability. Capital
spending will be higher in 2008 compared to last year, mainly for increased integrity-management
expenditures and growth projects in the Gas Transmission and Storage Operations segment,
expenditures to replace key generation unit components within the Electric Operations segment, and
bare steel replacement programs in the Gas Distribution Operations segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Due to recent developments in the broader economy, management is considering reducing capital
expenditures below $1&nbsp;billion annually for 2009 and 2010. Management will continue to evaluate
economic conditions as it sets capital budgets in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;30, 2008, Northern Indiana purchased the Sugar Creek facility for $329.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Proceeds from disposition of assets primarily included the Whiting Clean Energy sale proceeds of
$217.2&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Restricted cash activity consisted of an increase of $186.1&nbsp;million in restricted cash balances
compared to a decrease of $44.6&nbsp;million of restricted cash balances for the first nine months of
2008 and 2007, respectively. This increase in restricted cash balances is due to the volatility
in forward gas contracts, which resulted in increased margin deposits on open derivative contracts
at September&nbsp;30, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Financing Activities</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Long-Term Debt. </I></B>During July&nbsp;2008, Northern Indiana redeemed $24.0&nbsp;million of its medium-term
notes, with an average interest rate of 6.80%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;15, 2008, NiSource Finance issued $500.0&nbsp;million of 6.80% unsecured notes that mature
January&nbsp;15, 2019 and $200.0&nbsp;million of 6.15% unsecured notes that mature on March&nbsp;1, 2013. The
notes due in 2013 constitute a further issuance of the $345.0&nbsp;million 6.15% notes issued February
19, 2003, and will form a single series having an aggregate principal amount outstanding of $545.0
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;31, 2007, NiSource Finance issued $800&nbsp;million of 6.40% 10.5-year unsecured notes that
mature March&nbsp;15, 2018.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Jasper County Pollution Control Bonds</I><B><I>. </I></B>Northern Indiana has seven series of Jasper County
Pollution Control Bonds with a total principal value of $254&nbsp;million currently outstanding. Prior
to March&nbsp;25, 2008, each of the series bore interest at rates established through auctions that took
place at either 7, 28, or 35&nbsp;day intervals. Between February&nbsp;13, 2008 and March&nbsp;5, 2008, Northern
Indiana received notice that six separate market auctions of four series of the Jasper County
Pollution Control Bonds had failed. As a result, those series representing an aggregate principal
amount of $112&nbsp;million of the Jasper County Pollution Control Bonds bore interest at default rates
equal to 15% or 18% per annum. Subsequent auctions were successful, but resulted in interest rates
between 5.13% and 11.0%, which were in excess of historical market rates. These auction failures
were attributable to the resulting lack of liquidity in the auction rate securities market, largely
driven by the turmoil in the bond insurance market. The Jasper County Pollution Control Bonds are
insured by either Ambac Assurance Corporation or MBIA Insurance Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana converted all seven series of Jasper County Pollution Control Bonds from the
auction rate mode to a variable rate demand bond mode between March&nbsp;25, 2008 and April&nbsp;11, 2008 and
repurchased the bonds as part of the conversion process. Between April&nbsp;11, 2008 and August&nbsp;24,
2008, all of the Jasper County Pollution Control Bonds were held in Northern Indiana&#146;s treasury.
On August&nbsp;25, 2008, Northern Indiana converted all of the Jasper County Pollution Control Bonds
from a variable rate demand mode to a fixed rate mode, and reoffered the bonds to
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
external investors. As a result of the fixed rate conversion and reoffering process, the weighted
average interest rate is now fixed at 5.58%.
</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana reflected the Jasper County Pollution Control Bonds as an offset to long-term debt
within the Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of March&nbsp;31 and June&nbsp;30, 2008 upon
repurchase and the debt was considered extinguished per SFAS No.&nbsp;140. As such, unamortized debt
expense of $4.6&nbsp;million previously recorded under deferred charges and other was reclassified to a
regulatory asset. The Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of September&nbsp;30, 2008
reflects the reissuance of the long term debt. The repurchase and the subsequent re-issuance of
these bonds are included under, &#147;Financing Activities,&#148; in the Condensed Statement of Consolidated
Cash Flow (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Credit Facilities. </I></B>During September&nbsp;2008, NiSource Finance entered into a new $500&nbsp;million
six-month revolving credit agreement with a syndicate of banks led by Barclays Capital that expires
March&nbsp;23, 2009. During July&nbsp;2006, NiSource Finance amended its $1.25&nbsp;billion five-year revolving
credit facility increasing the aggregate commitment level to $1.5&nbsp;billion, extending the
termination date by one year to July&nbsp;7, 2011, and reduced the cost of borrowing. These facilities
are designed to provide a reasonable cushion of short-term liquidity for general corporate purposes
and in anticipation of continuing volatile natural gas prices, as well as to provide for short-term
payment requirements related to the Tawney settlement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource Finance had outstanding credit facility borrowings of $1,263.0&nbsp;million at September&nbsp;30,
2008, at a weighted average interest rate of 3.99%, and borrowings of $1,061.0&nbsp;million at December
31, 2007, at a weighted average interest rate of 5.43%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008 and December&nbsp;31, 2007, NiSource Finance had $90.1&nbsp;million and $110.4
million of stand-by letters of credit outstanding, respectively. At September&nbsp;30, 2008, $3.7
million of the $90.1&nbsp;million total outstanding letters of credit resided within a separate
bi-lateral letter of credit arrangement with Barclays Bank that NiSource Finance obtained during
February&nbsp;2004. Of the remaining $86.4&nbsp;million of stand-by letters of credit outstanding at
September&nbsp;30, 2008, $83.5&nbsp;million resided under NiSource Finance&#146;s five-year credit facility and
$2.9&nbsp;million resided under an uncommitted arrangement with another financial institution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008, an aggregate of $653.5&nbsp;million of credit was available under both credit
facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sale of Trade Accounts Receivables. </I></B>On May&nbsp;14, 2004, Columbia of Ohio entered into an agreement to
sell, without recourse, substantially all of its trade receivables, as they originate, to CORC, a
wholly-owned subsidiary of Columbia of Ohio. CORC, in turn, is party to an agreement with Dresdner
Bank AG, also dated May&nbsp;14, 2004, under the terms of which it sells an undivided percentage
ownership interest in the accounts receivable to a commercial paper conduit. On July&nbsp;1, 2006, the
agreement was amended to increase the program limit from $300&nbsp;million to $350&nbsp;million. The
agreement currently expires on June&nbsp;26, 2009. As of September&nbsp;30, 2008, $83.7&nbsp;million of accounts
receivable had been sold by CORC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the agreement, Columbia of Ohio acts as administrative agent, by performing record keeping
and cash collection functions for the accounts receivable sold by CORC. Columbia of Ohio receives
a fee, which provides adequate compensation, for such services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;30, 2003, Northern Indiana entered into an agreement to sell, without recourse, all of
its trade receivables, as they originate, to NRC, a wholly-owned subsidiary of Northern Indiana.
NRC, in turn, is party to an agreement with Citibank, N.A. under the terms of which it sells an
undivided percentage ownership interest in the accounts receivable to a commercial paper conduit.
The conduit can purchase up to $200&nbsp;million of accounts receivable under the agreement. NRC&#146;s
agreement with the commercial paper conduit has a scheduled expiration date of December&nbsp;19, 2008,
and can be renewed if mutually agreed to by both parties. As of September&nbsp;30, 2008, NRC had sold
$139.2&nbsp;million of accounts receivable. Under the arrangement, Northern Indiana may not sell any
new receivables if Northern Indiana&#146;s debt rating falls below BBB- or Baa3 at Standard and Poor&#146;s
or Moody&#146;s, respectively.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the agreement, Northern Indiana acts as administrative agent, performing record keeping and
cash collection functions for the accounts receivable sold. Northern Indiana receives a fee, which
provides adequate compensation, for such services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Contractual Obligations. </I></B>As of September&nbsp;30, 2008, NiSource has $4.1&nbsp;million of estimated federal
and state income tax liabilities, including interest, recorded on its books in accordance with FIN
48. If or when such amounts may be settled is uncertain and cannot be estimated at this time.
NiSource does not anticipate any significant changes to its liability for unrecognized tax benefits
over the next twelve months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Market Risk Disclosures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Risk is an inherent part of NiSource&#146;s energy businesses. The extent to which NiSource properly
and effectively identifies, assesses, monitors and manages each of the various types of risk
involved in its businesses is critical to its profitability. NiSource seeks to identify, assess,
monitor and manage, in accordance with defined policies and procedures, the following principal
risks that are involved in NiSource&#146;s energy businesses: commodity market risk, interest rate risk
and credit risk. Risk management at NiSource is a multi-faceted process with oversight by the Risk
Management Committee that requires constant communication, judgment and knowledge of specialized
products and markets. NiSource&#146;s senior management takes an active role in the risk management
process and has developed policies and procedures that require specific administrative and business
functions to assist in the identification, assessment and control of various risks. In recognition
of the increasingly varied and complex nature of the energy business, NiSource&#146;s risk management
policies and procedures continue to evolve and are subject to ongoing review and modification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Various analytical techniques are employed to measure and monitor NiSource&#146;s market and credit
risks, including VaR. VaR represents the potential loss or gain for an instrument or portfolio
from changes in market factors, for a specified time period and at a specified confidence level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Commodity Price Risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource is exposed to commodity price risk as a result of its subsidiaries&#146; operations involving
natural gas and power. To manage this market risk, NiSource&#146;s subsidiaries use derivatives,
including commodity futures contracts, swaps and options. NiSource is not involved in speculative
energy trading activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Commodity price risk resulting from derivative activities at NiSource&#146;s rate-regulated subsidiaries
is limited, since regulations allow recovery of prudently incurred purchased power, fuel and gas
costs through the rate-making process, including gains or losses on these derivative instruments.
If states should explore additional regulatory reform, these subsidiaries may begin providing
services without the benefit of the traditional rate-making process and may be more exposed to
commodity price risk. Some of NiSource&#146;s rate-regulated utility subsidiaries offer commodity price
risk products to its customers for which derivatives are used to hedge forecasted customer usage
under such products. These subsidiaries do not have regulatory recovery orders for these products
and are subject to gains and losses recognized in earnings due to hedge ineffectiveness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Interest Rate Risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource is exposed to interest rate risk as a result of changes in interest rates on borrowings
under revolving credit agreements and floating rate notes, which have interest rates that are
indexed to short-term market interest rates. NiSource is also exposed to interest rate risk due to
changes in interest rates on fixed-to-variable interest rate swaps that hedge the fair value of
long-term debt. Based upon average borrowings and debt obligations subject to fluctuations in
short-term market interest rates, an increase (or decrease) in short-term interest rates of 100
basis points (1%) would have increased (or decreased) interest expense by $6.2&nbsp;million and $17.8
million for the quarter and nine months ended September&nbsp;30, 2008, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Credit Risk</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Due to the nature of the industry, credit risk is a factor in many of NiSource&#146;s business
activities. NiSource&#146;s extension of credit is governed by a Corporate Credit Risk Policy. Written
guidelines approved by NiSource&#146;s Risk Management Committee document the management approval levels
for credit limits, evaluation of creditworthiness,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and credit risk mitigation procedures. Exposures to credit risks are monitored by the Corporate
Credit Risk function which is independent of commercial operations. Credit risk arises due to the
possibility that a customer, supplier or counterparty will not be able or willing to fulfill its
obligations on a transaction on or before the settlement date. For derivative contracts such as
interest rate swaps, credit risk arises when counterparties are obligated to pay NiSource the
positive fair value or receivable resulting from the execution of contract terms. Exposure to
credit risk is measured in terms of both current obligations and the market value of forward
positions. Current credit exposure is generally measured by the notional or principal value of
obligations and direct credit substitutes, such as commitments, stand-by letters of credit and
guarantees. In determining exposure, NiSource considers collateral that it holds to reduce
individual counterparty credit risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the ongoing credit crisis in the financial markets, NiSource has been closely
monitoring the financial status of its banking credit providers and interest rate swap
counterparties. NiSource continues to evaluate the financial status of its banking partners
through the use of market-based metrics such as credit default swap pricing levels, and also
through traditional credit ratings provided by the major credit rating agencies. On October&nbsp;14,
2008, the U.S. Treasury Department announced plans to inject as much as $250&nbsp;billion into U.S.
banks and savings and loan institutions, (the TARP Capital Purchase Program), in an attempt to
improve the financial position of U.S. banks. In addition, the Federal Reserve is evaluating the
acquisition of several financial institutions by larger banks having stronger financial positions.
As a result of these two recent initiatives, NiSource believes the financial status of its banking
partners is generally strong, and will continue to improve as a result of these federal government
actions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to the U.S. Treasury&#146;s announcement of the TARP Capital Purchase Program and the announcement
of certain bank acquisitions as described above, the parent company of one of NiSource&#146;s interest
rate swap counterparties, Lehman Brothers Holdings Inc., filed for Chapter&nbsp;11 bankruptcy
protection, impacting the status of an outstanding swap in the notional amount of $110&nbsp;million. As
a result, on September&nbsp;15, 2008, NiSource Finance terminated a fixed-to-variable interest rate swap
agreement with Lehman Brothers. NiSource Finance elected to terminate the swap when Lehman
Holdings Inc., guarantor under the applicable International Swaps and Derivatives Association
agreement, filed for Chapter&nbsp;11 bankruptcy protection on September&nbsp;14, 2008, which constituted an
event of default under the swap agreement between NiSource Finance and Lehman Brothers Special
Financing Inc. The mark-to-market close-out value of this swap at the September&nbsp;15, 2008
termination date was determined to be $4.8&nbsp;million. NiSource Finance recognized a $4.8&nbsp;million
reserve, which increases interest expense, for the Lehman swap and an additional $0.7&nbsp;million
reserve to recognize potential additional swap counterparty credit exposures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource also reviewed its exposure to all other counterparties including the other interest rate
swap counterparties. Although NiSource concluded that there was no significant risk, an additional
reserve of $0.7&nbsp;million was recorded at September&nbsp;30, 2008 to recognize credit risk related to one
other counterparty. NiSource will continue to closely monitor events in the credit markets, as
well as overall economic conditions in the nation and the markets we serve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Fair Value Measurement </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource measures fair value in accordance with SFAS No.&nbsp;157 for its financial assets and
liabilities. The level of the fair value hierarchy disclosed is based on the lowest level of input
that is significant to the fair value measurement. NiSource&#146;s financial assets and liabilities
include price risk assets and liabilities, available-for-sale securities and a deferred
compensation plan obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Exchange-traded derivative contracts are generally based on unadjusted quoted prices in active
markets and are classified within Level 1. These financial assets and liabilities are secured with
cash on deposit with the exchange; therefore nonperformance risk has not been incorporated into
these valuations. Certain non-exchange-traded derivatives are valued using broker or
over-the-counter, on-line exchanges. In such cases, these non-exchange-traded derivatives are
classified within Level 2. Non-exchange-based derivative instruments include swaps, forwards, and
options. In certain instances, these instruments may utilize models to measure fair value. The
company uses a similar model to value similar instruments. Valuation models utilize various inputs
that include quoted prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active, other observable inputs
for the asset or liability, and market-corroborated inputs, i.e., inputs derived principally from
or corroborated by observable market data by correlation or other means. Where observable inputs
are available for substantially the full term of the asset or liability, the instrument is
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM
2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">categorized in Level 2. Certain derivatives trade in less active markets with a lower availability
of pricing information and models may be utilized in the valuation. When such inputs have a
significant impact on the measurement of fair value, the instrument is categorized in Level 3.
Credit risk is considered in the fair value calculation of derivative instruments that are not
exchange-traded. Credit exposures are adjusted to reflect collateral agreements which reduce
exposures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Price risk management assets also include fixed-to-floating interest-rate swaps, which are
designated as fair value hedges, as a means to achieve its targeted level of variable-rate debt as
a percent of total debt. NiSource uses a calculation of future cash inflows and estimated future
outflows related to the swap agreements, which are discounted and netted to determine the current
fair value. Additional inputs to the present value calculation include the contract terms, as well
as market parameters such as current and projected interest rates and volatility. As they are
based on observable data and valuations of similar instruments, the interest-rate swaps are
categorized in Level 2 in the fair value hierarchy. Credit risk is considered in the fair value
calculation of the interest rate swap. Credit exposures are adjusted to reflect collateral
agreements which reduce exposures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Available-for-sale securities include assets in NiSource&#146;s deferred compensation trust and
investments pledged as collateral for trust accounts related to NiSource&#146;s wholly-owned insurance
company. Securities classified within Level 1 include U.S. Treasury debt securities which are
highly liquid and are actively traded in over-the-counter markets. NiSource values corporate and
mortgage-backed debt securities using a matrix pricing model that incorporates market-based
information. These securities trade less frequently, take into consideration default risk, and are
generally classified within Level 2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s deferred compensation plan allows participants to defer certain cash compensation into a
notional investment account. The value of the deferred compensation obligation is based on the
market value of the participants&#146; notional investment accounts. The notional investments include
balances which are credited based upon published interest and bond yield indices and investments in
mutual funds. NiSource uses the lowest level of input significant to the valuation to determine
the fair value hierarchy classification, and therefore the liability is categorized in Level 2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Refer to Note 11, &#147;Fair Value of Financial Assets,&#148; in the Notes to the Condensed Consolidated
Financial Statements for additional information on NiSource&#146;s fair value measurements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Market Risk Measurement</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Market risk refers to the risk that a change in the level of one or more market prices, rates,
indices, volatilities, correlations or other market factors, such as liquidity, will result in
losses for a specified position or portfolio. NiSource calculates a one-day VaR at a 95%
confidence level for the gas marketing group that utilize a variance/covariance methodology. The
daily market exposure for the gas marketing portfolio on an average, high and low basis was $0.2
million, $0.3&nbsp;million and $0.1&nbsp;million during the third quarter of 2008, respectively.
Prospectively, management has set the VaR limit at $0.8&nbsp;million for gas marketing. Exceeding this
limit would result in management actions to reduce portfolio risk. Power and gas derivative
contracts entered into to manage price risk associated with Whiting Clean Energy were limited to
quantities surrounding the physical generation capacity of Whiting Clean Energy and the gas
requirements to operate the facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Refer to Note 9, &#147;Risk Management and Energy Marketing Activities,&#148; in the Notes to Condensed
Consolidated Financial Statements (unaudited)&nbsp;for further discussion of NiSource&#146;s risk management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a part of normal business, NiSource and certain subsidiaries enter into various agreements
providing financial or performance assurance to third parties on behalf of certain subsidiaries.
Such agreements include guarantees and stand-by letters of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has issued guarantees that support up to approximately $512.7&nbsp;million of commodity-related
payments for its current subsidiaries involved in energy marketing to satisfy requirements under
forward gas sales. These
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NiSource Inc.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">guarantees were provided to counterparties in order to facilitate physical and financial
transactions involving natural gas and electricity. To the extent liabilities exist under the
commodity-related contracts subject to these guarantees, such liabilities are included in the
Condensed Consolidated Balance Sheets (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has purchase and sales agreement guarantees totaling $297.5&nbsp;million, which guarantee
performance of the seller&#146;s covenants, agreements, obligations, liabilities, representations and
warranties under the agreements. No amounts related to the purchase and sales agreement guarantees
are reflected in the Condensed Consolidated Balance Sheets (unaudited). Management believes that
the likelihood NiSource would be required to perform or otherwise incur any significant losses
associated with any of the aforementioned guarantees is remote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource has other guarantees outstanding. Refer to Note 17-A, &#147;Guarantees and Indemnities,&#148; in
the Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional information
about NiSource&#146;s off balance sheet arrangements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Critical Accounting Policies</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Goodwill Assets. </B>NiSource&#146;s goodwill assets at September&nbsp;30, 2008 were $3,677.3&nbsp;million pertaining
primarily to the acquisition of Columbia on November&nbsp;1, 2000. The goodwill balances at September
30, 2008 for Northern Indiana Fuel and Light and Kokomo Gas were $13.3&nbsp;million and $5.5&nbsp;million,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the quarters ended June&nbsp;30, 2008 and June&nbsp;30, 2007, NiSource performed its annual impairment
test of goodwill associated with the purchases of Columbia, Northern Indiana Fuel and Light and
Kokomo Gas. For the purpose of testing impairment of the goodwill recorded in the acquisition of
Columbia, the related subsidiaries were aggregated into two distinct reporting units, one within
the Gas Distribution Operations segment and one within the Gas Transmission and Storage Operations
segment. The results of the June&nbsp;30 impairment tests indicated that no impairment charge was
required, as the fair values of the reporting units exceeded the carrying values. NiSource uses
the discounted cash flow method to estimate the fair value of its reporting units for the purposes
of this test. This valuation methodology and underlying financial information that are used to
determine fair value require significant judgments to be made by management. These judgments
include, but are not limited to, long term projections of future financial performance and the
selection of appropriate discount rates used to determine the present value of future cash flows.
Changes in such estimates or the application of alternative assumptions could produce significantly
different results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2008, NiSource&#146;s market capitalization was approximately $4.0&nbsp;billion, while
NiSource&#146;s net assets, inclusive of goodwill, were $4.7&nbsp;billion. NiSource&#146;s market capitalization
at June&nbsp;30, 2008 of approximately $4.9&nbsp;billion was above NiSource&#146;s net asset value when the annual
impairment test was performed. In accordance with paragraph 28 of SFAS No.&nbsp;142, NiSource
considered whether there were any events or changes in circumstances during the third quarter that
would more likely than not reduce the fair value of any of the reporting units below their carrying
amounts and necessitate another goodwill impairment test and concluded that there were none.
NiSource attributes the decline in its market capitalization primarily to the overall stock market
decline resulting from the credit crisis taking place in the United States, and not any fundamental
change in NiSource&#146;s regulated gas distribution and gas transmission and storage businesses that
comprise the reporting units for which goodwill is attributable. NiSource&#146;s stock price decline of
21.9% from December&nbsp;31, 2007 compares to the overall declines of the S&#038;P Utilities Average and Dow
Jones Industrial Average, of 22.3% and 18.2% respectively, over the same nine-month time period.
NiSource considers the decline in its stock price, and the underlying reasons for that decline, to
be short-term and not indicative of an actual decline in the company&#146;s fair value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s reportable entities with goodwill consist of regulated companies. Regulated recovery
rates and approved rate of returns allow for more predictable and steady streams of revenues and
cash flows which helps mitigate the impacts that might otherwise be felt from the recessionary
trends seen in other industries and also adds more reliability to the cash flow forecasts used to
calculate fair value. NiSource reviewed its estimates and assumptions used in the discounted cash
flow model at June&nbsp;30, 2008, noting that there are no significant changes that would be
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->59<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">made in light of the changing economic circumstances during the third quarter. It should also be
noted that NiSource&#146;s ability to obtain credit remains strong as evidenced by a new short-term
credit facility of $500&nbsp;million that was obtained on September&nbsp;23, 2008 and Northern Indiana&#146;s
re-issuance of the Jasper County Pollution Control Bonds for $254&nbsp;million on August&nbsp;25, 2008 with a
weighted average interest rate now fixed at 5.58%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Recently Adopted Accounting Pronouncements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;157 &#150; Fair Value Measurements. </I></B>In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157 to define
fair value, establish a framework for measuring fair value and to expand disclosures about fair
value measurements. SFAS No.&nbsp;157 does not change the requirements to apply fair value in existing
accounting standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under SFAS No.&nbsp;157, fair value refers to the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the market in
which the reporting entity transacts. The standard clarifies that fair value should be based on
the assumptions market participants would use when pricing the asset or liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To increase consistency and comparability in fair value measurements, SFAS No.&nbsp;157 establishes a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three levels. The level in the fair value hierarchy disclosed is based on the lowest level of
input that is significant to the fair value measurement. The three levels of the fair value
hierarchy defined by SFAS No.&nbsp;157 are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 1 inputs are quoted prices (unadjusted)&nbsp;in active markets for identical asset or
liabilities that the company has the ability to access as of the reporting date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly through corroboration
with observable market data.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Level 3 inputs are unobservable inputs, such as internally developed pricing models for
the asset or liability due to little or no market activity for the asset or liability.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS No.&nbsp;157 became effective for NiSource as of January&nbsp;1, 2008. The provisions of SFAS No.&nbsp;157
are to be applied prospectively, except for the initial impact on the following three items, which
are required to be recorded as an adjustment to the opening balance of retained earnings in the
year of adoption: (1)&nbsp;changes in fair value measurements of existing derivative financial
instruments measured initially using the transaction price under EITF Issue No.&nbsp;02-3, (2)&nbsp;existing
hybrid financial instruments measured initially at fair value using the transaction price and (3)
blockage factor discounts. The adoption of SFAS No.&nbsp;157 did not have an impact on NiSource&#146;s
January&nbsp;1, 2008 balance of retained earnings and is not anticipated to have a material impact
prospectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2008, the FASB issued FSP FAS 157-2, which delays the effective date of SFAS No.&nbsp;157
for all nonrecurring fair value measurements of non-financial assets and liabilities until fiscal
years beginning after November&nbsp;15, 2008. NiSource has elected to defer the adoption of the
nonrecurring fair value measurement disclosures of non-financial assets and liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In October&nbsp;2008, the FASB issued FSP FAS 157-3, which clarifies the application of SFAS No.&nbsp;157 in
a market that is not active and provides an example to illustrate key considerations in determining
the fair value of a financial asset when the market for that financial asset is not active. The
FSP was effective upon issuance, including prior periods for which financial statements have not
been issued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 11, &#147;Fair Value of Financial Assets and Liabilities,&#148; in the Notes to Condensed
Consolidated Financial Statements (unaudited)&nbsp;for additional information regarding the adoption of
SFAS No.&nbsp;157.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;158 &#150; Employers&#146; Accounting for Defined Benefit Pension and Other Postretirement Plans.</I></B>
In September&nbsp;2006, the FASB issued SFAS No.&nbsp;158 to improve existing reporting for defined benefit
postretirement
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->60<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">plans by requiring employers to recognize in the statement of financial position the overfunded or
underfunded status of a defined benefit postretirement plan, among other changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the fourth quarter of 2006, NiSource adopted the provisions of SFAS No.&nbsp;158. Based on the
measurement of the various defined benefit pension and other postretirement plans&#146; assets and
benefit obligations at September&nbsp;30, 2006, the pretax impact of adopting SFAS No.&nbsp;158 decreased
intangible assets by $46.5&nbsp;million, decreased deferred charges and other assets by $1.1&nbsp;million,
increased regulatory assets by $538.8&nbsp;million, increased accumulated other comprehensive income by
$239.8&nbsp;million and increased accrued liabilities for postretirement and postemployment benefits by
$251.4&nbsp;million. In addition, NiSource recorded a reduction in deferred income taxes of
approximately $96&nbsp;million. With the adoption of SFAS No.&nbsp;158 NiSource determined that for certain
rate-regulated subsidiaries the future recovery of pension and other postretirement plans costs is
probable in accordance with the requirements of SFAS No.&nbsp;71. These rate-regulated subsidiaries
recorded regulatory assets and liabilities that would otherwise have been recorded to accumulated
other comprehensive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2007, NiSource adopted the SFAS No.&nbsp;158 measurement date provisions requiring
employers to measure plan assets and benefit obligations as of the fiscal year-end. The pre-tax
impact of adopting the SFAS No.&nbsp;158 measurement date provisions increased deferred charges and
other assets by $9.4&nbsp;million, decreased regulatory assets by $89.6&nbsp;million, decreased retained
earnings by $11.3&nbsp;million, increased accumulated other comprehensive income by $5.3&nbsp;million and
decreased accrued liabilities for postretirement and postemployment benefits by $74.2&nbsp;million.
NiSource also recorded a reduction in deferred income taxes of approximately $2.6&nbsp;million. In
addition, 2007 expense for pension and postretirement benefits reflects the updated measurement
date valuations. Refer to Note 14, &#147;Pension and Other Postretirement Benefits,&#148; in the Notes to
Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;159 &#150; The Fair Value Option for Financial Assets and Financial Liabilities &#150; Including an
amendment of FASB Statement No.&nbsp;115. </I></B>In February&nbsp;2007, the FASB issued SFAS No.&nbsp;159 which permits
entities to choose to measure certain financial instruments at fair value that are not currently
required to be measured at fair value. Upon adoption, a cumulative adjustment would be made to
beginning retained earnings for the initial fair value option remeasurement. Subsequent unrealized
gains and losses for fair value option items will be reported in earnings. SFAS No.&nbsp;159 is
effective for fiscal years beginning after November&nbsp;15, 2007 and should not be applied
retrospectively, except as permitted for certain conditions for early adoption. NiSource has
chosen not to elect to measure any applicable financial assets or liabilities at fair value
pursuant to this standard when SFAS No.&nbsp;159 was adopted on January&nbsp;1, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>FSP FIN 39-1 &#150; FASB Staff Position Amendment of FASB Interpretation No.&nbsp;39. </I></B>In April&nbsp;2007, the
FASB posted FSP FIN 39-1 to amend paragraph 3 of FIN 39 to replace the terms <I>conditional contracts</I>
and e<I>xchange contracts </I>with the term <I>derivative instruments </I>as defined in SFAS No.&nbsp;133. This FSP
also amends paragraph 10 of FIN 39 to permit a reporting entity to offset fair value amounts
recognized for the right to reclaim cash collateral or the obligation to return cash collateral
against fair value amounts recognized for derivative instruments executed with the same
counterparty under a master netting arrangement. This FSP became effective for NiSource as of
January&nbsp;1, 2008. NiSource has not elected to net fair value amounts for its derivative instruments
or the fair value amounts recognized for its right to receive cash collateral or obligation to pay
cash collateral arising from those derivative instruments recognized at fair value, which are
executed with the same counterparty under a master netting arrangement. This is consistent with
NiSource&#146;s current accounting policy prior to the adoption of this amended standard. NiSource
discloses amounts recognized for the right to reclaim cash collateral within &#147;Restricted cash&#148; and
amounts recognized for the right to return cash collateral within current liabilities on the
Consolidated Balance Sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>FIN 48 &#150; Accounting for Uncertainty in Income Taxes. </I></B>In June&nbsp;2006, the FASB issued FIN 48 to
reduce the diversity in practice associated with certain aspects of the recognition and measurement
requirements related to accounting for income taxes. Specifically, this interpretation requires
that a tax position meet a &#147;more-likely-than-not recognition threshold&#148; for the benefit of an
uncertain tax position to be recognized in the financial statements and requires that benefit to be
measured at the largest amount of benefit that is greater than 50% likely of being realized upon
ultimate settlement. The determination of whether a tax position meets the more-likely-than-not
recognition threshold is based on whether it is probable of being sustained on audit by the
appropriate taxing
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->61<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">authorities, based solely on the technical merits of the position. Additionally, FIN 48 provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning after December&nbsp;15, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2007, NiSource adopted the provisions of FIN 48. As a result of the implementation
of FIN 48, NiSource recognized a charge of $0.8&nbsp;million to the opening balance of retained
earnings. Refer to Note 13, &#147;Income Taxes,&#148; in the Notes to Condensed Consolidated Financial
Statements (unaudited)&nbsp;for additional information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Recently Issued Accounting Pronouncements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;161 &#150; Disclosures about Derivative Instruments and Hedging &#151; an amendment of SFAS No.&nbsp;133.</I></B>
In March&nbsp;2008, the FASB issued SFAS No.&nbsp;161 to amend and expand the disclosure requirements of
SFAS No.&nbsp;133 with the intent to provide users of the financial statement with an enhanced
understanding of how and why an entity uses derivative instruments, how these derivatives are
accounted for and how the respective reporting entity&#146;s financial statements are affected. SFAS
No.&nbsp;161 is effective for fiscal years and interim periods beginning after November&nbsp;15, 2008, and
earlier application is encouraged. NiSource is currently reviewing the provisions of SFAS No.&nbsp;161
to determine the impact it may have on its disclosures within the Notes to Condensed Consolidated
Financial Statements (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;160 &#150; Noncontrolling Interests in Consolidated Financial Statements &#151; an amendment of ARB
No.&nbsp;51. </I></B>In December&nbsp;2007, the FASB issued SFAS No.&nbsp;160 to improve the relevance, comparability,
and transparency of the financial information that a reporting entity provides in its consolidated
financial statements regarding non-controlling ownership interests in a business and for the
deconsolidation of a subsidiary. SFAS No.&nbsp;160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December&nbsp;15, 2008 and earlier adoption is
prohibited. NiSource is currently reviewing the provisions of SFAS No.&nbsp;160 to determine the impact
it may have on the Condensed Consolidated Financial Statements (unaudited)&nbsp;and Notes to Condensed
Consolidated Financial Statements (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>SFAS No.&nbsp;141R &#150; Business Combinations. </I></B>In December&nbsp;2007, the FASB issued SFAS No.&nbsp;141R to improve
the relevance, representational faithfulness, and comparability of information that a reporting
entity provides in its financial reports regarding business combinations and its effects, including
recognition of assets and liabilities, the measurement of goodwill and required disclosures. SFAS
No.&nbsp;141R is effective for fiscal years, and interim periods within those fiscal years, beginning on
or after December&nbsp;15, 2008 and earlier adoption is prohibited. NiSource is currently reviewing the
provisions of SFAS No.&nbsp;141R to determine the impact on future business combinations.<BR>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->62<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)</u>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RESULTS AND DISCUSSION OF SEGMENT OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Presentation of Segment Information</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s operations are divided into four primary business segments; Gas Distribution Operations,
Gas Transmission and Storage Operations, Electric Operations, and Other Operations.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->63<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.<BR></b></FONT><b>
Gas Distribution Operations</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>621.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">523.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4,095.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,435.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Cost of gas sold (excluding depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>436.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,029.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,367.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>185.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,065.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,068.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operation and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>157.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>578.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>56.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>171.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Gain) loss on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>128.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>241.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>877.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">841.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Income (Loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(56.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(41.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>188.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">226.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues ($ in Millions)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>271.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,190.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,936.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>108.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>778.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">675.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>57.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>229.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Off System</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>172.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>782.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>114.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>621.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,095.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,435.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Sales and Transportation (MMDth)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>186.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>121.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>92.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>284.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Off System</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>77.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>141.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>670.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">653.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Heating Degree Days</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,150</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,157</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Normal Heating Degree Days</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,192</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>% Colder (Warmer) than Normal</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(62</B></TD>
    <TD nowrap><B>)%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1</B></TD>
    <TD nowrap><B>)%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Customers</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,969,166</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,977,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>274,383</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,663</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,991</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,016</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>72</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,251,612</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,259,693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s natural gas distribution operations serve approximately 3.3&nbsp;million customers in seven
states: Ohio, Indiana, Pennsylvania, Massachusetts, Virginia, Kentucky and Maryland. The
regulated subsidiaries offer both traditional bundled services as well as transportation only for
customers that purchase gas from alternative suppliers. The operating results reflect the
temperature-sensitive nature of customer demand with 73% of annual residential and commercial
throughput affected by seasonality. As a result, segment operating income is higher in the first
and fourth quarters reflecting the heating demand during the winter season.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource
Inc.<BR></b></FONT>
<b>Gas Distribution Operations(continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Regulatory Matters</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Significant Rate Developments. </B>Columbia of Ohio filed a base rate case with the PUCO on March&nbsp;3,
2008, requesting an increase in base rates in excess of $80&nbsp;million annually. Columbia of Ohio is
seeking recovery of increased infrastructure rehabilitation costs, as well as the stabilization of
revenues and cost recovery through rate design. A settlement agreement was filed on October&nbsp;24,
2008. The agreement recommends an annual revenue increase of $47.1&nbsp;million, and also provides for
recovery of costs associated with Columbia of Ohio&#146;s infrastructure rehabilitation program. Rate
design issues are to be resolved by the PUCO. The case is currently pending, and is expected to be
resolved before the end of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;28, 2008, Columbia of Pennsylvania filed a base rate case with the Pennsylvania Public
Utility Commission, seeking an increase of approximately $60&nbsp;million annually, effective October
28, 2008. Through this filing, Columbia of Pennsylvania sought to recover costs associated with
its significant infrastructure rehabilitation program, as well as stabilize revenues and cost
recovery through modifications to rate design. On July&nbsp;2, 2008, Columbia of Pennsylvania and all
interested parties filed a unanimous settlement with the Pennsylvania Public Utilities Commission.
On October&nbsp;23, 2008, the Pennsylvania Public Utilities Commission issued an order approving the
settlement as filed, increasing annual revenues by $41.5 million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;17, 2007, Bay State petitioned the DPU to allow the company to collect an additional
$7.5&nbsp;million in annual revenue related to usage reductions occurring since its last rate case. Bay
State also requested approval of a steel infrastructure tracker that would allow for recovery of
ongoing infrastructure replacement program investments. The DPU held hearings on this matter in
the first quarter of 2008 and issued an order denying Bay State&#146;s petition on April&nbsp;30, 2008.
NiSource has decided not to appeal this case, and continues to weigh its options. On July&nbsp;16,
2008, the DPU issued an order in its generic decoupling proceeding for gas utilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;1, 2008, Columbia of Maryland filed a base rate case with the Maryland Public Service
Commission, seeking an increase of approximately $3.7&nbsp;million annually. New rates are expected to
take effect during the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cost Recovery and Trackers. </B>A significant portion of the distribution companies&#146; revenue is
related to the recovery of gas costs, the review and recovery of which occurs via standard
regulatory proceedings. All states require periodic review of actual gas procurement activity to
determine prudence and to permit the recovery of prudently incurred costs related to the supply of
gas for customers. NiSource distribution companies have historically been found prudent in the
procurement of gas supplies to serve customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain operating costs of the NiSource distribution companies are significant, recurring in
nature, and generally outside the control of the distribution companies. Some states allow the
recovery of such costs via cost tracking mechanisms. Such tracking mechanisms allow for
abbreviated regulatory proceedings in order for the distribution companies to implement charges and
recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as
compared with more traditional cost recovery mechanisms. Examples of such mechanisms include gas
cost recovery adjustment mechanisms, tax riders, and bad debt recovery mechanisms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Comparability of Gas Distribution Operations line item operating results is impacted by these
regulatory trackers that allow for the recovery in rates of certain costs such as bad debt
expenses. Increases in the expenses that are the subject of trackers result in a corresponding
increase in net revenues and therefore have essentially no impact on total operating income
results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain of the NiSource distribution companies are embarking upon plans to replace significant
portions of their operating systems that are nearing the end of their useful lives. Those
companies are currently evaluating requests for increases in rates in order to allow recovery of
the additional capital expenditures required for such plans. Each LDC&#146;s approach to cost recovery
may be unique, given the different laws, regulations and precedent that exist in each jurisdiction.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR><B>
Gas Distribution Operations(continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2008, the PUCO issued an order approving, in all material respects, a joint Stipulation
submitted on behalf of Columbia of Ohio. This Stipulation is a result of a process that began on
April&nbsp;13, 2005 with a PUCO ordered investigation into the type of gas risers installed in the
state, the conditions of installation and overall performance. The Stipulation provides for:
establishment of accounting for and recovery of costs resulting from the Staff&#146;s investigation;
Columbia&#146;s performance of a survey to identify those customer-owned risers on its system prone to
failure; and related customer education and other program related expenses. In addition this
Stipulation provides for: Columbia&#146;s assumption of financial responsibility for the replacement of
all risers identified as prone to failure; repair or replacement of hazardous customer owned
service lines; and capitalization of this investment with recovery to be addressed in future rate
proceedings. As of September&nbsp;30, 2008, Columbia of Ohio has approximately $38.5&nbsp;million in costs
associated with the gas riser and customer service line programs recorded as a regulatory asset
and/or capitalized plant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;28, 2007, Columbia of Ohio entered into a Stipulation with the Ohio Consumers&#146; Counsel
and PUCO Staff and other stakeholders resolving litigation concerning a pending Gas Cost Recovery
audit of Columbia of Ohio. The Stipulation calls for an accelerated pass back to customers of
$36.6&nbsp;million that will occur from January&nbsp;31, 2008 through January&nbsp;31, 2009, generated through
off-system sales and capacity release programs, the development of new energy efficiency programs
for introduction in 2009, and the development of a wholesale auction process for customer supply to
take effect in 2010. Approximately $21.2&nbsp;million was passed back through September&nbsp;2008. The
Stipulation also resolves issues related to pending and future Gas Cost Recovery Management
Performance audits through 2008. The PUCO approved this agreement on January&nbsp;23, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2008, Columbia of Ohio filed an application with the PUCO for permission to create a new
comprehensive energy conservation program. If approved by the PUCO, Columbia of Ohio&#146;s DSM program
would offer a wide range of services to residential and small commercial customers. Columbia of
Ohio proposes to recover the three-year, $24.9&nbsp;million cost of the DSM conservation program through
a rider that would be added to residential and small commercial customer bills beginning in May
2010. On July&nbsp;23, 2008, the PUCO issued an order approving Columbia of Ohio&#146;s proposal subject to
the approval of the DSM cost recovery rider proposed in the currently pending rate case, and any
other conditions that may be imposed in the rate case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Customer Usage. </B>The NiSource distribution companies have experienced declining usage by customers,
due in large part to the sensitivity of sales to increases in commodity prices. A significant
portion of the LDCs&#146; operating costs are fixed in nature. Historically, rate design at the
distribution level has been structured such that a large portion of cost recovery is based upon
throughput, rather than in a fixed charge. Many of NiSource&#146;s LDCs are evaluating mechanisms that
would &#147;de-couple&#148; the recovery of fixed costs from throughput, and implement recovery mechanisms
that more closely link the recovery of fixed costs with fixed charges. Each of the states in which
the NiSource LDCs operate has different requirements regarding the procedure for establishing such
changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Environmental Matters</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Various environmental matters occasionally impact the Gas Distribution Operations segment. As of
September&nbsp;30, 2008, a reserve has been recorded to cover probable environmental response actions.
Refer to Note 17-C, &#147;Environmental Matters,&#148; in the Notes to Condensed Consolidated Financial
Statements (unaudited)&nbsp;for additional information regarding environmental matters for the Gas
Distribution Operations segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Restructuring</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payments made for all restructuring initiatives within Gas Distribution Operations amounted to zero
and $0.9&nbsp;million for the third quarter and first nine months of 2008, respectively, and the
restructuring liability remaining at September&nbsp;30, 2008 was zero. Refer to Note 4, &#147;Restructuring
Activities,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional
information regarding restructuring initiatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Sale of Northern Utilities </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;15, 2008, NiSource reached a definitive agreement under which Unitil Corporation will
acquire NiSource subsidiaries Northern Utilities and Granite State Gas for $160&nbsp;million plus net
working capital at the time of closing. Northern Utilities is a local gas distribution company
serving 52 thousand customers in 44 communities in Maine and New Hampshire. In the first quarter
of 2008, NiSource began accounting for the operations of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->66<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT><BR><B>
Gas Distribution Operations(continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Utilities as discontinued operations. As such, a net loss of $1.3&nbsp;million and net income
of $5.0&nbsp;million from continuing operations for Northern Utilities, which affected the Gas
Distribution Operations segment, was classified as net income from discontinued operations for the
three months and nine months ended September&nbsp;30, 2008, respectively, and there was a net loss of
$1.4&nbsp;million and net income of $3.2&nbsp;million reclassified for the three months and nine months ended
September&nbsp;30, 2007, respectively. Refer to Note 5, &#147;Discontinued Operations and Assets Held for
Sale,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional
information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Weather</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In general, NiSource calculates the weather related revenue variance based on changing customer
demand driven by weather variance from normal heating degree-days. Normal is evaluated using
heating degree days across the NiSource distribution region. While the temperature base for
measuring heating degree-days (i.e. the estimated average daily temperature at which heating load
begins) varies slightly across the region, the NiSource composite measurement is based on 62
degrees. NiSource composite heating degree-days reported do not directly correlate to the weather
related dollar impact on the results of Gas Distribution operations. Heating degree-days
experienced during different times of the year or in different operating locations may have more or
less impact on volume and dollars depending on when and where they occur. When the detailed
results are combined for reporting, there may be weather related dollar impacts on operations when
there is not an apparent or significant change in the aggregated NiSource composite heating
degree-day comparison.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Weather in the Gas Distribution Operation&#146;s territories for the third quarter of 2008 was 62%
warmer than normal and 39% warmer than the comparable quarter in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Weather in the Gas Distribution Operation&#146;s territories for the first nine months of 2008 was close
to normal and comparable to the same period in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Throughput</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Total volumes sold and transported of 141.0 MMDth for the third quarter of 2008 decreased slightly
by 6.6 MMDth from the same period last year. Decreases in residential, commercial and off-system
sales volumes resulting primarily from warmer weather were mostly offset by increased industrial
usage in the current period compared to the same period last year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Total volumes sold and transported of 670.2 MMDth for the first nine months of 2008 increased 16.5
MMDth from the same period last year. This increase in volume was primarily due to higher
off-system sales and increased industrial usage for the first nine months of 2008 compared to the
same period last year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues for the three months ended September&nbsp;30, 2008 were $185.0&nbsp;million, a decrease of $2.7
million from the same period in 2007, due primarily to decreased revenues of $4.4&nbsp;million from the
implementation of the Columbia of Ohio Stipulation entered into with the Ohio Consumers&#146; Counsel
and the PUCO at the end of 2007, partially offset by increases from regulatory trackers of $3.1
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues for the nine months ended September&nbsp;30, 2008 were $1,065.8&nbsp;million, a decrease of $2.2
million from the same period in 2007, due primarily to warmer weather of approximately $14&nbsp;million,
reduced revenues of $7.7&nbsp;million from the implementation of the Columbia of Ohio Stipulation
entered into with the Ohio Consumers&#146; Counsel and the PUCO at the end of 2007 and decreased
industrial and commercial margins of $5.7&nbsp;million. These decreases were partially offset by
increased residential usage of $7.9&nbsp;million, increased net revenues of $8.6&nbsp;million from rate
proceedings and an increase in the gas cost adjustment
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Income</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the third quarter of 2008, Gas Distribution Operations reported an operating loss of $56.2
million compared to an operating loss of $41.2&nbsp;million for the same period in 2007. The increase
in operating loss was attributable to higher operating expenses of $12.3&nbsp;million, inclusive of an
increase in regulatory tracker expenses of $2.5&nbsp;million which are offset in revenues, and lower net
revenues described above. Operating expenses increased primarily due
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->67<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Gas Distribution Operations(continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to higher uncollectible accounts of $2.4&nbsp;million, the impact of a $2.4&nbsp;million reduction of expense
incurred in 2007 for a regulatory initiative and a $1.7&nbsp;million increase in outside service cost
and higher property and other taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the first nine months of 2008, Gas Distribution Operations reported operating income of $188.4
million compared to operating income of $226.4&nbsp;million for the same period in 2007. The decrease
in operating income was primarily attributable to increased operating expenses of $35.8&nbsp;million.
Operating expense increases were primarily due to higher employee and administrative expenses of
$12.1&nbsp;million, increased property and other taxes of $4.8&nbsp;million, higher depreciation expense of
$3.0&nbsp;million, higher uncollectible accounts of $2.6&nbsp;million and the impact of a $2.4&nbsp;million
reduction of expense incurred in 2007 for a regulatory initiative.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->68<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Gas Transmission and Storage Operations</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Transportation revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>155.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">154.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>491.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">480.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Storage revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>44.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>134.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>201.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>628.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">618.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operation and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>243.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>29.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>87.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment and (gain)&nbsp;loss on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>42.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>122.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>370.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity Earnings in Unconsolidated Affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>82.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">75.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>265.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Throughput (MMDth)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Transmission </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">
Market Area</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>217.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>770.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">742.1</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Gulf </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>




<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">
Mainline</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>156.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>482.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">489.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-haul</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>67.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>212.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Columbia Pipeline Deep Water</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Crossroads Gas Pipeline</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>27.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intrasegment eliminations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(128.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(129.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(398.0</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(419.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>321.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">281.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,096.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,001.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s Gas Transmission and Storage Operations segment consists of the operations of Columbia
Transmission, Columbia Gulf, Columbia Deep Water, Crossroads Pipeline, and Central Kentucky
Transmission. In total NiSource owns a pipeline network of approximately 16 thousand miles
extending from offshore in the Gulf of Mexico to New York and the eastern seaboard. The pipeline
network serves customers in 16 northeastern, mid-Atlantic, midwestern and southern states, as well
as the District of Columbia. In addition, the NiSource Gas Transmission and Storage Operations
segment operates one of the nation&#146;s largest underground natural gas storage systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>NiSource Energy Partners, L.P.</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;21, 2007, NiSource Energy Partners, L.P., an MLP and subsidiary of NiSource, filed a
Form S-1 registration statement with the SEC in which it proposed making an initial public offering
of common units in the MLP and NiSource proposed contributing its interest in Columbia Gulf to the
MLP. NiSource management believes the formation of an MLP is a natural complement to NiSource&#146;s
gas transmission and storage growth strategy, and should provide NiSource access to competitively
priced capital to support future growth investment. The initial public offering will not occur in
2008 due to the damage sustained at Columbia Gulf&#146;s Hartsville, Tennessee, compressor station,
following the tornados at the facility as described previously, as well as overall financial market
conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Millennium Pipeline Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Millennium received FERC approval for a pipeline project, in which Columbia Transmission is
participating, which will provide access to a number of supply and storage basins and the Dawn,
Ontario trading hub. The reconfigured project, which was approved by the FERC in a certificate
order issued December&nbsp;21, 2006, will begin at an
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->69<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Gas Transmission and Storage Operations (continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">interconnect with Empire, an existing pipeline that originates at the Canadian border and extends
easterly towards Syracuse, New York. Empire will construct a lateral pipeline southward to connect
with Millennium near Corning, New York. Millennium will extend eastward to an interconnect with
Algonquin at Ramapo, New York. The Millennium partnership is currently made up of the following
companies: Columbia Transmission (47.5%), DTE Millennium (26.25%), and KeySpan Millennium (26.25%).
Columbia Transmission is the operator.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The reconfigured Millennium project relies on completion of some or all of several other related
pipeline projects proposed by Empire, Algonquin, and Iroquois collectively referred to as the
&#147;Companion Pipelines.&#148; The December&nbsp;21, 2006 certificate order also granted the necessary project
approvals to the Companion Pipelines. Construction began on June&nbsp;22, 2007 with a projected
in-service date in December&nbsp;2008. Mainline construction activities continue to proceed. All
shipments of pipe and deliveries to various pipeyards are complete. The project includes twelve
horizontal direction drill sites, four of which are complete and eight are in process.
Construction on the compressor station is progressing as planned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;29, 2007, Millennium entered into a bank credit agreement to finance the construction of
the Millennium Pipeline project. As a condition precedent to the credit agreement, NiSource issued
a guarantee securing payment for its indirect ownership interest percentage of amounts borrowed
under the financing agreement up until such time as the amounts payable under the agreement are
paid in full. The permanent financing for Millennium is expected to be completed when debt capital
market conditions improve. In the interim, Millennium will continue to be funded by the $800
million credit agreement, which extends through August&nbsp;2010. Additional information on this
guarantee is provided in Note 17-A, &#147;Guarantees and Indemnities,&#148; in the Notes to Condensed
Consolidated Financial Statements (unaudited).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Hardy Storage Project</U><BR>
Hardy Storage completed its sixth full quarter of operations, receiving customer injections and
withdrawing natural gas from its new underground natural gas storage facility in West Virginia.
Injections this year will allow the field to deliver up to 150,000 Dth of natural gas per day
during the 2008-2009 winter heating season. Customers withdrew over 5.44 Bcf from the storage
field during the 2007-2008 winter heating season. When fully operational in 2009, the field will
have a working storage capacity of 12 Bcf, delivering more than 176,000 Dth of natural gas per day.
Hardy Storage is a joint venture of subsidiaries of Columbia Transmission and Piedmont.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Transmission, the operator of Hardy Storage, has expanded its natural gas transmission
system by 176,000 Dth per day to provide the capacity needed to deliver Hardy Storage supplies to
customer markets. Construction of these transmission facilities is complete and the facilities
were placed into full service during the first half of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Florida Gas Transmission Expansion Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An open season to solicit interest and contracts for expanded capacity on Columbia Gulf&#146;s system
for delivery to Florida Gas Transmission was held in late 2007 and contracts for 100,000 Dth per
day of capacity were executed. This project was placed into service in May&nbsp;2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Eastern Market Expansion Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;3, 2007, Columbia Transmission filed a certificate application before the FERC for approval
to expand its facilities to provide additional storage and transportation services and to replace
certain existing facilities. This Eastern Market Expansion is projected to add 97,000 Dth per day
of storage and transportation deliverability and is fully subscribed on a 15-year contracted firm
basis. On January&nbsp;14, 2008, the FERC issued a favorable order which granted a certificate to
construct the project. Construction of the facilities is underway and the project is expected to
be in service by April&nbsp;2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Appalachian Expansion Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;29, 2008, Columbia Transmission filed an application before the FERC for approval to
build a new 9,470 horsepower compressor station in West Virginia. The Appalachian Expansion
Project will add 100,000 Dth per day of transportation capacity and is fully subscribed on a
15-year contracted firm basis. On August&nbsp;22, 2008,
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->70<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Gas Transmission and Storage Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
 the FERC issued a favorable order which granted
a certificate to construct the project. Construction is in progress and the project is expected to
be in service in the fourth quarter of 2009.</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Ohio Storage Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;24, 2008, Columbia Transmission filed an application before the FERC for approval to expand
two of its Ohio storage fields for additional capacity of nearly 7 MMDths and 103,400 Dth per day
of daily deliverability. If required approvals are granted as requested, construction would begin
in 2009 and the expanded facilities would be placed in service by the end of 2009. The expansion
capacity is 58% contracted on a long-term, firm basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>New Penn Transmission Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2008, Columbia Transmission concluded an open season to gauge customer
interest in a new pipeline system to provide 500,000 Dth per day of firm service from storage
facilities near Leidy, PA to a new interconnection with Millennium Pipeline in Steuben County, New
York in 2010. NiSource is continuing to explore interest in this project and other demand for
capacity in the region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Centerville Expansion Project </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An open season to solicit interest and receive bids for expanded capacity on Columbia Gulf&#146;s system
for delivery to Southern Natural Gas and the Louisiana intrastate pipeline market was held during
the first quarter of 2008, and bids for 60,000 Dth per day of capacity were submitted. The
remaining 175,000 Dth per day of capacity is expected to be sold under firm contracts prior to the
facilities being placed into service. The project is expected to be placed into service in late
2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>MarkWest Energy Partners, LP Joint Venture Project </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In August&nbsp;2008, Columbia Transmission and MarkWest Energy Partners, LP, announced their intention
to jointly develop several natural gas gathering and processing projects to support increased
natural gas production in the Appalachian Basin. The two companies are in discussions with several
natural gas producers to provide new gathering and gas processing services in association with
Columbia Transmission&#146;s existing Majorsville, WV, compressor station, located in the northern
panhandle area of West Virginia and Western Pennsylvania.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Columbia Penn Project</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2008, Columbia Transmission announced its intention to develop additional natural gas
transmission, gathering and processing services along and around its existing pipeline corridor
between Waynesburg, PA, and Corning, NY, referred to as the &#147;Columbia Penn&#148; corridor. This
two-phased development will accelerate access to pipeline capacity in conjunction with production
increases in the Marcellus Shale formation which underlies Columbia Transmission&#146;s transmission and
storage network in the region. Phase I is anticipated to give customers access to capacity in
early 2009, while Phase II would be available by the end of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Sales and Percentage of Physical Capacity Sold</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Transmission and Columbia Gulf compete for transportation customers based on the type of
service a customer needs, operating flexibility, available capacity and price. Columbia Gulf and
Columbia Transmission provide a significant portion of total transportation services under firm
contracts and derive a smaller portion of revenues through interruptible contracts, with management
seeking to maximize the portion of physical capacity sold under firm contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Firm service contracts require pipeline capacity to be reserved for a given customer between
certain receipt and delivery points. Firm customers generally pay a &#147;capacity reservation&#148; fee
based on the amount of capacity being reserved regardless of whether the capacity is used, plus an
incremental usage fee when the capacity is used. Annual capacity reservation revenues derived from
firm service contracts generally remain constant over the life of the contract because the revenues
are based upon capacity reserved and not whether the capacity is actually used. The high
percentage of revenue derived from capacity reservation fees mitigates the risk of revenue
fluctuations within the Gas Transmission and Storage Operations segment due to changes in near-term
supply and demand conditions. For the nine months ended September&nbsp;30, 2008 approximately 90.2% of
the transportation revenues were derived from capacity reservation fees paid under firm contracts
and 5.5% of the transportation revenues were derived from usage fees under firm contracts. This is
compared to approximately 88.7% of the transportation revenues derived from capacity reservation
fees paid under firm contracts and 5.3% of transportation revenues derived from usage
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->71<!-- /Folio -->
</DIV>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Gas Transmission and Storage Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">fees under firm contracts for the nine months ended September&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interruptible transportation service is typically short term in nature and is generally used by
customers that either do not need firm service or have been unable to contract for firm service.
These customers pay a usage fee only for the volume of gas actually transported. The ability to
provide this service is limited to available capacity not otherwise used by firm customers, and
customers receiving services under interruptible contracts are not assured capacity in the pipeline
facilities. Gas Transmission and Storage Operations provides interruptible service at competitive
prices in order to capture short-term market opportunities as they occur and interruptible service
is viewed by management as an important strategy to optimize revenues from the gas transmission
assets. For the nine months ended September&nbsp;30, 2008 and 2007, approximately 4.3% and 6.0% of the
transportation revenues were derived from interruptible contracts, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Significant FERC Developments</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Columbia Gulf and Columbia Transmission are cooperating with the FERC on an informal, non-public
investigation of certain operating practices regarding tariff services offered by those companies.
Although the companies are continuing to cooperate with the FERC in an effort to reach a consensual
settlement, it is likely that any settlement will require the payment of fines or refunds.
Management does not expect these fines and refunds to be material to the results of operations for
2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Hartsville and Delhi Compressor Stations</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;5, 2008, tornados struck Columbia Gulf&#146;s Hartsville Compressor Station in Macon County,
Tennessee. The damage to the facility forced Columbia Gulf to declare force majeure because no gas
was flowing through this portion of the pipeline system while a facility assessment was being
performed and the current contractual transportation agreements of 2.156 Bcf per day could not be
met. Since that time Columbia Gulf has constructed both temporary and permanent facilities at
Hartsville. On July&nbsp;19, 2008, the station completed the installation of temporary horsepower and
restored capacity to flow up to 2.156 Bcf per day. During the next 12 to 14&nbsp;months, the temporary
facilities that were constructed to restore system capabilities will be replaced with a permanent
solution. The temporary capacity will remain in place while the permanent solution is installed.
NiSource expects the majority of the reconstruction costs for the compressor station and ancillary
facilities and the business interruption losses caused by this event to be recovered through
insurance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;14, 2007, Columbia Gulf&#146;s Line 100 ruptured approximately two miles north of its Delhi
Compressor Station in Louisiana. The damage to the pipeline forced Columbia Gulf to declare force
majeure because no gas was flowing through this portion of the pipeline system on Lines 100, 200
and 300 while a facility assessment was performed. One day later, Lines 200 and 300 were returned
to service and gas flow was restored on December&nbsp;16, 2007. On December&nbsp;19, 2007, the U.S.
Department of Transportation issued a Corrective Action Order. The Order required Columbia Gulf to
develop a remedial work plan to restore Line 100 pipeline&#146;s pressure and capacity. Between
December&nbsp;22, 2007 and June&nbsp;30, 2008, the Line 100 pipeline operated at less than full pressure and
full capacity. On July&nbsp;1, 2008, Columbia Gulf received permission from the U.S. Department of
Transportation to restore full pressure and full capacity on the Line 100 pipeline. Columbia Gulf
continues to operate under this Order. NiSource expects to recover a portion of the pipeline
replacement costs plus business interruption losses through insurance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Sale of Columbia Gulf&#146;s Offshore Assets</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;27, 2008, Columbia Gulf sold a portion of Columbia Gulf&#146;s offshore assets to Tennessee Gas
Pipeline Company for $7.5&nbsp;million, which resulted in a gain of $2.9&nbsp;million that was recorded
during the second quarter of 2008. Payment was received on July&nbsp;1, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Sale of Granite State Gas</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;15, 2008, NiSource reached a definitive agreement under which Unitil Corporation will
acquire NiSource subsidiaries Northern Utilities and Granite State Gas for $160&nbsp;million plus net
working capital at the time of closing. Granite State Gas is an 86-mile FERC regulated gas
transmission pipeline primarily located in Maine and New Hampshire. In the first quarter of 2008,
NiSource began accounting for the operations of Granite State Gas as discontinued operations. As
such, net income of zero and $0.5&nbsp;million from continuing operations for Granite State Gas, which
affected the Gas Transmission and Storage Operations segment, was classified as net income from
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->72<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Gas Transmission and Storage Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">discontinued operations for the three months and nine months ended September&nbsp;30, 2008,
respectively, and no amounts were reclassified for the three months and nine months ended September
30, 2007, respectively. Refer to Note 5, &#147;Discontinued Operations and Assets Held for Sale,&#148; in
the Notes to Condensed Consolidated Financial Statements (unaudited)&nbsp;for additional information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Environmental Matters</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Various environmental matters occasionally impact the Gas Transmission and Storage Operations
segment. As of September&nbsp;30, 2008, a reserve has been recorded to cover probable environmental
response actions. Refer to Note 17-C, &#147;Environmental Matters,&#148; in the Notes to Condensed
Consolidated Financial Statements (unaudited)&nbsp;for additional information regarding environmental
matters for the Gas Transmission and Storage Operations segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Restructuring</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payments made for all restructuring initiatives within Gas Transmission and Storage Operations
amounted to $0.4&nbsp;million and $0.9&nbsp;million for the third quarter and first nine months of 2008,
respectively, and the restructuring liability remaining at September&nbsp;30, 2008 was $0.4&nbsp;million.
Refer to Note 4, &#147;Restructuring Activities,&#148; in the Notes to Condensed Consolidated Financial
Statements (unaudited)&nbsp;for additional information regarding restructuring initiatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Throughput</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Throughput for the Gas Transmission and Storage Operations segment totaled 321.1 MMDth for the
third quarter of 2008, compared to 281.2 MMDth for the same period in 2007. The increase of 39.9
MMDth for the three-month period was primarily due to incremental volumes transported into storage
on Columbia Transmission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Throughput totaled 1,096.2 MMDth for the first nine months of 2008, compared to 1,001.3 MMDth for
the same year-ago period. The increase of 94.9 MMDth for the period was due primarily to
incremental volumes transported from new interconnects along the Columbia Gulf pipeline system and
market area transportation into storage on Columbia Transmission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues were $201.3&nbsp;million for the third quarter of 2008, an increase of $1.8&nbsp;million from
the same period in 2007, primarily due to increased subscriptions for firm transportation services
of $7.2&nbsp;million related to new interconnects along the Columbia Gulf pipeline system, deliveries
from the Hardy Storage field and incremental demand revenues on the Columbia Transmission system
partially offset by $3.0&nbsp;million of lower shorter-term transportation and storage services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues were $628.6&nbsp;million for the first nine months of 2008, an increase of $10.2&nbsp;million
from the same period in 2007, primarily due to increased subscriptions for firm transportation
services of $18.5&nbsp;million related to new interconnects along the Columbia Gulf pipeline system,
deliveries from the Hardy Storage field and incremental demand revenues on the Columbia
Transmission system. These increases in net revenues were partially offset by lower shorter-term
transportation and storage services and commodity related charge revenues of $6.7&nbsp;million and
insurance proceeds from a business interruption claim that improved last year&#146;s results by $2.6
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Income</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating income was $82.3&nbsp;million for the third quarter of 2008 compared to $75.0&nbsp;million in the
third quarter of 2007. Operating income increased $7.3&nbsp;million as a result of higher net revenues
described above and a decrease in operating expenses of $4.7&nbsp;million, which included lower employee
and administrative costs and outside services expenses partially offset by a $3.5&nbsp;million increase
in a legal reserve. Equity earnings increased by $0.8&nbsp;million due to higher earnings on Millennium
and Hardy Storage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating income was $265.0&nbsp;million for the first nine months of 2008 compared to $249.4&nbsp;million in
the first nine months of 2007. Operating income increased $15.6&nbsp;million as a result of higher net
revenues described above and a decrease in operating expenses of $6.2&nbsp;million, partially offset by
a decrease in equity earnings of $0.8&nbsp;million. Operating expenses decreased as a result of a $6.6
million impairment charge recognized in the comparable 2007 period related to base gas at a storage
field, a $2.9&nbsp;million gain recognized on the sale of certain Columbia Gulf offshore assets, $1.3
million in lower uncollectible accounts and lower insurance cost. These decreases in operating
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->73<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</u>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT><BR>
Gas Transmission and Storage Operations (continued)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">expenses were partially offset by higher employee and administrative costs of $6.1&nbsp;million, $4.1
million in increased legal reserves and a $2.8&nbsp;million reversal of a reserve in the comparable 2007
period for a legal matter. Equity earnings decreased by $0.8&nbsp;million due to lower earnings
associated with Millennium partially offset by increased earnings from Hardy Storage, which was
partially in service in 2007.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->74<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Electric Operations</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September, 30</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>380.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">378.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,054.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,040.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Cost of sales (excluding depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>160.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>449.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">419.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>220.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>605.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">620.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operation and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>71.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>233.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>157.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">143.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>44.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>139.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>434.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>81.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">85.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>170.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">223.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues ($ in millions)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>109.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>277.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>107.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>274.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>139.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>408.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Wholesale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>47.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>47.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>380.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">378.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,054.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,040.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Sales (Gigawatt Hours)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>980.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,129.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,532.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,768.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,083.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,109.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,979.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,043.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,403.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,409.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,294.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,083.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Wholesale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>220.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>550.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">782.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>102.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,725.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,129.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13,459.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,780.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cooling Degree Days</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>504</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>705</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">919</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Normal Cooling Degree Days</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>578</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>808</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">812</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>% Warmer (Colder) than Normal</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(13</B></TD>
    <TD nowrap><B>%)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(13</B></TD>
    <TD nowrap><B>%)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Electric Customers</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Residential</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>399,243</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,772</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,197</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,378</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Industrial</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,487</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Wholesale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>11</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>754</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">755</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>455,692</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">454,424</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource generates and distributes electricity, through its subsidiary Northern Indiana, to
approximately 456 thousand customers in 20 counties in the northern part of Indiana. The operating
results reflect the temperature-sensitive nature of customer demand with annual sales affected by
temperatures in the northern part of Indiana. As a result, segment operating income is generally
higher in the second and third quarters, reflecting cooling demand during the summer season.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Electric Supply</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;1, 2007, Northern Indiana filed its bi-annual IRP with the IURC. The plan showed the
need to add approximately 1,000 mw of new capacity. Additionally, during November&nbsp;2007, Northern
Indiana filed a CPCN as
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->75<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Electric Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">well as contracts to purchase power generated with renewable energy, specifically with wind. The
CPCN requested approval to purchase two CCGT power plants &#151; the Whiting Clean Energy facility owned
by PEI, a wholly-owned subsidiary of NiSource, and the Sugar Creek facility located in west central
Indiana and owned by LS Power Group. On December&nbsp;22, 2007, BPAE indicated it would exercise a
contractual right of first refusal to purchase the Whiting Clean Energy facility and subsequently
purchased the facility on June&nbsp;30, 2008. As a result, on January&nbsp;25, 2008, Northern Indiana filed
an amended CPCN to address just the Sugar Creek CCGT facility. On May&nbsp;30, 2008, Northern Indiana
purchased the facility for $329.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;24, 2008, Northern Indiana issued two requests for proposals to secure new sources of
electric power to meet the future needs of its residential, commercial and industrial customers.
The first request seeks capacity and energy proposals for up to 300 mw of electricity to address
Northern Indiana&#146;s projected electricity supply needs during the 2011 to 2016 time period. The
second request seeks up to 300 mw of electricity generated from renewable sources and/or DSM
technologies to address the Northern Indiana&#146;s projected electricity supply needs beginning in
2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Regulatory Matters</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Significant Rate Developments. </B>Northern Indiana filed a petition for new electric base rates and
charges on June&nbsp;27, 2008 and filed its case-in-chief on August&nbsp;29, 2008. The filing requests a
two-step increase. Step One is a request for an increase in base rates calculated to produce
additional gross margin of approximately $24&nbsp;million. Step Two requests an additional increase to
incorporate the return on and recovery of the Sugar Creek facility, which Northern Indiana
purchased on May&nbsp;30, 2008. The Step Two increase, if granted, would become effective as soon as
the Sugar Creek facility is no longer committed to the PJM Interconnection market and is dispatched
into MISO, but no later than June&nbsp;1, 2010. The hearing on Northern Indiana&#146;s case-in-chief is
scheduled to begin on January&nbsp;6, 2009. Several stakeholder groups have intervened in the case,
representing customer groups and various counties and towns within Northern Indiana&#146;s electric
service territory. Testimony from the OUCC and all intervenors will be due by April&nbsp;17, 2009.
Assuming the case goes through the full procedural schedule without settlement, the final hearing
is scheduled to begin July&nbsp;27, 2009 and new rates are anticipated to take effect in early 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2002, Northern Indiana indefinitely shut down its Mitchell Station. In the base rate
case filed on August&nbsp;29, 2008, Northern Indiana stated in pre-filed testimony that it intends to
retire the Mitchell station, demolish it, and remediate the site to industrial condition, subject
to the ability to recover these costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During 2002, Northern Indiana settled certain regulatory matters related to an electric rate
review. On September&nbsp;23, 2002, the IURC issued an order adopting most aspects of the settlement.
The order approving the settlement provides that electric customers of Northern Indiana will
receive bill credits of approximately $55.1&nbsp;million each year. The credits will continue at
approximately the same annual level and per the same methodology, until the IURC enters a base rate
order that approves revised Northern Indiana electric rates. The order included a rate moratorium
that expired on July&nbsp;31, 2006. The order also provides that 60% of any future earnings beyond a
specified earnings level will be retained by Northern Indiana. The revenue credit is calculated
based on electric usage; therefore, in times of high usage the credit may be more than $55.1
million. Credits amounting to $40.5&nbsp;million and $44.3&nbsp;million were recognized for electric
customers for the first nine months of 2008 and 2007, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>MISO. </B>As part of Northern Indiana&#146;s participation in the MISO transmission service and wholesale
energy market, certain administrative fees and non-fuel costs have been incurred. IURC orders have
been issued authorizing the deferral for consideration in a future rate case proceeding of the
administrative fees and certain non-fuel related costs incurred after Northern Indiana&#146;s rate
moratorium, which expired on July&nbsp;31, 2006. During the first nine months of 2008 non-fuel costs of
$1.9&nbsp;million were deferred in accordance with the aforementioned orders. In addition,
administrative, FERC and other fees of $5.0&nbsp;million were deferred. In the first nine months of
2008 and 2007, MISO costs of $6.9&nbsp;million and $18.4&nbsp;million, respectively, were deferred. In the
base rate case filed in August&nbsp;2008, Northern Indiana proposed a tracker for these MISO charges
which are currently being deferred.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->76<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Electric Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;25, 2006, the FERC issued an order on the MISO&#146;s Transmission and Energy Markets Tariff,
stating that MISO had violated the tariff on several issues including not assessing revenue
sufficiency guarantee charges on virtual bids and offers and for charging revenue sufficiency
guarantee charges on imports. The FERC ordered MISO to perform a resettlement of these charges
back to the start of the Day 2 Market. The resettlement began on June&nbsp;9, 2007 and ended in January
2008. Certain charge types included in the resettlement were originally considered to be non-fuel
and were recorded as regulatory assets, in accordance with previous IURC orders allowing deferral
of certain non-fuel MISO costs. During the fourth quarter 2007, based on precedent set by an IURC
ruling for another Indiana utility, Northern Indiana reclassified these charges, totaling $16.7
million, as fuel and included them in the fuel cost recovery mechanism in its latest FAC filing.
Prior to the hearing for FAC-78 on April&nbsp;17, 2008, several intervenors objected to a portion of the
$16.7&nbsp;million and Northern Indiana agreed to remove $7.6&nbsp;million from the FAC filing. This amount
represents the portion of the resettlement costs related to periods prior to December&nbsp;9, 2005. The
$7.6&nbsp;million was recorded as a reduction to net revenues in the first quarter of 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana is an active stakeholder in the process used in designing, testing and
implementing the ASM and in developing the surrounding business practices. On January&nbsp;18, 2008,
Northern Indiana as part of a Joint Petition among several other Indiana utilities &#147;Joint
Petitioners&#148; filed a request to the IURC to participate in ASM and seek approval of timely cost
recovery for the associated costs of participating. On August&nbsp;13, 2008, the IURC issued a Phase I
order, authorizing the Joint Petitioners authority to transfer additional balancing authority
functions and to implement the operational changes necessary to participate in the ASM and to seek
recovery of modified MISO charge-types via the FAC and to defer certain other MISO charge-types,
pending a final determination on the issue of cost recovery. This order also created a subdocket
for the purpose of further consideration of whether a cost-benefit analysis of participation in
MISO or the MISO ASM should be required. Phase II of this proceeding deals with how the Joint
Petitioners will approach the ASM, specifically related to operating reserves, and the specifics
regarding cost recovery. The evidentiary hearing for Phase II is scheduled for December&nbsp;22, 2008.
At this time, Northern Indiana is unable to determine what impact the ASM will have on its
operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cost Recovery and Trackers. </B>A significant portion of the Northern Indiana&#146;s revenue is related to
the recovery of fuel costs to generate power and the fuel costs related to purchased power. These
costs are recovered through a FAC, a standard, quarterly, &#147;summary&#148; regulatory proceeding in
Indiana.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;30, 2008, Northern Indiana purchased the Sugar Creek facility for $329.7&nbsp;million. The Sugar
Creek facility is a CCGT located in West Terre Haute, Indiana. Sugar Creek has a plant capacity
rating of 535 mw. Sugar Creek has transmission access to and is able to participate in both the
MISO and PJM Interconnection wholesale electricity markets. The plant is currently committed to
the PJM Interconnection market until May&nbsp;31, 2010. The purchase was in response to Northern
Indiana&#146;s need to add approximately 1,000 mw of new capacity, as filed in its bi-annual IRP with
the IURC on November&nbsp;1, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The IURC had issued an order on May&nbsp;28, 2008 approving the purchase of Sugar Creek, but denied
Northern Indiana&#146;s request for deferral of depreciation expense and carrying costs related to the
plant, beginning with the acquisition date, on the basis that the facility would not be used and
useful property under traditional regulation until the facility was operating inside of MISO. The
order also denied Northern Indiana&#146;s request for alternative regulatory treatment of the plant,
based on incomplete presentation of evidence, but provided for the establishment of a subdocket to
allow for the proper presentation and consideration of alternative regulatory treatment. On June
6, 2008, Northern Indiana filed its (a)&nbsp;Verified Petition for Rehearing; (b)&nbsp;Request for
Establishment of a Subdocket for Presentation and Consideration of an Alternative Regulatory Plan;
and (c)&nbsp;Motion for Consolidation (a single document) in Cause No.&nbsp;43396. The IURC established a
subdocket for consideration of Northern Indiana&#146;s Alternative Regulatory Plan. Northern Indiana&#146;s
case-in-chief was filed with the IURC on September&nbsp;26, 2008 and an evidentiary hearing in the
subdocket proceeding is scheduled for February 3 and 4, 2009. The subdocket proposes deferral of
depreciation and carrying costs associated with Sugar Creek and creation of a regulatory asset,
which would be reduced by the Sugar Creek capacity and energy revenues, net of operation and
maintenance expenses to operate the plant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The IRP included a commitment to using renewable energy, and a subsequent filing was made with the
IURC, requesting approval for Northern Indiana to enter into power purchase contracts with
subsidiaries of Iberdrola Renewables for wind-generated power in Iowa and South Dakota, and
requesting full recovery of all associated
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->77<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Electric Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">costs. On July&nbsp;24, 2008, the IURC issued an order approving Northern Indiana&#146;s proposed purchase
power agreement with subsidiaries of Iberdrola Renewables. The agreement provides Northern Indiana
the opportunity to purchase 100 mw of wind power commencing in early 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;30, 2008, the IURC approved a settlement agreement which was reached in October&nbsp;2007
with the OUCC, LaPorte County and a group of Northern Indiana industrial customers to resolve
questions relating to purchased power costs in the period from January&nbsp;1, 2006 through September
30, 2007. The terms of the settlement called for Northern Indiana to make a one-time payment of
$33.5&nbsp;million to FAC customers. A reserve for the entire amount was recorded in the third quarter
of 2007 and the refund was made to customers via the FAC in the periods of February through July
2008. As part of this agreement, Northern Indiana implemented a new &#147;benchmarking standard,&#148; that
became effective in October&nbsp;2007, which defines the price above which purchased power costs must be
absorbed by Northern Indiana and are not permitted to be passed on to customers. The benchmark is
based upon the costs of power generated by a hypothetical natural gas fired CCGT using gas
purchased and delivered to Northern Indiana. During the first nine months of 2008, the amount of
purchased power costs exceeding the benchmark amounted to $10.8&nbsp;million, which was recognized as a
net reduction of revenues. The agreement also contemplated Northern Indiana adding generating
capacity to its existing portfolio and that the benchmark would be adjusted as new capacity is
added. It was anticipated that the addition of the Sugar Creek capacity would trigger a change in
the benchmark beginning in June&nbsp;2008. However, based on the IURC order in the CPCN as described
above, the Sugar Creek capacity will not be considered until the plant is operating inside of MISO
and therefore the benchmark is unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;26, 2002, Northern Indiana received approval from the IURC for an ECT. Under the ECT,
Northern Indiana is permitted to recover (1)&nbsp;AFUDC and a return on the capital investment expended
by Northern Indiana to implement IDEM&#146;s NOx SIP through an ECRM and (2)&nbsp;related operation and
maintenance and depreciation expenses once the environmental facilities become operational through
an EERM. Under the IURC&#146;s November&nbsp;26, 2002 order, Northern Indiana is permitted to submit filings
on a semi-annual basis for the ECRM and on an annual basis for the EERM. In December&nbsp;2006,
Northern Indiana filed a petition with the IURC for appropriate cost treatment and recovery of
emission control construction needed to address the Phase I CAIR requirements of the Indiana Air
Pollution Control Board&#146;s CAIR rules that became effective on February&nbsp;25, 2007. On July&nbsp;3, 2007,
Northern Indiana received an IURC order issuing a CPCN for the CAIR and CAMR Phase I Compliance
Plan Projects, estimated to cost approximately $23&nbsp;million. Northern Indiana will include the CAIR
and CAMR Phase I Compliance Plan costs to be recovered in the semi-annual and annual ECRM and EERM
filing six months after construction costs begin. On October&nbsp;23, 2008, Northern Indiana filed for
approval of a revised cost estimate to meet the NOx and SO2 and mercury emissions environmental
standards. Northern Indiana anticipates a total capital investment of approximately $368&nbsp;million.
On October&nbsp;1, 2008, the IURC approved ECR-12 for capital expenditures (net of accumulated
depreciation) of $267.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the electric base rate case filed in August&nbsp;2008, Northern Indiana proposed a new tracker,
referred to as the Reliability Adjustment mechanism. The case proposes that this tracker be used
for recovery of MISO charges currently being deferred. This tracker is also intended to be used to
recover purchased power energy and capacity costs and to share with customers the proceeds of
off-system sales and transmission revenues, as well as to track costs and revenues associated with
emissions allowances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Northern Indiana is committed to offering DSM and energy efficiency programs to its electric
customers and plans to file a petition and case-in-chief requesting approval to implement a variety
of programs. The filing is expected to be made with the IURC in the fourth quarter of 2008, with
anticipated approval and implementation in 2009. Proposed programs will include rebates for
energy efficiency appliances and an air-conditioning cycling program, designed to reduce peak load.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;27, 2006, Indiana Gasification, LLC, Vectren Energy Delivery of Indiana, Citizens Gas &#038;
Coke Utility and Northern Indiana filed a joint petition at the IURC seeking approval for Indiana
Gasification, LLC to construct a coal gasification facility and the respective utilities to enter
into long-term contracts to purchase the energy output of the plant, both gas and electricity.
This filing was based upon a Letter of Intent that was entered into by the parties, but subject to
finalization of a contract and regulatory approval. On December&nbsp;12, 2007, Citizens Gas &#038; Coke
Utility filed a Motion with the IURC to withdraw from the petition. The parties have had frequent
negotiations
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->78<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Electric Operations (continued)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">during the two year period, but have not reached a definitive agreement. On October&nbsp;15, 2008,
Joint Petitioners filed a motion requesting that the technical conference scheduled for November
25, 2008 be used to establish a new procedural schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Environmental Matters</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Various environmental matters occasionally impact the Electric Operations segment. As of September
30, 2008, a reserve has been recorded to cover probable environmental response actions. Refer to
Note 17-C, &#147;Environmental Matters,&#148; in the Notes to Condensed Consolidated Financial Statements
(unaudited)&nbsp;for additional information regarding environmental matters for the Electric Operations
segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Sales</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Electric Operations sales quantities for the third quarter of 2008 were 4,725.4 gwh, compared to
5,129.8 gwh in the third quarter of 2007. The decrease was primarily due to lower residential,
commercial and wholesale volumes for the second quarter of 2008 compared to the same period last
year. The lower volumes were partially the result of cooler weather compared to last year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Electric Operations sales quantities for the first nine months of 2008 were 13,459.2 gwh, compared
to 13,780.0 gwh in the first nine months of 2007. The decrease was primarily due to lower
residential, commercial and wholesale volumes partially offset by higher industrial volumes for the
first nine months of 2008 compared to the same period last year. The lower volumes were partially
the result of cooler weather compared to last year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the third quarter of 2008, Electric Operations net revenues of $220.6&nbsp;million increased by $2.8
million from the comparable 2007 period. This increase was primarily due to the impact of a $33.5
million settlement in third quarter of 2007 related to the cost of power purchased by Northern
Indiana in 2006 and 2007, incremental revenues of $3.8&nbsp;million from the new Sugar Creek facility
and $2.6&nbsp;million in increased industrial net revenues. These increases in quarter over quarter net
revenues were partially offset by lower wholesale transactions of $13.9&nbsp;million, lower residential
and commercial sales volumes and margins of $8.9&nbsp;million, the impact of cooler weather of
approximately $7&nbsp;million and $4.3&nbsp;million of non-recoverable purchased power.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the first nine months of 2008, Electric Operations net revenues of $605.4&nbsp;million decreased by
$15.5&nbsp;million from the comparable 2007 period. This decrease was due to lower residential and
commercial sales volumes and margins of $22.0&nbsp;million, lower wholesale transactions of $12.8
million, $10.8&nbsp;million of non-recoverable purchased power, the impact of cooler weather of
approximately $10&nbsp;million and $9.6&nbsp;million of higher non-recoverable MISO charges. These decreases
in net revenues were partially offset by the impact of a $33.5&nbsp;million settlement in third quarter
of 2007 related to the cost of power purchased by Northern Indiana in 2006 and 2007, incremental
revenues of $5.1&nbsp;million from the new Sugar Creek facility and $10.9&nbsp;million in increased
industrial net revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Income</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating income for the third quarter of 2008 was $81.4&nbsp;million, a decrease of $4.0&nbsp;million from
the same period in 2007. The decrease in operating income was due to increased operating expenses
of $6.8&nbsp;million, partially offset by higher net revenues described above. Operating expenses
increased primarily due to higher electric generation and maintenance expenses of $5.0&nbsp;million,
which include incremental costs associated with the Sugar Creek facility, and a $2.5&nbsp;million
increase in depreciation expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating income for the first nine months of 2008 was $170.5&nbsp;million, a decrease of $52.7&nbsp;million
from the same period in 2007. The decrease in operating income was due to lower net revenues
described above and increased operating expenses of $37.2&nbsp;million. Operating expenses increased
primarily due to a $13.7&nbsp;million increase in depreciation which includes an $8.3&nbsp;million
depreciation expense adjustment recorded by Northern Indiana during the second quarter of 2008,
higher electric generation and maintenance expenses of $11.8&nbsp;million and higher employee and
administrative costs of $16.0&nbsp;million. The higher generation and maintenance expenses were
primarily attributable to a planned turbine and boiler maintenance and a generator overhaul and
$2.3&nbsp;million of incremental costs associated with the Sugar Creek facility.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->79<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 2.</U> <U>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.<BR></FONT>
Other Operations</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Three Months</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Nine Months</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September, 30</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Ended September, 30</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in millions)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">2007</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Products and services revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>257.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">210.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>902.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">775.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Cost of products purchased (excluding
depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>249.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>879.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">753.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating Expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operation and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment and (gain)&nbsp;loss on sale of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Operating Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>21.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Income (Loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Other Operations segment participates in energy-related services including gas marketing, gas
risk management and ventures focused on distributed power generation technologies, including fuel
cells and storage systems. Additionally, the Other Operations segment is involved in real estate
and other businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Lake Erie Land Company, Inc.</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Lake Erie Land, which is wholly-owned by NiSource, is in the process of selling real estate over a
10-year period as a part of an agreement reached in June&nbsp;2006 with a private real estate
development group. Part of the sale transaction included the assets of the Sand Creek Golf Club,
and NiSource began accounting for the operations of the Sand Creek Golf Club as discontinued
operations at that time. NiSource estimates the property to be sold to the private developer
during the next twelve months and classifies these assets as assets of discontinued operations and
held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>NDC Douglas Properties</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NDC Douglas Properties, a subsidiary of NiSource Development Company, is in the process of exiting
some of its low income housing investments. One of these investments was disposed of during 2007
and two other investments are expected to be sold or disposed of during 2009. NiSource has
accounted for the investments to be sold as assets and liabilities of discontinued operations and
held for sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Revenues</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues of $7.9&nbsp;million for the third quarter of 2008 increased by $1.2&nbsp;million from the third
quarter of 2007, as a result of higher commercial and industrial gas marketing revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net revenues of $23.2&nbsp;million for the first nine months of 2008 increased by $1.5&nbsp;million from the
first nine months of 2007, as a result of increased commercial and industrial gas marketing
revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Operating Income (Loss)</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other Operations reported operating income of $1.3&nbsp;million for the third quarter of 2008, versus an
operating loss of $1.0&nbsp;million for the comparable 2007 period. The increase in operating income
resulted primarily from higher net revenues described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other Operations reported operating income of $1.5&nbsp;million for the first nine months of 2008,
versus an operating loss of $1.2&nbsp;million for the comparable 2007 period. The increase in operating
income resulted primarily from increased net revenues described above.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->80<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 3.</U> <U>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For a discussion regarding quantitative and qualitative disclosures about market risk see
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations &#151; Market
Risk Disclosures.&#148;
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 4.</U> <U>CONTROLS AND PROCEDURES</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Evaluation of Disclosure Controls and Procedures</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s chief executive officer and its principal financial officer, after evaluating the
effectiveness of NiSource&#146;s disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)), have concluded based on the evaluation required by paragraph (b)&nbsp;of
Exchange Act Rules&nbsp;13a-15 and 15d-15 that, as of the end of the period covered by this report,
NiSource&#146;s disclosure controls and procedures are considered effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Changes in Internal Controls</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There have been no changes in NiSource&#146;s internal control over financial reporting during the
fiscal period covered by this report that has materially affected, or is reasonably likely to
affect, NiSource&#146;s internal control over financial reporting.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->81<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>PART II</B></U>
</DIV>

<DIV align="left">
<A name="112"></A>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1.</U> <U>LEGAL PROCEEDINGS</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Stand Energy Corporation, et al. v. Columbia Gas Transmission Corporation, et al., Kanawha
County Court, West Virginia</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;14, 2004, Stand Energy Corporation filed a complaint in Kanawha County Court in West
Virginia. The complaint contains allegations against various NiSource companies, including
Columbia Transmission and Columbia Gulf, and asserts that those companies and certain &#147;select
shippers&#148; engaged in an &#147;illegal gas scheme&#148; that constituted a breach of contract and
violated state law. The &#147;illegal gas scheme&#148; complained of by the plaintiffs relates to the
Columbia Transmission and Columbia Gulf gas imbalance transactions that were the subject of
the FERC enforcement staff investigation and subsequent settlement approved in October&nbsp;2000.
Columbia Transmission and Columbia Gulf filed a Motion to Dismiss on September&nbsp;10, 2004. In
October&nbsp;2004, however, the plaintiffs filed their Second Amended Complaint, which clarified
the identity of some of the &#147;select shipper&#148; defendants and added a federal antitrust cause of
action. To address the issues raised in the Second Amended Complaint, the Columbia companies
revised their briefs in support of the previously filed motions to dismiss. In June&nbsp;2005, the
Court granted in part and denied in part the Columbia companies&#146; motion to dismiss the Second
Amended Complaint. The Columbia companies have filed an answer to the Second Amended
Complaint. On December&nbsp;1, 2005, Plaintiffs filed a motion to certify this case as a class
action. The Columbia companies filed their opposition to this motion in March&nbsp;2008. All
briefing has been completed. Oral argument was heard on June&nbsp;3, 2008, and on August&nbsp;19, 2008,
the Court denied the Motion for Class&nbsp;Certification. The Columbia companies continue to
defend against the claims made by the individual plaintiffs. Trial is scheduled to begin
April&nbsp;28, 2009.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>United States of America ex rel. Jack J. Grynberg v. Columbia Gas Transmission Corporation,
et al., U.S. District Court, E.D. Louisiana</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The plaintiff filed a complaint in 1995, under the False Claims Act, on behalf of the United
States of America, against approximately seventy pipelines, including Columbia Gulf and
Columbia Transmission. The plaintiff claimed that the defendants had submitted false royalty
reports to the government by mismeasuring natural gas produced on Federal land and Indian
lands. The Plaintiff&#146;s original complaint was dismissed without prejudice for misjoinder of
parties and for failing to plead fraud with specificity. In 1997, the plaintiff filed over
sixty-five new False Claims Act complaints against over 330 defendants in numerous Federal
courts. One of those complaints was filed in the Federal District Court for the Eastern
District of Louisiana against Columbia and thirteen affiliated entities (collectively, the
&#147;Columbia defendants&#148;). This complaint repeats the mismeasurement claims previously made and
adds valuation claims alleging that the defendants undervalued natural gas for royalty
purposes in various ways, including sales to affiliated entities at artificially low prices.
This case was transferred, along with most of the other new Grynberg cases, to Federal court
in Wyoming in 1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;20, 2006, the Federal District Court issued an Order granting the Columbia
defendants&#146; motion to dismiss for lack of subject matter jurisdiction. The Plaintiff has
appealed the dismissal of the Columbia defendants to the United States Court of Appeals for
the Tenth Circuit. All briefing has been completed and oral argument was held on September
25, 2008.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Tawney, et al. v. Columbia Natural Resources, Inc., Roane County, WV Circuit Court</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Plaintiffs, who are West Virginia landowners, filed a lawsuit in early 2003 against CNR
alleging that CNR underpaid royalties on gas produced on their land by improperly deducting
post-production costs and not paying a fair value for the gas. In December&nbsp;2004, the court
granted plaintiffs&#146; motion to add NiSource and Columbia as defendants. Plaintiffs also
claimed that the defendants fraudulently concealed the deduction of post-production charges.
The court certified the case as a class action that includes any person who, after July&nbsp;31,
1990, received or is due royalties from CNR (and its predecessors or successors) on lands
lying within the boundary of the state of West Virginia. All claims by the government of the
United States are excluded from the class. Although NiSource sold CNR in 2003, NiSource
remains obligated to manage this litigation and for the majority of any damages ultimately
awarded to the plaintiffs. On January&nbsp;27, 2007, the jury hearing the case returned a verdict
against all
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->82<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="112"></A>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1.</U> <U>LEGAL PROCEEDINGS (continued)</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">defendants in the amount of $404.3&nbsp;million; this is comprised of $134.3&nbsp;million in compensatory
damages and $270&nbsp;million in punitive damages. In January&nbsp;2008, the Defendants filed their petition
for appeal, and on March&nbsp;24, 2008, the Defendants filed their amended petition for appeal with the
West Virginia Supreme Court of Appeals. On May&nbsp;22, 2008, the West Virginia Supreme Court of
Appeals refused the Defendants petition for appeal. On August&nbsp;22, 2008, Defendants filed their
petitions to the United States Supreme Court for writ of certiorari. The Plaintiffs filed their
response on September&nbsp;22, 2008. On September&nbsp;19, 2008, the West Virginia Supreme Court issued an
order extending the stay of the judgment until proceedings before the United States Supreme Court
are fully concluded. Given the West Virginia Court&#146;s refusal of the appeal, NiSource adjusted its
reserve in the second quarter of 2008 to reflect the portion of the trial court judgment for which
NiSource would be responsible, inclusive of interest. This amount was included in &#147;Legal and
environmental reserves,&#148; on the Condensed Consolidated Balance Sheet (unaudited)&nbsp;as of September
30, 2008. On October&nbsp;24, 2008, the West Virginia Circuit Court for Roane County, West Virginia,
preliminarily approved a settlement agreement with a total settlement amount of $380&nbsp;million. The
settlement is subject to final approval by the Court, following a fairness hearing currently
scheduled for November&nbsp;22, 2008. The settlement agreement is contingent upon a final ruling on the
settlement by the trial court prior to the resolution of the petitions for writ of certiorari filed
with the United States Supreme Court. NiSource&#146;s share of the settlement liability would be up to
$338.8&nbsp;million.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>John Thacker, et al. v. Chesapeake Appalachia, L.L.C., U.S. District Court, E.D. Kentucky</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;8, 2007, Plaintiff filed this purported class action, alleging that Chesapeake
Appalachia, L.L.C. (&#147;Chesapeake&#148;) has failed to pay royalty owners the correct amounts
pursuant to the provisions of their oil and gas leases covering real property located within
the state of Kentucky. Columbia has assumed the defense of Chesapeake in this matter pursuant
to the provisions of the Stock Purchase Agreement dated July&nbsp;3, 2003, among Columbia,
NiSource, and Triana Energy Holding, Inc., Chesapeake&#146;s predecessor in interest. Plaintiffs
filed an amended complaint on March&nbsp;19, 2007, which, among other things, added NiSource and
Columbia as defendants. On March&nbsp;31, 2008, the Court denied the Defendants&#146; Motions to
Dismiss; the Defendants filed their answers to the complaint on April&nbsp;25, 2008. On June&nbsp;3,
2008, the Plaintiffs moved to certify a class consisting of all persons entitled to payment of
royalty by Chesapeake under leases operated by Chesapeake at any point after February&nbsp;5, 1992,
on real property in Kentucky. Defendants&#146; response was filed on July&nbsp;18, 2008. The class
certification hearing scheduled for November&nbsp;13, 2008 was vacated.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Environmental Protection Agency Notice of Violation</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;29, 2004, the EPA issued an NOV to Northern Indiana for alleged violations of the
CAA and the Indiana SIP. The NOV alleges that modifications were made to certain boiler units
at three of Northern Indiana&#146;s generating stations between the years of 1985 and 1995 without
obtaining appropriate air permits for the modifications. The ultimate resolution could
require additional capital expenditures and operations and maintenance costs as well as
payment of substantial penalties and require development of supplemental environmental
projects. Northern Indiana is currently in discussions with the EPA regarding possible
resolutions to this NOV.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Pennsylvania Department of Environmental Protection Proposed Consent Order and Agreement</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;21, 2007, PADEP provided representatives of Columbia Transmission with a proposed
Consent Order and Agreement covering an unmanned equipment storage site located in rural southwest
Pennsylvania. The site in question is also subject to the EPA&#146;s AOC (Refer to Note 17-C,
&#147;Environmental Matters,&#148; in the Notes to Condensed Consolidated Financial Statements (unaudited)
for additional information regarding the AOC). PADEP&#146;s proposed order alleges that Columbia
Transmission has violated the state&#146;s Clean Streams Act and Solid Waste Management Act by
discharging petroleum products onto the property and into the waters of the state. In addition to
requiring remediation and monitoring activities at the site, the state has proposed penalties for
these violations. Columbia Transmission plans to engage in further discussions with the agency
regarding the proposed order, including the rationale for the proposed penalty. The site was
remediated via an EPA approved Remedial Action Work Plan in the summer of 2008. The PADEP had
provided written notification that it would not attempt to stop the EPA approved work and would
seek the aforementioned Order after the remedy is completed. To date, Columbia Transmission has
not received any communication from the PADEP regarding the afore-mentioned order.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->83<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="113"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 1A.</U> <U>RISK FACTORS</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NiSource is exposed to risk that customers will not remit payment for delivered energy or services,
and that suppliers or counterparties will not perform under various financial or operating
agreements.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource&#146;s extension of credit is governed by a Corporate Credit Risk Policy, involves considerable
judgment and is based on an evaluation of a customer or counterparty&#146;s financial condition, credit
history and other factors. Credit risk exposure is monitored by obtaining credit reports and
updated financial information for customers and suppliers, and by evaluating the financial status
of its banking partners and other counterparties through the use of market-based metrics such as
credit default swap pricing levels, and also through traditional credit ratings provided by the
major credit rating agencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Recently, the credit markets and the general economy have been experiencing a period of large-scale
turmoil and upheaval characterized by the bankruptcy, failure, collapse or sale of various
financial institutions and an unprecedented level of intervention from the United States federal
government. While the ultimate outcome of these events cannot be predicted, it may have an adverse
material effect on NiSource.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other than the risk factor disclosed above, there were no other material changes from the risk
factors disclosed in NiSource&#146;s 2007 Form 10-K filed on March&nbsp;5, 2008.
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 2.</U> <U>UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None

</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 3.</U> <U>DEFAULTS UPON SENIOR SECURITIES</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None
</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 4.</U> <U>SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None
</DIV>

<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 5.</U> <U>OTHER INFORMATION</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;4, 2008, NiSource entered into a Change in Control and Termination Agreement (the
&#147;Agreement&#148;) with each of Robert C. Skaggs, Stephen P. Smith, Christopher A. Helms and Robert D.
Campbell. Each Agreement is effective for a two year term and provides that payment would occur
upon (i)&nbsp;a change in control of NiSource and either (ii)&nbsp;termination of the executive occurs by
NiSource for any reason other than good cause, or (iii)&nbsp;termination of employment occurs by the
executive for good reason. Additionally, payment would occur under each Agreement following a
change in control if (i)&nbsp;the termination occurs within a year prior to the change in control for
other than good reason but after steps have been taken to reasonably effect a change in control and
(ii)&nbsp;it is reasonably demonstrated by the executive that such termination of employment was in
connection with or in anticipation of a change in control. Payment under the Agreement with Mr.
Skaggs would be equal to 36 times his then-current monthly base salary plus 36 times one-twelfth of
his then-current target annual incentive bonus. Payment under each Agreement for Messrs.&nbsp;Smith,
Helms and Campbell would be equal to 24 times the executive&#146;s then-current monthly base salary plus
24 times one-twelfth of his then-current target annual incentive bonus. Additionally, each
Agreement provides for the following additional benefits:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of the pro rata portion of the executive&#146;s target annual incentive bonus
for the then-current calendar year calculated based on the proportion of the full
calendar year employed by NiSource;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Receipt of accrued benefits in the various NiSource or NiSource affiliates
retirement plans, welfare plans or other plan or program within which such
executive participates. For purposes of</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->84<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 5.</U> <U>OTHER INFORMATION (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><FONT style="font-variant: SMALL-CAPS">NiSource Inc.</FONT></B>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>determining this benefit, each executive would further be deemed to have
been terminated by reason of retirement without regard to vesting limitations in
such plans or programs, except for plans subject to the qualification requirements
of Section 401(a) of the Internal Revenue Code of 1986 as amended, or otherwise
under circumstances with the most favorable result to the executive;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any options held by the executive become immediately exercisable and any
restrictions on NiSource stock immediately lapse;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of 130% of the amount of any welfare plan premiums for which the
executive participated for a period of 36&nbsp;months for Mr.&nbsp;Skaggs and for a period of
24&nbsp;months for Messrs.&nbsp;Smith, Helms and Campbell;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Outplacement services in an amount not to exceed $25,000;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If determined that an excise tax payment is required as a result of the payments
made under each respective Agreement, a &#147;gross-up&#148; payment would be paid to the
executive in the amount of the excise tax plus any federal, state and local income
and employment taxes on the excise tax payment. The gross-up payment will not be
made, however, if it is determined that the total payment to the executive would
not exceed 110% of the greatest amount that could be paid without requiring an
excise tax payment; rather, in such case, the total payments to the executive would
be reduced to the highest amount of total payments that would not require payment
of an excise tax.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each Agreement also provides that the executive will not solicit employees of NiSource to terminate
their employment with the company and that each executive will not disclose confidential
information concerning the company obtained by the executive in the course of his employment.
</DIV>

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>ITEM 6.</U> <U>EXHIBITS</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revolving Credit Agreement among NiSource Finance Corp., as Borrower, NiSource Inc., as
Guarantor, the lender parties thereto as Lenders, Barclays Bank PLC as Administrative
Agent, and Barclays Bank as Sole Lead Arranger and Sole Book Runner, dated as of September
23, 2008 (incorporated by reference to Exhibit&nbsp;10.1 to the NiSource Inc. Current Report on
Form 8-K filed on September&nbsp;26, 2008).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amendment No.&nbsp;1, dated as of September&nbsp;19, 2008, to Amended and Restated Revolving Credit
Agreement among NiSource Finance Corp., as Borrower, NiSource Inc., as Guarantor, the
lender parties thereto as Lenders, Credit Suisse as Syndication Agent, JPMorgan Chase Bank,
N.A., The Bank Of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch and Citicorp USA, Inc., as
Co-Documentation Agents and Barclays Bank PLC, as Administrative Agent and LC Bank dated
July&nbsp;7, 2006. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>NiSource Inc. Executive Deferred Compensation Plan, Amended and Restated Effective
January&nbsp;1, 2008. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>NiSource Inc. Supplemental Executive Retirement Plan, as Amended and Restated Effective
January&nbsp;1, 2008. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pension Restoration Plan for NiSource Inc. and Affiliates, as Amended and Restated Effective
January&nbsp;1, 2008. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Savings Restoration Plan for NiSource Inc. and Affiliates, as Amended and Restated Effective
January&nbsp;1, 2008. *</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->85<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>ITEM 6.</U> <U>EXHIBITS (continued)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10.7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form of Change in Control and Termination Agreement dated November&nbsp;4, 2008 by
and between NiSource Inc. and each of Robert C. Skaggs, Stephen P. Smith, Christopher
A. Helms and Robert D. Campbell. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(31.1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification of Robert C. Skaggs, Jr., Chief Executive Officer, pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(31.2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification of Stephen P. Smith, Chief Financial Officer, pursuant to Section&nbsp;302 of
the Sarbanes-Oxley Act of 2002. *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(32.1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification of Robert C. Skaggs, Jr., Chief Executive Officer, pursuant to Section&nbsp;906
of the Sarbanes-Oxley Act of 2002 (furnished herewith). *</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(32.2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification of Stephen P. Smith, Chief Financial Officer, pursuant to Section&nbsp;906 of
the Sarbanes-Oxley Act of 2002 (furnished herewith). *</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Exhibit filed herewith.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to Item&nbsp;601(b)(4)(iii) of Regulation&nbsp;S-K, NiSource hereby agrees to furnish the SEC, upon
request, any instrument defining the rights of holders of long-term debt of NiSource not filed as
an exhibit herein. No such instrument authorizes long-term debt securities in excess of 10% of the
total assets of NiSource and its subsidiaries on a consolidated basis.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->86<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="119"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>SIGNATURE</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS"><B>NiSource Inc.</B></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">NiSource Inc.</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Registrant)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: November&nbsp;4, 2008
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/ Jeffrey W. Grossman</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Jeffrey W. Grossman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Vice President and Controller</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Principal Accounting Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">and Duly Authorized Officer)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->87<!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>2
<FILENAME>c47397exv10w2.htm
<DESCRIPTION>EX-10.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">AMENDMENT NO. 1
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">to

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the &#147;Amendment&#148;) is
made as of September&nbsp;19, 2008, by and among NISOURCE FINANCE CORP. (the &#147;Borrower&#148;), NISOURCE INC.
(the &#147;Guarantor&#148;), the lenders from time to time parties thereto (the &#147;Lenders&#148;) and BARCLAYS BANK
PLC, as issuer of letters of credit (the &#147;LC Bank&#148;) and as administrative agent (the
&#147;Administrative Agent&#148;) under that certain Amended and Restated Revolving Credit Agreement dated as
of July&nbsp;7, 2006, by and among the Borrower, the Guarantor, the Lenders and the Administrative Agent
(as further amended, supplemented or otherwise modified from time to time, the &#147;Credit Agreement&#148;).
Defined terms used herein and not otherwise defined herein shall have the meaning given to them in
the Credit Agreement.
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">WITNESSETH

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Borrower, the Guarantor, the Lenders, the LC Bank and the Administrative Agent
are parties to the Credit Agreement; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Borrower and the Guarantor have requested that the Lenders, the LC Bank and the
Administrative Agent amend the Credit Agreement on the terms and conditions set forth herein;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Borrower, the Guarantor, the Administrative Agent, the LC Bank and the Required
Lenders under <U>Section&nbsp;11.02</U> of the Credit Agreement have agreed to amend the Credit
Agreement on the terms and conditions set forth herein;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto have agreed to the following amendments to the Credit
Agreement:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Amendments to the Credit Agreement</U>. Effective as of September&nbsp;19, 2008 and subject
to the satisfaction of the condition precedent set forth in <U>Section&nbsp;2</U> below, the
Credit Agreement is hereby amended as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Section&nbsp;1.01</U> of the Credit is amended to insert alphabetically therein
the following defined term:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>&#147;</I><B><I>Tawney Litigation</I></B><I>&#148; means Estate of Garrison G. Tawney, et al. v. Columbia
Natural Resources, LLC, et al., Civil Action No.&nbsp;03-C-10E (Circuit Court of Roane
County, West Virginia), petition for writ of certiorari, NiSource Inc., et al. v.
Estate of Tawney, et al., U.S. Supreme Court No.&nbsp;08-219 and No.&nbsp;08-228.</I>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Section&nbsp;8.01(h)</U> of the Credit Agreement is amended to delete <U>clause
(ii</U>) thereof in its entirety and to substitute the following therefor:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><I>(ii)&nbsp;there shall be any period of 30 consecutive days (or, solely with respect to
the Tawney Litigation, a period of 30 consecutive days from and after July&nbsp;1, 2009)
during which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect, except that, with respect to the Tawney
Litigation, expiration or any other failure of a stay of judgment to be in place
shall have no effect under </I><U><I>clause (ii)</I></U><I> of this </I><U><I>Section&nbsp;8.01(h)</I></U><I>,
either as a Default or, after lapse of time, as an Event of Default, prior to July
1, 2009; or</I>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Condition of Effectiveness</U>. The effectiveness of this Amendment is subject to the
condition precedent that the Administrative Agent shall have received duly executed originals
of this Amendment from each of the Borrower, the Guarantor, the Required Lenders under
<U>Section&nbsp;11.02</U> of the Credit Agreement, the LC Bank and the Administrative Agent.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Representations and Warranties of the Borrower and the Guarantor</U>. Each of the
Borrower and the Guarantor hereby represents and warrants as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each of the Borrower and the Guarantor hereby represents and warrants that this
Amendment and the Credit Agreement as previously executed and as modified hereby
constitute legal, valid and binding obligations of the Borrower and the Guarantor and
are enforceable against the Borrower and the Guarantor in accordance with their terms
(except as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors&#146; rights generally).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the effectiveness of this Amendment and after giving effect hereto, each
of the Borrower and the Guarantor hereby (i)&nbsp;reaffirms all covenants, representations
and warranties made in the Credit Agreement as modified hereby, and agrees that all
such covenants, representations and warranties shall be deemed to have been remade as
of the date of this Amendment except that any such covenant, representation, or
warranty that was made as of a specific date shall be considered reaffirmed only as of
such date and (ii)&nbsp;certifies to the Administrative Agent, the LC Bank and the Lenders
that no Default has occurred and is continuing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reference to the Effect on the Credit Agreement</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the effectiveness of <U>Section&nbsp;1</U> hereof, on and after the date
hereof, each reference in the Credit Agreement (including any reference therein to
&#147;this Credit Agreement,&#148; &#147;hereunder,&#148; &#147;hereof,&#148; &#147;herein&#148; or words of like import
referring thereto) or in any other Credit Document shall mean and be a reference to the
Credit Agreement as modified hereby.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except as specifically modified above, the Credit Agreement and all other
documents, instruments and agreements executed and/or delivered in connection</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>therewith, shall remain in full force and effect, and are hereby ratified and
confirmed.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The execution, delivery and effectiveness of this Amendment shall not operate
as a waiver of any right, power or remedy of the Administrative Agent, the LC Bank or
the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any
other documents, instruments and agreements executed and/or delivered in connection
therewith.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>GOVERNING LAW</U>. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Headings</U>. Section headings in this Amendment are included herein for convenience of
reference only and shall not constitute a part of this Amendment for any other purpose.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Counterparts</U>. This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above
written.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">NISOURCE FINANCE CORP., as Borrower<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ David J. Vajda
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">David J. Vajda&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Vice President and Treasurer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">NISOURCE INC., as Guarantor<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ David J. Vajda
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">David J. Vajda&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Vice President and Treasurer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">BARCLAYS BANK PLC, as a Lender, as LC Bank and as<BR>
Administrative Agent<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Sydney G. Dennis
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Sydney G. Dennis&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Director&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>Signature Page to Amendment No.&nbsp;1 to<BR>
Amended and Restated Revolving Credit Agreement</I>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Karim Blasetti</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Karim Blasetti</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Christopher Day</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Christopher Day</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>Signature Page to Amendment No.&nbsp;1 to<BR>
Amended and Restated Revolving Credit Agreement</I>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">JPMORGAN CHASE BANK, N.A., as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Helen D. Davis</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Helen D. Davis</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., <BR>
as a
Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Chi-Cheng Chen</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chi-Cheng Chen</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Authorized Signatory</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">CITICORP USA, INC., as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Amit Vasani</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amit Vasani</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">BNP PARIBAS, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Denis O&#146;Meara</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Denis O&#146;Meara</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Andrew Platt</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Andrew Platt</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" valign="top" align="left">DEUTSCHE BANK AG NEW YORK AND GRAND <BR>
CAYMAN
BRANCHES, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Thomas Brady</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thomas Brady</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark McGuigan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark McGuigan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">MIZUHO CORPORATE BANK, LTD., NEW YORK BRANCH, as
a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Raymond Ventura</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Raymond Ventura</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deputy General Manager</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">THE ROYAL BANK OF SCOTLAND plc, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Andrew N. Taylor</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Andrew N. Taylor</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">WACHOVIA BANK, NATIONAL ASSOCIATION, <BR>
as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Shawn Young</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shawn Young</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">BANK OF AMERICA, N.A., as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Patrick N. Martin</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patrick N. Martin</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">THE NORTHERN TRUST COMPANY, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Phillip McCaulay</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Phillip McCaulay</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">PNC BANK, NATIONAL ASSOCIATION, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Helmut Vogel</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Helmut Vogel</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Credit Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">U.S. BANK NATIONAL ASSOCIATION, as a Lender</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ James N. DeVries</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">James N. DeVries</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>3
<FILENAME>c47397exv10w3.htm
<DESCRIPTION>EX-10.3
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.3</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>EXECUTIVE DEFERRED COMPENSATION PLAN</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Amended and Restated Effective January&nbsp;1, 2008</B>

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I PURPOSE; EFFECTIVE DATE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.1 Purpose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.2 Effective Date</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II DEFINITIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.1 Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.2 Beneficiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.3 Code</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.4 Committee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.5 Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.6 Compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.7 Deferral Commitment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.8 Deferral Period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.9 Determination Date</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.10 Discretionary Contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.11 Election Form</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.12 Eligible Employee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.13 Employer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.14 Participant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.15 Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.16 Post-2004 Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.17 Pre-2005 Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.18 Retirement Committee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.19 Unforeseeable Emergency</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.20 Gender and Number</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III MERGER OF NISOURCE PLAN AND OTHER PLANS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.1 Bay State Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.2 Columbia Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV PARTICIPATION AND DEFERRAL COMMITMENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.1 Eligibility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.2 Participation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.3 Amendment of Eligibility Criteria</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V DEFERRAL COMMITMENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.1 Timing of Deferral Commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.2 Amount of Deferral</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.3 Distribution Options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.4 Duration of Deferral Commitment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.5 Modification of Deferral Commitment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->i&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.6 Change in Employment Status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI DEFERRED COMPENSATION ACCOUNT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.1 Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.2 Timing of Credits; Withholding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.3 Discretionary Contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.4 Determination of Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.5 Vesting of Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.6 Statement of Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII INVESTMENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.1 Investment Options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.2 Special Investment Option for Former Participants in the Bay State Plan and
Participants in the Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.3 Special Investment Option for Former Participants in the Columbia Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VIII BENEFICIARY DESIGNATION</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.1 Distributions &#151; Events Generally</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.2 In-Service Distributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.3 Distributions After Separation from Service</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.4 Hardship Distributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.5 Distribution Provisions Applicable to a Transferred Bay State Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.6 Automatic Cash-Out</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.7 Special Payment Election by December&nbsp;31, 2006, for Code Section&nbsp;409A
Transition Relief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.8 Withholding for Taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.9 Payment to Guardian</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IX BENEFICIARY DESIGNATION</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.1 Beneficiary Designation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.2 Changing Beneficiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.3 Community Property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.4 No Beneficiary Designation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE X ADMINISTRATION</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.1 Committee; Duties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.2 Agents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.3 Binding Effect of Decisions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.4 Indemnity of Retirement Committee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XI CLAIMS PROCEDURE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.1 Claim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.2 Review of Claim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.3 Notice of Denial of Claim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->ii&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.4 Reconsideration of Denied Claim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.5 Employer to Supply Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XII AMENDMENT AND TERMINATION OF PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.1 Amendment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.2 Employer&#146;s Right to Terminate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XIII MISCELLANEOUS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.1 Unfunded Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.2 Company and Employer Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.3 Unsecured General Creditor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.4 Trust Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.5 Nonassignability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.6 Not a Contract of Employment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.7 Protective Provisions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.8 Governing Law</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.9 Validity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.10 Notice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.11 Successors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">13.12 Tax Savings Clause</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EXHIBIT A</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">A-1</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->iii&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>EXECUTIVE DEFERRED COMPENSATION PLAN</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>ARTICLE I</B></U>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>PURPOSE; EFFECTIVE DATE</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.1 </B><U><B>Purpose</B></U><B>. </B>The purpose of this Executive Deferred Compensation Plan is to provide
current tax planning opportunities as well as supplemental funds for retirement or death for
selected employees of an Employer. It is intended that the Plan will aid in attracting and
retaining employees of exceptional ability by providing them with these benefits. Effective
November&nbsp;1, 2000, the Bay State Gas Company Key Employee Deferred Compensation Plan (the &#147;Bay State
Plan&#148;) was merged into the NIPSCO Industries, Inc. Executive Deferred Compensation Plan (the
&#147;NIPSCO Plan&#148;), and the NIPSCO Plan was renamed the NiSource Inc. Executive Deferred Compensation
Plan (the &#147;Plan&#148;). Effective January&nbsp;1, 2004, the Columbia Energy Group Deferred Compensation Plan
(the &#147;Columbia Plan&#148;) was merged into the Plan. Effective January&nbsp;1, 2005, the Plan was amended
and restated to comply with Code Section&nbsp;409A, and guidance and regulations thereunder. Deferred
Compensation, Discretionary Contributions, and earnings thereon, earned and vested prior to January
1, 2005 shall be administered without giving effect to Code Section&nbsp;409A, and guidance and
regulations thereunder. Effective January&nbsp;1, 2008, the Plan is hereby amended and restated to
incorporate the provisions of amendments to the Plan since the January&nbsp;1, 2005, amendment and
restatement and to allow participants to elect to participate in the Plan only during the
applicable enrollment period or at such later date allowed under Code Section&nbsp;409A for certain
performance based bonuses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.2 </B><U><B>Effective Date</B></U><B>. </B>The Plan, as amended and restated, generally is effective as of
January&nbsp;1, 2008.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE II</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>DEFINITIONS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purposes of the Plan, the following terms shall have the meanings indicated, unless
the context clearly indicates otherwise:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 </B><U><B>Account</B></U><B>. </B>&#147;Account&#148; means the device used by an Employer to measure and determine
the amount to be paid to a Participant under the Plan. Each Account shall be divided into a
Pre-2005 Account containing contributions to the Plan earned and vested prior to January&nbsp;1, 2005, a
Post-2004 Account containing contributions to the Plan earned and/or vested on or after January&nbsp;1,
2005, and, if applicable, a Transferred Bay State Account containing any amount transferred from
the Bay State Plan or a Transferred Columbia Account containing any amount transferred from the
Columbia Plan.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 </B><U><B>Beneficiary</B></U><B>. </B>&#147;Beneficiary&#148; means the person, persons or entity entitled under
Article&nbsp;IX to receive any Plan benefits payable after a Participant&#146;s death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.3 </B><U><B>Code</B></U><B>. </B>&#147;Code&#148; means the Internal Revenue Code of 1986, as amended from time to
time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 </B><U><B>Committee</B></U><B>. </B>&#147;Committee&#148; means the Officer Nomination and Compensation Committee of
the Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.5 </B><U><B>Company</B></U><B>. </B>&#147;Company&#148; means NiSource Inc., a Delaware corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.6 </B><U><B>Compensation</B></U><B>. </B>&#147;Compensation&#148; means base salary and annual incentive awards paid
to a Participant during the calendar year, before reduction for amounts deferred under the Plan or
any other salary reduction program. Compensation earned on or after January&nbsp;1, 2005 shall not
include incentive payments other than annual incentive awards. Compensation does not include
expense reimbursements, any form of noncash compensation, or benefits. Compensation does not
include lump sum severance payments or lump sum vacation payouts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.7 </B><U><B>Deferral Commitment</B></U><B>. </B>&#147;Deferral Commitment&#148; means a commitment made by a
Participant to defer Compensation pursuant to Article&nbsp;IV.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.8 </B><U><B>Deferral Period</B></U><B>. </B>&#147;Deferral Period&#148; means each calendar year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.9 </B><U><B>Determination Date</B></U><B>. </B>&#147;Determination Date&#148; means each business day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.10 </B><U><B>Discretionary Contribution</B></U><B>. </B>&#147;Discretionary Contribution&#148; means the Employer
contribution credited to a Participant&#146;s Account under Section&nbsp;6.3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.11 </B><U><B>Election Form</B></U><B>. </B>&#147;Election Form&#148; means the agreement submitted by a Participant to
the Retirement Committee prior to the beginning of a Deferral Period, with respect to a Deferral
Commitment made for such Deferral Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.12 </B><U><B>Eligible Employee</B></U><B>. </B>&#147;Eligible Employee&#148; means a select group of management or
highly compensated employees of the Employer selected by the Committee in accordance with this
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.13 </B><U><B>Employer</B></U><B>. </B>&#147;Employer&#148; means the Company and any subsidiary or affiliate of the
Company designated by the Committee to participate in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.14 </B><U><B>Participant</B></U><B>. </B>&#147;Participant&#148; means any eligible individual who has elected to
defer Compensation under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.15 </B><U><B>Plan</B></U><B>. </B>&#147;Plan&#148; means the NiSource Inc. Executive Deferred Compensation Plan, as
set forth herein and as amended from time to time.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.16 </B><U><B>Post-2004 Account</B></U><B>. </B>&#147;Post-2004 Account&#148; means the excess of (1)&nbsp;the total balance
of the Participant&#146;s Account determined as of a Participant&#146;s date of separation from service with
all Employers (provided that such separation from service occurred after December&nbsp;31, 2004) over
(2)&nbsp;his Pre-2005 Account, to which the Participant would be entitled under the Plan if he
voluntarily separated from service without cause as of such date and received a full payment of
benefits from the Plan on the earliest possible date allowed under the Plan following his
separation from service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.17 </B><U><B>Pre-2005 Account</B></U><B>. &#147;</B>Pre-2005 Account&#148; means the balance of a Participant&#146;s
Account determined as of December&nbsp;31, 2004, adjusted to reflect earnings credited to such balance
from and after such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.18 </B><U><B>Retirement Committee</B></U><B>. </B>&#147;Retirement Committee&#148; means a committee consisting of the
Senior Vice President of Human Resources and the Vice President of Human Resources (in charge of
Total Rewards) of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.19 </B><U><B>Unforeseeable Emergency</B></U><B>. </B>&#147;Unforeseeable Emergency&#148; means a severe financial
hardship to the Participant resulting from an illness or accident of the Participant, the
Participant&#146;s spouse, or a dependent (as defined in Code Section&nbsp;152(a)) of the Participant, loss
of the Participant&#146;s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.20 </B><U><B>Gender and Number</B></U><B>. </B>Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular terminology shall include
the plural.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE III</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>MERGER OF NISOURCE PLAN AND OTHER PLANS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 </B><U><B>Bay State Plan</B></U>. As of November&nbsp;1, 2000, the Bay State Plan was merged into the
Plan. The balance of the account of each Bay State Plan participant, determined as of November&nbsp;1,
2000, was transferred to the Plan and became the initial balance in such Participant&#146;s Transferred
Bay State Account in the Plan. A Participant&#146;s Transferred Bay State Account shall be held,
administered, invested, and distributed pursuant to the terms of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 </B><U><B>Columbia Plan</B></U>. As of January&nbsp;1, 2004, the Columbia Plan was merged into the Plan.
The balance of the account of each Columbia Plan participant, determined as of December&nbsp;31, 2003,
was transferred to the Plan and became the initial balance in such Participant&#146;s Transferred
Columbia Account in the Plan. A Participant&#146;s Transferred Columbia Account shall be held,
administered, invested, and distributed pursuant to the terms of the Plan.
</DIV>
 <DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE IV</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>ELIGIBILITY AND PARTICIPATION</B></U>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 </B><U><B>Eligibility</B></U><B>. </B>From and after January&nbsp;1, 2005, eligibility to participate in the
Plan for a Deferral Period shall be limited to (1)&nbsp;an employee in job scope level D2 or above, and
(2)&nbsp;any other key employee of an Employer who is designated from time to time by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 </B><U><B>Participation</B></U><B>. </B>An Eligible Employee shall become a Participant in the Plan by
electing to defer Compensation in accordance with Article&nbsp;V. An Eligible Employee also becomes a
participant if the Employer credits the Participant&#146;s Account with a Discretionary Contribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.3 </B><U><B>Amendment of Eligibility Criteria</B></U><B>. </B>The Committee may, in its discretion, change
the criteria for eligibility for any reason, provided, however, that no change in the criteria for
eligibility shall be effective unless such changes are (a)&nbsp;within guidelines established by the
Committee or (b)&nbsp;approved by the Committee. Eligibility for participation in one year does not
guarantee eligibility to participate in any future year.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE V</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>DEFERRAL COMMITMENTS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Timing of Deferral Elections. An Eligible Employee may elect to defer Compensation for
services performed in any Deferral Period by submitting an Election Form to the Retirement
Committee only during the annual enrollment period, established by the Retirement Committee, which
shall end no later than December&nbsp;31, of the year preceding such Deferral Period. Thus, for any
salary to be paid for services performed in a year, an election to defer such salary must be made
no later than December&nbsp;31, of the prior year. Further, except as provided in Section&nbsp;5.1(b) below,
for annual incentive awards paid for services performed in a year, an election to defer such annual
incentive award must be made no later than December&nbsp;31, of the prior year. To illustrate these
provisions, an election to defer salary payable for services performed in 2008 must be made by
December&nbsp;31, 2007. Further, an election to defer annual incentive awards that are (1)&nbsp;not
performance-based compensation described in Section&nbsp;5.1(b) below, (2)&nbsp;earned for the 2009 calendar
year, and (3)&nbsp;to be paid in March&nbsp;2010, must be made by December&nbsp;31, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.2 </B><U><B>Amount of Deferral</B></U><B>. </B>A Participant may make a Deferral Commitment in the Election
Form as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Compensation Deferral Commitment</U>. The amount of base Compensation that a
Participant may elect to defer in a Compensation Deferral Commitment shall be stated as a whole
percentage of base Compensation from five percent (5%) to 80%; provided, however, that the Company
may reduce the amount deferred to the extent necessary to satisfy federal, state, local, or other
tax withholding obligations and employee benefit plan withholding requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Annual Incentive Deferral Commitment</U>. The amount of any annual incentive award
that a Participant may elect to defer in a Compensation Deferral Commitment shall be stated as a
whole percentage of the annual incentive award from five percent (5%) to 100%; provided, however,
that the Company may reduce the amount deferred to the extent necessary to

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</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
satisfy federal, state, local, or other tax withholding obligations and employee benefit plan
withholding requirements.</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Deferral Commitment shall be made subsequent to the date of a Participant&#146;s separation from
service with all Employers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.3 </B><U><B>Distribution Options</B></U>. Each Deferral Commitment with respect to a calendar year
shall specify the date on which the applicable deferred amount and earnings thereon shall be
distributed. Such date shall be the first to occur of (1)&nbsp;the date of the Participant&#146;s separation
from service with all Employers; or (2)&nbsp;a date selected by the Participant, provided that a
selected date must be at least one year after the date the deferred amount would have been paid to
the Participant in cash in the absence of the election to make the deferral.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.4 </B><U><B>Duration of Deferral Commitment</B></U><B>. </B>A Participant shall make an election in his
Election Form as to the time and form of payment of the Deferral Commitment for each Deferral
Period. A Participant&#146;s Deferral Commitment for any Deferral Period is effective only for such
Deferral Period in order to defer Compensation for a subsequent Deferral Period, an Eligible
Employee must file a new deferral election with respect to such Compensation. A Participant shall
not be required to designate the same time and form of payment for each Deferral Period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.5 </B><U><B>Modification of Deferral Commitment</B></U>. Except as provided otherwise in this Plan,
Deferral Commitments shall be irrevocable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.6 </B><U><B>Change in Employment Status</B></U><B>. </B>If the Committee determines that a Participant&#146;s
performance is no longer at a level that deserves reward through participation in the Plan, but
does not terminate the Participant&#146;s employment with an Employer, the Participant&#146;s existing
Deferral Commitment shall terminate at the end of the current Deferral Period, and no new Deferral
Commitment may be made by such Participant for any Deferral Period beginning after notice of such
determination is given by the Committee.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VI</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>DEFERRED COMPENSATION ACCOUNT</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.1 </B><U><B>Account</B></U><B>. </B>The Compensation deferred by a Participant under the Plan, including any
Discretionary Contributions and earnings thereon, shall be credited to the Participant&#146;s Account.
Separate subaccounts may be maintained to reflect different forms of distribution, investment
options, levels of vesting, and forms of payment. The Account shall be a bookkeeping device
utilized for the sole purpose of determining the benefits payable under the Plan and shall not
constitute a separate fund of assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.2 </B><U><B>Timing of Credits; Withholding</B></U><B>. </B>A Participant&#146;s deferred Compensation shall be
credited to the Participant&#146;s Account at the time it would have been payable to the Participant.
Any withholding of taxes or other amounts with respect to deferred Compensation that is required by
federal, state or local law shall be withheld from the Participant&#146;s nondeferred Compensation to
the maximum extent possible and any remaining amount shall reduce the amount credited to the
Participant&#146;s Account.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.3 </B><U><B>Discretionary Contributions</B></U><B>. </B>An Employer may make Discretionary Contributions to
a Participant&#146;s Account. Discretionary Contributions shall be credited at such times and in such
amounts as the Committee in its sole discretion shall determine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.4 </B><U><B>Determination of Account</B></U><B>. </B>Each Participant&#146;s Account as of each Determination
Date shall consist of the balance of the Account as of the immediately preceding Determination
Date, adjusted as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>New Deferrals</U>. The Account shall be increased by any deferred Compensation
credited since such preceding Determination Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Discretionary Contributions</U>. The Account shall be increased by any Discretionary
Contributions credited since such preceding Determination Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Distributions</U>. The Account shall be reduced by any benefits distributed from the
Account to the Participant since such preceding Determination Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Valuation of Account</U>. The Account shall be increased or decreased by the
aggregate earnings, gains and losses on such Account since such preceding Determination Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.5 </B><U><B>Vesting of Account</B></U><B>. </B>Each Participant shall be vested in the amounts credited to
such Participant&#146;s Account and earnings thereon as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Amounts Deferred</U>. A Participant shall be 100% vested at all times in the amount
of Compensation elected to be deferred under the Plan, and earnings thereon.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Discretionary Contributions</U>. A Participant&#146;s Discretionary Contributions, and
earnings thereon, shall become vested as determined by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Transferred Account</U>. A Participant shall be 100% vested at all times in the
balance of his Transferred Bay State Account or Transferred Columbia Account, if any.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.6 </B><U><B>Statement of Account</B></U><B>. </B>The Retirement Committee shall give to each Participant a
statement showing the balance in the Participant&#146;s Account periodically, at such times as may be
determined by the Retirement Committee, in written or electronic form.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>INVESTMENTS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.1 </B><U><B>Investment Options</B></U><B>. </B>Amounts credited hereunder to the Account of a Participant
shall be invested as such Participant elects among the investment choices provided to the
Participant. The investment options shall be determined by the Company from time to time in its
sole and absolute discretion. No election of a Deferral Commitment by a Participant shall be
effective until such time as the Participant submits his initial investment election to the
</div>

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<DIV style="font-family: 'Times New Roman',Times,serif">
 <DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company. Such investment election shall continue to apply to subsequent Deferral Commitments
made by the Participant until changed by the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.2 </B><U><B>Special Investment Option for Former Participants in the Bay State Plan and
Participants in the Plan</B></U><B>. </B>Former participants in the Bay State Plan who became Participants in
the Plan, or Participants in the Plan on November&nbsp;1, 2000, shall have an additional special
investment option applicable solely to their Transferred Bay State Account balances, or their
Account balances in the Plan, valued as of November&nbsp;1, 2000, and any subsequent amounts contributed
to such Participant&#146;s Account. Such Participants may invest their Transferred Bay State Account
balances, or their Account balances in the Plan as of November&nbsp;1, 2000, and any subsequent amounts
contributed to such Participant&#146;s Account, in a subaccount which shall be credited with earnings
equal to one percentage point higher than the effective annual yield of the average of the Moody&#146;s
Average Corporate Bond Yield Index for the previous calendar month as published by Moody&#146;s Investor
Services, Inc. (or any successor publisher thereto), or, if such index is no longer published, a
substantially similar index selected by the Committee. A Participant&#146;s Transferred Bay State
Account balance, or his Account balance in the Plan on November&nbsp;1, 2000, shall be invested pursuant
to this special investment option from and after November&nbsp;1, 2000, and until such time as another
investment choice is designated by him pursuant to Section&nbsp;7.1 with respect to all or a portion of
his Transferred Bay State Account, or his Account balance in the Plan on November&nbsp;1, 2000.
Subsequent amounts contributed to any such Participant&#146;s Account may be invested pursuant to this
option as designated by the Participant pursuant to Section&nbsp;7.1. However, any portion of a
Transferred Bay State Account, or an Account balance in the Plan, subsequently transferred from the
investment option described in this Section&nbsp;7.2 to another investment option may not be reinvested
under this Section&nbsp;7.2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.3 </B><U><B>Special Investment Option for Former Participants in the Columbia Plan</B></U>. Former
participants in the Columbia Plan who become Participants in the Plan on January&nbsp;1, 2004 shall have
an additional special investment option applicable solely to their Transferred Columbia Account
balances, valued as of January&nbsp;1, 2004. Such Participants may invest all or any portion of their
Transferred Columbia Account balances in a subaccount that shall be credited each day with earnings
equal to the prime rate of interest in effect as of such business day, as listed in The Wall Street
Journal. All or the designated portion of a Participant&#146;s Transferred Columbia Account balance
shall be invested pursuant to this special investment option from and after January&nbsp;1, 2004, and
until such time as another investment choice is designated by him pursuant to Section&nbsp;7.1 with
respect to all or a portion of his Transferred Columbia Account. Any portion of a Transferred
Columbia Account subsequently transferred from the investment option described in this Section&nbsp;7.3
to another investment option may not be reinvested under the investment option described in this
Section&nbsp;7.3. Amounts contributed to any such Participant&#146;s Account on or after January&nbsp;1, 2004
shall not be eligible for the investment option described in this Section&nbsp;7.3.
</DIV>
 <DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VIII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>PLAN BENEFITS &#151; PAYMENTS AND DISTRIBUTIONS</B></U>

</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.1 </B><U><B>Distributions/Events Generally</B></U><B>. </B>Participants generally will not be entitled to
receive a distribution of their Account balance until they separate from service with the Employer
for any reason, as provided in Section&nbsp;8.3. A Participant may receive a distribution before
separation from service, however, in accordance with this Article&nbsp;VIII, upon (1)&nbsp;an Unforeseeable
Emergency that occurs before separation from service, or (2)&nbsp;a year that has been designated by the
Participant in a Deferral Commitment and that occurs before separation from service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.2 </B><U><B>In-Service Distributions</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>General Payments</U>. A Participant, in connection with a Deferral Commitment, may
elect to receive his or her Compensation deferred for a Deferral Period, and all amounts credited
or debited thereto, in a specified year while employed with an Employer. The Participant, in a
Deferral Commitment, may elect to receive such an in-service distribution as either a lump sum or
equal annual installments over a period of not more than 15&nbsp;years. If a Participant does not make
such an election, the payment shall be made in a lump sum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a Participant elects to receive an in-service distribution as a lump sum, the amount of the
lump sum payment will be based on the value of the Participant&#146;s account as of March&nbsp;15 of the
designated year. The distribution date generally shall be March&nbsp;31 of such year, or, if later,
within such time frame permitted under Code Section&nbsp;409A and the guidance and regulations
thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a Participant elects to receive installments, the amount of each installment payment will
be based on the value of the participant&#146;s account as of the March&nbsp;15 preceding the distribution of
each installment payment. The distribution date generally shall be each subsequent March&nbsp;31, or if
later, within such time frame permitted under Code Section&nbsp;409A, and the guidance and regulations
thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Modifying In-Service Distributions</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <U>Pre-2005 Account</U>. Notwithstanding any other provision of the Plan, a
Participant may modify his election as to the form or time of distribution of his entire
Pre-2005 Account, and earnings thereon, by a writing filed with the Retirement Committee at
any time prior to the commencement of payment. A Participant&#146;s modification of his election
as to the form or time of commencement of payment shall be ineffective, unless (1)&nbsp;the
modification election is filed with the Retirement Committee more than 12&nbsp;months prior to
the time of commencement of payment, or (2)&nbsp;a Participant elects by written instrument
delivered to the Company prior to the time of commencement of payment to have his Pre-2005
Account reduced by 10%. This reduction shall be forfeited and used by the Plan to reduce
expenses of administration. This reduction is intended to discourage a Participant from
modifying his election as to the form or time of commencement of payment within the period
set forth in clause&nbsp;(1) above and prevent him from being deemed in constructive receipt of
his Pre-2005 Account prior to its actual payment to him.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <U>Post-2004 Account</U>. The Company, in its discretion, may allow a Participant
to modify his election as to the form or time of distribution of his entire Post-2004
Account, and earnings thereon, or of any Post-2004 Deferral Commitment under the Plan and
earnings thereon, if (1)&nbsp;such election does not take effect until at least 12&nbsp;months after
the date on which the election is made, (2)&nbsp;the first payment with respect to which such
election is made is deferred for a period of not less than five (5)&nbsp;years from the date on
which such payment would otherwise have been made, and (3)&nbsp;any election related to a payment
to be made at a specified date is made at least 12&nbsp;months prior to the date of the first
scheduled payment. For purposes of the Plan, the term &#147;payment&#148; means each separate
installment and not the collective group of installment payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Precedence of Distributions</U>. In the event a Participant has a separation from
service, Severe Financial Hardship, or other event that triggers distribution of benefits under
Article&nbsp;VIII of this Plan, all amounts subject to an in-service distribution shall be paid in
accordance with other applicable provisions of the Plan and not under this Section&nbsp;8.2. If,
however, a Participant made an election to postpone an in-service distribution under Section
8.2(b), and the Participant separates from service, the distribution will be made in accordance
with Section&nbsp;8.2(b) and not Section&nbsp;8.3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.3 </B><U><B>Distributions After Separation from Service</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Generally</U>. If a Participant separates from service with an Employer, the
provisions of this Section&nbsp;8.3 shall apply to the distribution of the Participant&#146;s account. The
Participant may elect, in his or her, Deferral Commitment, to receive such benefits as either a
lump sum or in equal annual installments over a period not to exceed 15&nbsp;years. If no such election
is made, payment shall be made as a lump sum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Lump Sum</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <U>Pre-2005 Account</U>. If payment of a Participant&#146;s Pre-2005 Account is to be made in
a lump sum, the lump sum payment generally shall be made on or as soon as administratively
practicable after the March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> immediately after the date in which the Participant
separates from service.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <U>Post-2004 Account</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Non-Specified Employees</U>. If payment of a Participant&#146;s Post-2004 Account is to be
made to the Participant in a lump sum, and the Participant is not a Specified Employee of any
Employer as defined in Section&nbsp;8.3(d) of this Plan and consistent with the guidance under Code
Section&nbsp;409A, the lump sum payment generally shall be made on or as soon as administratively
practicable after the March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> immediately after the date in which the Participant
separates from service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Specified Employees</U>. If payment of a Participant&#146;s Post-2004 Account is to be
made to the Participant in a lump sum, and the Participant is a Specified Employee of any Employer,
as defined in Section&nbsp;8.3(d) of this Plan and consistent with the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">guidance under Code Section&nbsp;409A, the lump sum payment generally shall be made on or as soon
as administratively practicable after the later of (1)&nbsp;the March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> immediately after
the date in which the Participant separates from service, or (2)&nbsp;the date that is six (6)&nbsp;months
after the date in which the Participant separates from service, unless due to such Participant&#146;s
death, in which case payment generally shall be made to the Beneficiary as soon as practicable
after the date of the Participant&#146;s death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Installments</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <U>Pre-2005 Account</U>. If payment of a Participant&#146;s Pre-2005 Account is to be made in
annual installments, the distribution of the first annual installment payment generally shall be
made on or as soon as administratively practicable after the March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> immediately
after the date in which the Participant separates from service. The amount of this first
installment payment shall be based on the value of the Participant&#146;s Account as of the March&nbsp;15
preceding the distribution date of this installment payment. Each subsequent installment payment
generally shall be paid on or as soon as administratively practicable after each subsequent March
31. The amount of each such installment shall be based on the value of the Participant&#146;s account
as of the March&nbsp;15 preceding the distribution date of such installment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <U>Post-2004 Account</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Non-Specified Employees</U>. If payment of a Participant&#146;s Post-2004 Account is to be
made to the Participant in annual installments, the distribution of the first annual installment
payment generally shall be made on or as soon as administratively practicable after the March
31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> immediately after the date in which the Participant separates from service. The
amount of this first installment payment shall be based on the value of the Participant&#146;s Account
as of the March&nbsp;15 preceding the distribution date of this installment payment. Each subsequent
installment payment generally shall be paid on or as soon as administratively practicable after
each subsequent March&nbsp;31. The amount of each such installment shall be based on the value of the
Participant&#146;s account as of the March&nbsp;15 preceding the distribution date of such installment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Specified Employees</U>. If payment of a Participant&#146;s Post-2004 Account is to be
made to the Participant in annual installments, and the Participant is a Specified Employee of any
Employer, as defined in Section&nbsp;8.3(d) of this Plan and consistent with the guidance under Code
Section&nbsp;409A, the distribution of the first annual installment payment generally shall be made on
or as soon as administratively practicable after the later of (1)&nbsp;the March&nbsp;31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>
immediately after the date in which the Participant separates from service, or (2)&nbsp;the date that is
six (6)&nbsp;months after the date in which the Participant separates from service, unless due to such
Participant&#146;s death, in which case such installment payment generally shall be made to the
Beneficiary as soon as practicable after the date of the Participant&#146;s death. The amount of this
first installment payment shall be based on the value of the Participant&#146;s Account as of the March
15 preceding the distribution date of this installment payment. Each subsequent installment
payment generally shall be paid on or as soon as administratively practicable after each subsequent
March&nbsp;31. The amount of each such installment shall be based on the value of the Participant&#146;s
account as of the March&nbsp;15 preceding the distribution date of such installment.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Specified Employee Determination</U>. A Participant shall be deemed to be a Specified
Employee for purposes of this Section&nbsp;8.3 if he or she is in job scope level C2 or above with
respect to any Employer that employees him; provided that if at any time the total number of
Employees in job category C2 and above is less than 50, a Specified Employee shall include any
employee who meets the definition of Key Employee set forth in Code Section 416(i) without
reference to paragraph (5). A Participant shall be deemed to be a Specified Employee with respect
to a calendar year if he or she is a Specified Employee on September&nbsp;30 of the preceding calendar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Modifying Separation from Service Distributions</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <U>Pre-2005 Account</U>. Notwithstanding any other provision of the Plan, a
Participant may modify his election as to the form or time of distribution of his entire
Pre-2005 Account, and earnings thereon, by a writing filed with the Retirement Committee at
any time prior to the commencement of payment. A Participant&#146;s modification of his election
as to the form or time of commencement of payment shall be ineffective, unless (1)&nbsp;the
modification election is filed with the Retirement Committee more than 12&nbsp;months prior to
the time of commencement of payment, or (2)&nbsp;a Participant elects by written instrument
delivered to the Company prior to the time of commencement of payment to have his Pre-2005
Account reduced by 10%. This reduction shall be forfeited and used by the Plan to reduce
expenses of administration. This reduction is intended to discourage a Participant from
modifying his election as to the form or time of commencement of payment within the period
set forth in clause&nbsp;(1) above and prevent him from being deemed in constructive receipt of
his Pre-2005 Account prior to its actual payment to him.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <U>Post-2004 Account</U>. The Company, in its discretion, may allow a Participant
to modify his election as to the form or time of distribution of his entire Post-2004
Account, and earnings thereon, or of any Post-2004 Deferral Commitment under the Plan and
earnings thereon, if (1)&nbsp;such election does not take effect until at least 12&nbsp;months after
the date on which the election is made, (2)&nbsp;the first payment with respect to which such
election is made is deferred for a period of not less than five (5)&nbsp;years from the date on
which such payment would otherwise have been made, and (3)&nbsp;any election related to a payment
to be made at a specified date is made at least 12&nbsp;months prior to the date of the first
scheduled payment. For purposes of the Plan, the term &#147;payment&#148; means each separate
installment and not the collective group of installment payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.4 </B><U><B>Unforeseeable Emergency/Hardship Distributions</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon a finding that a Participant has suffered an Unforeseeable Emergency, the Retirement
Committee may, in its sole discretion, make distributions from the Participant&#146;s Pre-2005 Account
(including his Transferred Bay State Account or Transferred Columbia Account, if applicable). The
amount of such a distribution shall be limited to the amount reasonably necessary to meet the
Participant&#146;s needs resulting from the Unforeseeable Emergency. Any distribution pursuant to this
Section&nbsp;8.4(a) shall be payable in a lump sum.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The distribution shall be paid within 30&nbsp;days after the determination of an Unforeseeable
Emergency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Upon a finding that a Participant has suffered an Unforeseeable Emergency, the Retirement
Committee may, in its sole discretion, make distributions from the Participant&#146;s Post-2004 Account
and/or allow a Participant to suspend his Deferred Commitment entirely. The amount of such
distribution shall be limited to the amount necessary to satisfy such Unforeseeable Emergency plus
amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking
into account the extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant&#146;s assets (to the extent
the liquidation of such assets would not itself cause severe financial hardship). Any distribution
pursuant to this Section&nbsp;8.4(b) shall be payable in a lump sum. The distribution shall be paid
within 30&nbsp;days after the determination of an Unforeseeable Emergency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.5 </B><U><B>Distribution Provisions Applicable to a Transferred Bay State Account</B></U><B>.</B>
Notwithstanding any other provision in the Plan, the following provisions shall apply to the form
and time of payment of the balance of a Transferred Bay State Account:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The portion of a Transferred Bay State Account not paid pursuant to Section&nbsp;8.2 shall be
paid to a Participant following his separation from service, or to his Beneficiary in the case of
death, in the form selected by the Participant, by written instrument delivered to the Retirement
Committee before November&nbsp;1, 2000. If no form is selected by the Participant, payment shall be
made in a lump sum. The provisions of Section&nbsp;8.2(b) shall apply with respect to the election of
the form of payment of a Transferred Bay State Account and the modification of such election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Any former employee of Bay State Gas Company who (1)&nbsp;was a participant in the Bay State
Plan immediately prior to November&nbsp;1, 2000, (2)&nbsp;terminated employment with Bay State Gas Company
prior to November&nbsp;1, 2000, for any reason other than Retirement, death or Disability (as such terms
were defined in the Bay State Plan immediately prior to November&nbsp;1, 2000), and (3)&nbsp;as of November
1, 2000, had not commenced payment of his Account shall not commence payment of his Transferred Bay
State Account until the earlier of the Participant&#146;s attainment of age 65, Disability or death.
Notwithstanding the preceding sentence, the Retirement Committee may, in its sole discretion, vary
the manner and time of making the payment of a Participant&#146;s Transferred Bay State Account to such
former Bay State employee, and may make such distributions over a longer or shorter period of time
or in a lump sum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.6 </B><U><B>Automatic Cash-Out</B></U><B>. </B>In the event a Participant&#146;s Account balance at the time
distribution begins, or following a distribution of an installment payment is $15,000 or less, that
balance shall be paid to the Participant or his Beneficiary in a lump sum on the next annual
installment distribution date notwithstanding any form of benefit payment elected by the
Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.7 </B><U><B>Special Payment Election by December&nbsp;31, 2006, for Code Section&nbsp;409A Transition
Relief</B></U><B>. </B>Notwithstanding any other provision of this Plan, a Participant may change
</div>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">an election with respect to the time and form of payment of Post-2004 Benefit, without regard
to the restrictions imposed under paragraph (i)&nbsp;next above, on or before December&nbsp;31, 2006;
provided that such election (1)&nbsp;applies only to amounts that would not otherwise be payable in
calendar year 2006, and (2)&nbsp;shall not cause an amount to be paid in calendar year 2006 that would
not otherwise be payable in such year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.8 </B><U><B>Withholding for Taxes</B></U><B>. </B>To the extent required by the law in effect at the time
payments are made, an Employer shall withhold from the payments made hereunder any taxes required
to be withheld by the federal or any state or local government, including any amounts which the
Employer determines is reasonably necessary to pay any generation-skipping transfer tax which is or
may become due. A Beneficiary, however, may elect not to have withholding of federal income tax
pursuant to Code Section&nbsp;3405(a)(2).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.9 </B><U><B>Payment to Guardian</B></U><B>. </B>The Retirement Committee may direct payment to the duly
appointed guardian, conservator or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal representative, the Retirement
Committee may, in its sole and absolute discretion, make payment to a person having the care and
custody of a minor, incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Retirement Committee of incompetency, status as a minor, or incapacity.
Such distribution shall completely discharge the Company from all liability with respect to such
benefit.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE IX</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>BENEFICIARY DESIGNATION</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.1 </B><U><B>Beneficiary Designation</B></U><B>. </B>Subject to Section&nbsp;9.3, each Participant shall have the
right, at any time, to designate one or more persons or an entity as Beneficiary (both primary as
well as secondary) to whom benefits under the Plan shall be paid in the event of the Participant&#146;s
death prior to complete distribution of the Participant&#146;s Account. Each Beneficiary designation
shall be in a written form prescribed by the Retirement Committee and shall be effective only when
filed with the Retirement Committee during the Participant&#146;s lifetime.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.2 </B><U><B>Changing Beneficiary</B></U><B>. </B>Subject to Section&nbsp;9.3, any Beneficiary designation may be
changed by a Participant without the consent of the previously named Beneficiary by the filing of a
new designation with the Retirement Committee. The filing of a new designation shall cancel all
designations previously filed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.3 </B><U><B>Community Property</B></U><B>. </B>If the Participant resides in a community property state, the
following rules shall apply:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Designation by a married Participant of a Beneficiary other than the Participant&#146;s spouse
shall not be effective unless the spouse executes a written consent that acknowledges the effect of
the designation, or it is established that the consent cannot be obtained because the spouse cannot
be located.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;A married Participant&#146;s Beneficiary designation may be changed by a Participant with the
consent of the Participant&#146;s spouse as provided for in Section&nbsp;9.3(a) by the filing of a new
designation with the Retirement Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If the Participant&#146;s marital status changes after the Participant has designated a
Beneficiary, the following shall apply:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Participant is married at the time of death but was unmarried when the
designation was made, the designation shall be void unless the spouse has consented to it in
the manner prescribed in Section&nbsp;98.3(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If the Participant is unmarried at the time of death but was married when the
designation was made:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The designation shall be void if the spouse was named as
Beneficiary, unless the designation is reaffirmed when the Participant is unmarried.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The designation shall remain valid if a nonspouse. Beneficiary
was named.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If the Participant was married when the designation was made and is married to a
different spouse at death, the designation shall be void unless the new spouse has consented
to it in the manner prescribed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.4 </B><U><B>No Beneficiary Designation</B></U><B>. </B>If any Participant fails to designate a Beneficiary
in the manner provided above, if the designation is void or if the Beneficiary designated by a
deceased Participant dies before the Participant or before complete distribution of the
Participant&#146;s benefits, the Participant&#146;s Beneficiary shall be the person in the first of the
following classes in which there is a survivor:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Participant&#146;s spouse;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Participant&#146;s children in equal shares, except that if any of the children predeceases
the Participant but leaves issue surviving, then such issue shall take, by right of representation,
the share the parent would have taken if living;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Participant&#146;s estate.
</DIV>
 <DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE X</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>ADMINISTRATION</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.1 </B><U><B>Committee; Duties</B></U><B>. </B>The Plan shall be administered by the Retirement Committee.
The Retirement Committee shall have the authority to make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of the Plan and decide or
</div>
<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">resolve any and all questions, including interpretations of the Plan, as may arise in such
administration. Members of the Retirement Committee may be Participants under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.2 </B><U><B>Agents</B></U><B>. </B>The Retirement Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to time consult with
counsel who may be counsel to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.3 </B><U><B>Binding Effect of Decisions</B></U><B>. </B>The decision or action of the Retirement Committee
with respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.4 </B><U><B>Indemnity of Retirement Committee</B></U><B>. </B>The Company shall indemnify and hold harmless
the members of the Retirement Committee against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to the Plan on account of such
person&#146;s service on the Retirement Committee, except in the case of gross negligence or willful
misconduct.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE XI</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>CLAIMS PROCEDURE</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.1 </B><U><B>Claim</B></U><B>. </B>The Retirement Committee shall establish rules and procedures to be
followed by Participants and Beneficiaries in filing claims for benefits, and for furnishing and
verifying proof necessary to establish the right to benefits in accordance with the Plan,
consistent with the remainder of this Article. Such rules and procedures shall require that claims
and proofs be made in writing and directed to the Retirement Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.2 </B><U><B>Review of Claim</B></U><B>. </B>The Retirement Committee shall review all claims for benefits.
Upon receipt by the Retirement Committee of such a claim, it shall determine all facts that are
necessary to establish the right of the claimant to benefits under the provisions of the Plan and
the amount thereof as herein provided within 90&nbsp;days of receipt of such claim. If prior to the
expiration of the initial 90&nbsp;day period, the Retirement Committee determines additional time is
needed to come to a determination on the claim, the Retirement Committee shall provide written
notice to the Participant, Beneficiary or other claimant of the need for the extension, not to
exceed a total of 180&nbsp;days from the date the application was received.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.3 </B><U><B>Notice of Denial of Claim</B></U><B>. </B>In the event that any Participant, Beneficiary or
other claimant claims to be entitled to a benefit under the Plan, and the Retirement Committee
determines that such claim should be denied in whole or in part, the Retirement Committee shall, in
writing, notify such claimant that the claim has been denied, in whole or in part, setting forth
the specific reasons for such denial. Such notification shall be written in a manner reasonably
expected to be understood by such claimant and shall refer to the specific sections of the Plan
relied on, shall describe any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary, and, where
appropriate, shall include an explanation of how the claimant can obtain reconsideration of such
denial.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.4 </B><U><B>Reconsideration of Denied Claim</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Within 60&nbsp;days after receipt of the notice of the denial of a claim, such claimant or duly
authorized representative may request, by mailing or delivery of such written notice to the
Retirement Committee, a reconsideration by the Retirement Committee of the decision denying the
claim. If the claimant or duly authorized representative fails to request such a reconsideration
within such 60&nbsp;day period, it shall be conclusively determined for all purposes of the Plan that
the denial of such claim by the Retirement Committee is correct. If such claimant or duly
authorized representative requests a reconsideration within such 60&nbsp;day period, the claimant or
duly authorized representative shall have 30&nbsp;days after filing a request for reconsideration to
submit additional written material in support of the claim, review pertinent documents and submit
issues and comments in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;After such reconsideration request, the Retirement Committee shall determine within 60
days of receipt of the claimant&#146;s request for reconsideration whether such denial of the claim was
correct and shall notify such claimant in writing of its determination. The written notice of
decision shall be in writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based. In the event of special circumstances determined
by the Retirement Committee, the time for the Retirement Committee to make a decision may be
extended by an additional 60&nbsp;days upon written notice to the claimant prior to the commencement of
the extension. If such determination is favorable to the claimant, it shall be binding and
conclusive. If such determination is adverse to such claimant, it shall be binding and conclusive
unless the claimant or his duly authorized representative notifies the Retirement Committee within
90&nbsp;days after the mailing or delivery to the claimant by the Retirement Committee of its
determination that claimant intends to institute legal proceedings challenging the determination of
the Retirement Committee and actually institutes such legal proceedings within 180&nbsp;days after such
mailing or delivery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.5 </B><U><B>Employer to Supply Information</B></U><B>. </B>To enable the Retirement Committee to perform
its functions, each Employer shall supply full and timely information to the Retirement Committee
of all matters relating to the retirement, death or other cause for separation from service of all
Participants, and such other pertinent facts as the Retirement Committee may require.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE XII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>AMENDMENT AND TERMINATION OF PLAN</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.1 </B><U><B>Amendment</B></U><B>. </B>The Committee may at any time amend the Plan by written instrument,
notice of which is given to all Participants, and to Beneficiaries receiving installment
payments. Notwithstanding the preceding sentence, no amendment shall reduce the amount accrued
in any Account prior to the date such notice of the amendment is given.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.2 </B><U><B>Employer&#146;s Right to Terminate</B></U><B>. </B>The Committee may at any time partially or
completely terminate the Plan if, in its judgment, the tax, accounting or other effects of the
continuance of the Plan, or potential payments thereunder, would not be in the best interests of
the Employers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Partial Termination</U>. The Committee may partially terminate the Plan by
instructing the Retirement Committee not to accept any additional Deferral Commitments. If such a
partial termination occurs, the Plan shall continue to operate and be effective with regard to
Deferral Commitments entered into prior to the effective date of such partial termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Complete Termination</U>. The Committee may completely terminate the Plan by
instructing the Retirement Committee not to accept any additional Deferral Commitments, and by
terminating all ongoing Deferral Commitments. If such a complete termination occurs, the Plan
shall cease to operate and the Employers shall pay out each Pre-2005 Account in equal monthly
installments over the following period, based on the Pre-2005 Account balance:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Account Balance</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Payout Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less than $50,000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lump Sum</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$50,000 but less than $100,000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3 Years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">More than $100,000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5 Years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payments shall commence within 65&nbsp;days after the Committee terminates the Plan, and earnings shall
continue to be credited on the unpaid Account balance. Employers shall pay out each Post-2004
Account in the manner and at the time described in Articles V and VIII.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE XIII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>MISCELLANEOUS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.1 </B><U><B>Unfunded Plan</B></U><B>. </B>The Plan is an unfunded plan maintained primarily to provide
deferred compensation benefits for a select group of &#147;management or highly-compensated employees&#148;
within the meaning of Sections&nbsp;201, 301 and 401 of the Employee Retirement Income Security Act of
1974, as amended (&#147;ERISA&#148;), and therefore is exempt from the provisions of Parts 2, 3 and 4 of
Title I of ERISA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.2 </B><U><B>Company and Employer Obligations</B></U><B>. </B>The obligation to make benefit payments to any
Participant under the Plan shall be a joint and several liability of the Company and the Employer
that employed the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.3 </B><U><B>Unsecured General Creditor</B></U><B>. </B>Participants and Beneficiaries shall be unsecured
general creditors, with no secured or preferential right to any assets of the Employer or any other
party for payment of benefits under the Plan. Any life insurance policies, annuity contracts or
other property purchased by the Employer in connection with the Plan shall remain its general,
unpledged and unrestricted assets. The Employer&#146;s obligation under the Plan shall be an unfunded
and unsecured promise to pay money in the future.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.4 </B><U><B>Trust Fund</B></U><B>. </B>Subject to Section&nbsp;13.3, the Company may establish separate
subtrusts for deferrals by employees of each Employer, pursuant to a trust agreement entered into
with such trustees as the Committee may approve, for the purpose of providing for the payment of
benefits owed under the Plan. At its discretion, each Employer may contribute deferrals under the
Plan for its employees to the subtrust established with respect to such Employer under such trust
agreement. To the extent any benefits provided under the Plan are paid from any such subtrust, the
Employer shall have no further obligation to pay them. If not paid from a subtrust, such benefits
shall remain the obligation of the Employer. Although such subtrusts may be irrevocable, their
assets shall be held for payment of all the Company&#146;s general creditors in the event of insolvency
or bankruptcy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.5. </B><U><B>Nonassignability</B></U><B>. </B>Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate, or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof or rights to, which are expressly declared to be unassignable and
nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony, or separate maintenance
owed by a Participant or any other person, nor be transferable by operation of law in the event of
a Participant&#146;s or any other person&#146;s bankruptcy or insolvency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the preceding paragraph, the Account of any Participant shall be subject to
and payable in the amount determined in accordance with any qualified domestic relations order, as
that term is defined in Section&nbsp;206(d)(3) of ERISA. The Retirement Committee shall provide for
payment in a lump sum from a Participant&#146;s Account to an alternate payee (as defined in Code
Section&nbsp;414(p)(8)) as soon as administratively practicable following receipt of such order. Any
federal, state or local income tax associated with such payment shall be the responsibility of the
alternate payee. The balance of an Account that is subject to any qualified domestic relations
order shall be reduced by the amount of any payment made pursuant to such order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.6 </B><U><B>Not a Contract of Employment</B></U><B>. </B>The Plan shall not constitute a contract of
employment between an Employer and the Participant. Nothing in the Plan shall give a Participant
the right to be retained in the service of an Employer or to interfere with the right of an
Employer to discipline or discharge a Participant at any time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.7 </B><U><B>Protective Provisions</B></U><B>. </B>A Participant shall cooperate with his Employer by
furnishing any and all information requested by the Employer in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations as the Employer may deem necessary and
taking such other action as may be requested by the Employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.8 </B><U><B>Governing Law</B></U><B>. </B>The provisions of the Plan shall be construed and interpreted
according to the laws of the State of Indiana, except as preempted by federal law.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.9 </B><U><B>Validity</B></U><B>. </B>In case any provision of the Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan
shall be construed and enforced as if such illegal and invalid provision had never been inserted
herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.10 </B><U><B>Notice</B></U><B>. </B>Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed
as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification. Mailed notice to the Retirement
Committee shall be directed to the Company&#146;s address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual&#146;s last known address in the applicable Employer&#146;s
records.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.11 </B><U><B>Successors</B></U><B>. </B>The provisions of the Plan shall bind and inure to the benefit of
the Employers and their successors and assigns. The term successors as used herein shall include
any corporate or other business entity that shall, whether by merger, consolidation, purchase, or
otherwise, acquire all or substantially all of the business and assets of an Employer, and
successors of any such corporation or other business entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.12 </B><U><B>Tax Savings Clause</B></U><B>. </B>Notwithstanding anything to the contrary contained in the
Plan, (1)&nbsp;in the event that the Internal Revenue Service prevails in its claim that amounts
contributed to the Plan for the benefit of a Participant, and/or earnings thereon, constitute
taxable income under Code Section&nbsp;409A, and guidance and regulations thereunder, to the Participant
or his Beneficiary for a taxable year prior to the taxable year in which such contributions and/or
earnings are distributed to him, or (2)&nbsp;in the event that legal counsel satisfactory to the
Company, and the applicable Participant or his Beneficiary, renders an opinion that the Internal
Revenue Service would likely prevail in such a claim, the Post-2004 Account, to the extent
constituting such taxable income, shall be immediately distributed to the Participant or his
Beneficiary. For purposes of this Section, the Internal Revenue Service shall be deemed to have
prevailed in a claim if such claim is upheld by a court of final jurisdiction, or, if based upon an
opinion of legal counsel satisfactory to the Company and the Participant or his Beneficiary, the
Plan fails to appeal a decision of the Internal Revenue Service, or a court of applicable
jurisdiction, with respect to such claim to an appropriate Internal Revenue Service appeals
authority or to a court of higher jurisdiction within the appropriate time period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the Company has caused the Plan to be executed in its name by its duly
authorized officer this 28&nbsp;day of October&nbsp;2008, effective as of the 1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> day of January
2008.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>NISOURCE INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="center">/s/ Robert Campbell
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>



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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>4
<FILENAME>c47397exv10w4.htm
<DESCRIPTION>EX-10.4
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w4</TITLE>
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<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.4</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>As Amended and Restated Effective January&nbsp;1, 2008</B>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
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<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE I PURPOSE</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE II DEFINITIONS</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Affiliate
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">1</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Board
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Code
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Committee
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Compensation
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Disability or Disabled
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Early Retirement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Final Average Compensation
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Pension Plan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">2</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Normal Retirement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Participant
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pension
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.14</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pension Restoration Plan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.15</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.16</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Post-2004 Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.17</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pre-2005 Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.18</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Primary Social Security Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.19</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Qualified Pension Plan
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">3</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.20</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retirement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retirement Committee
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">2.22</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Service
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE III PARTICIPATION</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE IV SUPPLEMENTAL RETIREMENT PENSION</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Applicability
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Retirement Pension
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">4</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Reduction for Early Retirement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">5</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Separation from Service Prior to Early Retirement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">5</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Disability Pension
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">6</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Spouse Pension
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">7</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retiree Death Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">7</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cost of Living Adjustment
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">7</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">4.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Separate Agreement
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE V SUPPLEMENTAL RETIREMENT ACCOUNT</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">5.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Applicability
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">5.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Retirement Account
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">5.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Supplemental Credits
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->i<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B><BR>
(continued)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">5.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Separation from Service
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">5.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Death
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">8</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE VI DISTRIBUTIONS</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">9</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">6.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pre-2005 Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">9</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">6.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Post-2004 Benefit
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">10</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE VII MISCELLANEOUS</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plan Financing
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Non-Compete and Related Provisions
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nonguarantee of Employment
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">12</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nonalienation of Benefits
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">13</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plan Amendment or Termination
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">13</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indemnification
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">13</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Action by Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Protective Provisions
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Governing Law
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Notice
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Successors
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">14</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Actuarial Assumptions
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">15</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">7.13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tax Savings
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">15</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE VIII CHANGE IN CONTROL</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">16</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">16</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Potential Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">18</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Additional Service and Compensation Upon Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">18</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Waiver of Service and Age Requirements Upon Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">18</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Funding of Plan Benefits Upon Potential Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">19</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Plan Administration and Amendment Upon a Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">19</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Committee Discretion to Pay Lump Sum After a Change in Control
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">19</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lump Sum Election
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">19</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">8.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitions
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">20</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="7" valign="top" align="left">ARTICLE IX PLAN ADMINISTRATION:THE COMMITTEE</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">21</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">9.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Powers, Rights and Duties
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">21</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">9.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Information Required by Committee
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">21</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">9.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Committee Decision Final
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">22</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">9.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Claims Procedure
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">22</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.<BR>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN<BR>
As Amended and Restated Effective January&nbsp;1, 2008</B><BR>
<U><B>ARTICLE I</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Purpose</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective as of December&nbsp;23, 1982, and as subsequently amended as of January&nbsp;1, 1989, Northern
Indiana Public Service Company adopted the Northern Indiana Public Service Company Supplemental
Executive Retirement Plan. Effective as of January&nbsp;1, 1991, NIPSCO Industries, Inc. (the
&#147;Company&#148;) adopted the NIPSCO Industries, Inc. Supplemental Executive Retirement Plan (the &#147;Plan&#148;)
to benefit the Company by providing key executives and employees with additional security in order
to aid the Company in retaining its present management and, should circumstances require it, to aid
the Company in attracting additions to management. The Company, by providing such additional
benefits, expects key executives and employees to be available for consulting assignments to the
Company after retirement, at the Company&#146;s request. The Plan was amended and restated, effective
January&nbsp;1, 1993, in order to clarify certain provisions, and was further amended and restated
effective September&nbsp;1, 1994. The Plan was further amended and restated effective June&nbsp;1, 2002 to
reflect the name change of the Company to NiSource Inc. and to make other administrative and
technical changes. The Plan was further amended, effective January&nbsp;1, 2004, to reflect changes in
the structure of benefits under the Plan. The Plan was again amended and restated, effective
January&nbsp;1, 2005, to comply with Internal Revenue Code Section&nbsp;409A with respect to benefits earned
under the Plan from and after January&nbsp;1, 2005. Benefits under the Plan earned and vested prior to
January&nbsp;1, 2005 shall be administered without giving effect to Code Section&nbsp;409A, and guidance and
regulations thereunder. The Plan is now further amended and restated, effective January&nbsp;1, 2008,
to incorporate special transition relief under Internal Revenue Service Notice 2007-86 to allow
Participants to elect to change the time and form of payment of certain Post-2004 Benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is intended that the Plan be exempt from the reporting and disclosure requirements of
Title&nbsp;I of the Employee Retirement Income Security Act of 1974 because it is an unfunded plan
maintained by an employer for the purpose of providing benefits for a select group of management or
highly compensated employees.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE II</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Definitions</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where the following words or phrases appear in the Plan, they shall have the respective
meanings set forth in the following Sections of this Article, unless the context clearly indicates
to the contrary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <U>Affiliate</U>. Any corporation that is a member of a controlled group of corporations
(as defined in Code Section&nbsp;414(b)) that includes the Company; any trade or business (whether or
not incorporated) that is under common control (as defined in Code Section&nbsp;414(c)) with the
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company; any organization (whether or not incorporated) that is a member of an affiliated
service group (as defined in Code Section&nbsp;414(m)) that includes the Company; any leasing
organization, to the extent that its employees are required to be treated as if they were employed
by the Company pursuant to Code Section&nbsp;414(n) and the regulations thereunder; and any other entity
required to be aggregated with the Company pursuant to regulations under Code Section&nbsp;414(o). An
entity shall be an Affiliate only with respect to the existing period as described in the preceding
sentence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <U>Board</U>. The Board of Directors of NiSource Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <U>Code</U>. The Internal Revenue of Code of 1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <U>Committee</U>. The Officer Nomination and Compensation Committee of the Board, which
has certain specific duties with respect to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <U>Company</U>. NiSource Inc. and its subsidiaries and affiliates that adopt the Plan
for the benefit of key employees, or its successor or successors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <U>Compensation</U>. As defined in the NiSource Pension Plan, but disregarding the
definition of Taxable Compensation and the limitations required by Code Section&nbsp;401(a)(17), or any
successor Section. In addition, for purposes of the Plan, bonuses shall be considered in full as
Compensation and not limited to 50% of base pay.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 <U>Disability or Disabled</U>. A Participant has a Disability or is Disabled if he or
she has a condition that (a)&nbsp;causes a Participant to be unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than
12&nbsp;months, (b)&nbsp;causes a Participant, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous
period of not less than 12&nbsp;months, to receive income replacement benefits for a period of not less
than three&nbsp;months under an accident and health plan covering employees of the Company or an
Affiliate or (c)&nbsp;causes a Participant to be eligible to receive Social Security disability
payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 <U>Early Retirement</U>. Separation from Service for reasons other than death or
Disability after the Participant has both attained age&nbsp;55 and completed at least 10&nbsp;years of
Service, but before the Participant&#146;s Normal Retirement, except as otherwise provided.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 <U>Final Average Compensation</U>. The result obtained by dividing the total
Compensation paid to a Participant during a considered period by the number of&nbsp;months for which
such Compensation was received. The considered period shall be the 60&nbsp;consecutive calendar months
within the last 120&nbsp;months of service that produces the highest result.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 <U>NiSource Pension Plan</U>. NiSource Inc. and Northern Indiana Public Service Company
Pension Plan Provisions Pertaining to Salaried and Non-Exempt Employees, as amended from time to
time.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 <U>Normal Retirement</U>. Separation from Service for reasons other than death or
Disability after a Participant has: (1)&nbsp;attained age&nbsp;62; or (2)&nbsp;attained age&nbsp;60 and completed at
least 25&nbsp;years of Service, except as otherwise provided.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 <U>Participant</U>. An employee or retiree participating in the Plan in accordance with
the provisions of Article&nbsp;III.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 <U>Pension</U>. A series of monthly amounts that are payable to a person who is
entitled to receive benefits under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 <U>Pension Restoration Plan</U>. Pension Restoration Plan for NiSource Inc. and
Affiliates, as amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 <U>Plan</U>. NiSource Inc. Supplemental Executive Retirement Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 <U>Post-2004 Benefit</U>. The portion of a Participant&#146;s Supplemental Retirement
Pension or Supplemental Retirement Account, as applicable, equal to the present value, determined
as of a Participant&#146;s date of separation from Service after December&nbsp;31, 2004, of the excess of
such benefit or account balance to which a Participant would be entitled under the Plan if he or
she voluntarily separated from Service without cause after December&nbsp;31, 2004 over his or her
Pre-2005 Benefit and received a full payment of benefits from the Plan on the earliest possible
date allowed under the Plan following the separation from Service, pursuant to Articles IV and&nbsp;V,
calculated from and after January&nbsp;1, 2005 to the date of separation from Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 <U>Pre-2005 Benefit</U>. The portion of a Participant&#146;s Supplemental Retirement Pension
or Supplemental Retirement Account, as applicable, equal to the present value of the benefit or
account balance, determined as of December&nbsp;31, 2004, to which a Participant would be entitled under
the Plan if he or she voluntarily separated from Service without cause on December&nbsp;31, 2004 and
received a full payment of benefits from the Plan on the earliest possible date allowed under the
Plan following separation from Service, pursuant to Articles IV and V, calculated as of December
31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 <U>Primary Social Security Benefit</U>. The monthly amount available to a Participant
at age&nbsp;65 (or at Retirement, if later) under the provisions of Title&nbsp;II of the Social Security Act
in effect at the time of separation from Service, assuming the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Participant attained age&nbsp;65 in the year of Retirement, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Participant earned maximum taxable wages under Code Section&nbsp;3121(a)(1) in
all years prior to the year of Retirement. A Participant&#146;s Primary Social Security
Benefit will be deducted in accordance with Article&nbsp;IV, even though he or she may not
be receiving or may not be eligible to receive Social Security benefits.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 <U>Qualified Pension Plan</U>. The NiSource Pension Plan and any other tax-qualified
defined benefit pension plan maintained by the Company or any Affiliate.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20 <U>Retirement</U>. A Participant&#146;s Normal or Early Retirement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.21 <U>Retirement Committee</U>. The NiSource Inc. and Affiliates Retirement Plan
Administrative and Investment Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.22 <U>Service</U>. A Participant&#146;s or employee&#146;s employment or service with the Company,
as defined in the NiSource Pension Plan, or such other employment or service date as determined by
the Board.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE III</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Participation</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board or the Committee shall select which key employees of the Company will participate in
the Plan. In accordance with Article&nbsp;I, it is intended that officers and certain other employees
be eligible for participation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the Board or the Committee approves participation for an individual, the Company or the
Committee shall provide the individual with a notice of participation in the Plan and a description
of the Plan.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE IV</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Supplemental Retirement Pension</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U>Applicability</U>. This Article&nbsp;IV shall apply to each Participant or former
Participant who first participated in the Plan prior to January&nbsp;23, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <U>Supplemental Retirement Pension</U>. Upon Normal Retirement, a Participant shall
receive a monthly Supplemental Retirement Pension calculated on a single-life basis equal to the
larger of (a)&nbsp;or (b)&nbsp;below, reduced in each case by the single-life pension (excluding any
supplements related to eligibility for a Social Security benefit) the Participant is eligible to
receive under (1)&nbsp;either the Final Average Pay Option or the Account Balance Option of the NiSource
Pension Plan, or any other Qualified Pension Plan and (2)&nbsp;the Pension Restoration Plan.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sum of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1.7% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service to a maximum of 30&nbsp;years; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.6% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service in excess of 30&nbsp;years.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sum of:</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>3% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service to a maximum of 20&nbsp;years; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.5% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service in excess of 20&nbsp;years, to a maximum of 30&nbsp;years;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>less 5% of the Participant&#146;s Primary Social Security Benefit,
multiplied by the Participant&#146;s Service to a maximum of 20&nbsp;years.</TD>
</TR>


</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon Early Retirement, a Participant shall receive a monthly Supplemental Retirement Pension
in a reduced amount (as described in Section&nbsp;4.3 below).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <U>Reduction for Early Retirement</U>. A Participant who experiences a separation from
Service prior to Normal Retirement, but after Early Retirement, shall receive a monthly
Supplemental Retirement Pension in an amount determined in accordance with Section&nbsp;4.2 above, but
reduced as follows: (1)&nbsp;by 6% for each of the first two&nbsp;(2)&nbsp;years and 4% for each of the next five
years that commencement of the Participant&#146;s Supplemental Retirement Pension precedes the date that
the Participant would attain age&nbsp;62; or (2)&nbsp;if the Participant had completed 25&nbsp;years of Service at
the time of his or her separation, by 6% for the first&nbsp;year and 4% for each of the next four years
that commencement of the Participant&#146;s Supplemental Retirement Pension precedes the date that the
Participant would attain age&nbsp;60, with a pro rata reduction for any fraction of a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of the Participant&#146;s monthly reduced Supplemental Retirement Pension shall normally
commence within 45&nbsp;days following a separation from Service, or, if later, within such timeframe
permitted under Code Section&nbsp;409A, and guidance and regulations thereunder. Notwithstanding the
preceding sentence, a Participant may elect to defer the commencement of the portion of his or her
reduced Supplemental Retirement Pension that constitutes the Pre-2005 Benefit to any date between
Early Retirement and attainment of age&nbsp;62 by a written election delivered to the Retirement
Committee on or before the last day of the calendar year preceding the calendar year of Early
Retirement. A Participant may elect to defer the commencement of the portion of his or her reduced
Supplemental Retirement Pension that constitutes the Post-2004 Benefit to any date between Early
Retirement and attainment of age&nbsp;62 by a written election delivered to the Retirement Committee
only if such election (i)&nbsp;constitutes a delay in payment or change in the form of payment,
(ii)&nbsp;does not take effect until at least 12&nbsp;months after the date on which the election is made,
(iii)&nbsp;defers the first payment with respect to which such new election is effective for a period of
not less than five years from the date such payment would otherwise have been made, and (iv)&nbsp;is not
made less than 12&nbsp;months prior to the date of the first scheduled payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <U>Separation from Service Prior to Early Retirement</U>. Upon separation from Service
prior to Early Retirement, a Participant shall receive a monthly Supplemental Retirement Pension,
calculated on a single-life basis equal to the excess, if any, of the single-life pension the
Participant would be eligible to receive under either the Final Average Pay Option or the Account
Balance Option of the NiSource Pension Plan, or any other Qualified Pension Plan, if
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the limitations required by Code Sections&nbsp;401(a)(17) and 415, or any other limitation imposed
by the Code, the limitation on bonuses to 50% of base pay and the potential limitations relating to
Taxable Compensation were not applied, reduced by the single-life pension the Participant is
eligible to receive under (1)&nbsp;either such Option of the NiSource Pension Plan, or any other
Qualified Pension Plan and (2)&nbsp;the Pension Restoration Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of the Pre-2005 Benefit to a Participant or his or her beneficiary in accordance with
this Section shall commence on the same date as the pension under the NiSource Pension Plan or any
other Qualified Pension Plan. Payment of the Post-2004 Benefit to a Participant or his or her
beneficiary in accordance with this Section, shall commence within 45&nbsp;days after (i)&nbsp;the
Participant attains (or would have attained) age&nbsp;62, if the Participant has not completed at least
25&nbsp;years of Service, or (ii)&nbsp;if the Participant has completed at least 25&nbsp;years of Service, the
Participant attains (or would have attained) age&nbsp;60, or, if later, within such timeframe permitted
under Code Section&nbsp;409A, and guidance and regulations thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <U>Supplemental Disability Pension</U>. If a Participant becomes Disabled while in the
active employment of the Company prior to age&nbsp;65, the Participant shall be eligible for a monthly
Supplemental Disability Pension commencing on the date the Disability begins and continuing to the
first to occur of the Participant&#146;s death or attainment of age&nbsp;65, calculated on a single-life
basis, and equal to the larger of (a)&nbsp;or (b)&nbsp;below, reduced in each case by the basic benefit the
Participant is eligible to receive under the long-term group disability insurance coverage provided
under any long term disability plan maintained by the Company or any Affiliate.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sum of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1.7% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service to a maximum of 30&nbsp;years, plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.6% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service in excess of 30&nbsp;years.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sum of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>3% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service to a maximum of 20&nbsp;years; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>0.5% of the Participant&#146;s Final Average Compensation multiplied
by the Participant&#146;s Service in excess of 20&nbsp;years, to a maximum of 30&nbsp;years;
less</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>5% of the Participant&#146;s Primary Social Security Benefit,
multiplied by the Participant&#146;s Service to a maximum of 20&nbsp;years.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After age&nbsp;65, the Participant shall be eligible for a monthly Supplemental Retirement Pension
in accordance with Section&nbsp;4.2, based on Service the Participant would have had if the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Participant had continued working for the Company or an Affiliate to age&nbsp;65, the Participant&#146;s
Final Average Compensation at the time he or she became Disabled, the Primary Social Security
Benefit determined at the time the Participant became Disabled, and the single-life pension the
Participant is entitled to receive at age&nbsp;65 from the NiSource Pension Plan, or any other Qualified
Pension Plan, and the Pension Restoration Plan, determined at the time he or she became Disabled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <U>Supplemental Spouse Pension</U>. Upon the death of a Participant in active employment
or while receiving a Supplemental Disability Pension, his or her surviving spouse, if any, shall be
eligible to receive a monthly Supplemental Spouse Pension equal to the greater of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>25% of the Participant&#146;s Final Average Compensation; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the monthly amount that would have been payable to such surviving spouse if the
Participant had elected payment of his or her monthly Supplemental Retirement Pension
in the form of a reduced 50% joint and survivor Pension, with his or her spouse as the
contingent annuitant, terminated employment (on the date of his or her actual death)
and then died immediately prior to the commencement of payments.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Supplemental Spouse Pension shall commence in the month next following the month of the
Participant&#146;s death and continue for the life of such spouse. In the event that the Supplemental
Spouse Pension calculated under option&nbsp;(a) of this Section will provide a greater benefit to the
spouse immediately following the Participant&#146;s death, but option&nbsp;(b) of this Section will provide a
greater monthly benefit as of the date the Participant would have attained age&nbsp;55, the amount of
monthly Supplemental Spouse Pension payable to the surviving spouse shall be: (1)&nbsp;calculated and
payable under option&nbsp;(a) during the period immediately following the Participant&#146;s death; and
(2)&nbsp;recalculated and payable according to option&nbsp;(b) beginning on the date the Participant would
have attained age&nbsp;55. Beginning on the earliest date that the surviving spouse could have begun
receiving a benefit under the NiSource Pension Plan, or any other Qualified Pension Plan, the
Supplemental Spouse Pension payable under this Section shall be reduced by the amount of benefit
under the NiSource Pension Plan, or any other Qualified Pension Plan, and the Pension Restoration
Plan that the spouse is (or would have been) entitled to receive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <U>Retiree Death Benefit</U>. Upon the death of a retired Participant, a lump sum death
benefit equal to 50% of his or her retiree group life insurance coverage shall be paid to the
retiree&#146;s spouse or other beneficiaries designated with respect to such coverage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8 <U>Cost of Living Adjustment</U>. For Participants in the Final Average Pay Option of
the NiSource Pension Plan, the benefits payable under Sections&nbsp;4.2 through&nbsp;4.7 shall be increased
in the same percentage and at the same time as cost of living adjustments are made to the pensions
of salaried employees of the Company or an Affiliate under the NiSource Pension Plan, or any other
Qualified Pension Plan.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9 <U>Separate Agreement</U>. Notwithstanding Sections&nbsp;2.6 and&nbsp;2.22, each Participant who
first becomes eligible to participate in the Plan on and after January&nbsp;1, 2004 and prior to
January&nbsp;23, 2004 shall have his or her Supplemental Retirement Pension determined based upon his or
her Service and Compensation as set forth in a separate, written agreement, if any, between the
Company and such Participant.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE V</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Supplemental Retirement Account</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Applicability</U>. This Article&nbsp;V shall apply to each Participant who first
participates in the Plan on and after January&nbsp;23, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Supplemental Retirement Account</U>. A Participant&#146;s Supplemental Retirement Account
is a notional account equal to the sum of his or her Compensation Credits, Supplemental Credits, if
any, and Interest Credits. Compensation Credits shall be credited to a Participant&#146;s Supplemental
Retirement Account as of the last day of each Plan Year beginning on or after January&nbsp;1, 2004 equal
to five&nbsp;percent of the Participant&#146;s Compensation for such Plan Year. Supplemental Credits, if
any, shall be credited pursuant to Section&nbsp;5.3. Interest Credits shall be calculated in the same
manner and shall be credited to a Participant&#146;s Supplemental Retirement Account at the same time as
provided under the NiSource Pension Plan or any other Qualified Pension Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Supplemental Credits</U>. The Committee, subject to approval of the Board, may
authorize Supplemental Credits to a Participant&#146;s Supplemental Retirement Account in such amounts
and at such times, and subject to such specific terms and provisions, as authorized by the
Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 <U>Separation from Service</U>. Upon separation from Service, for any reason other than
death, with five or more years of Service, unless a shorter period is provided in a separate,
written agreement between the Company and the Participant and approved by the Board, a Participant
shall receive the balance of his or her Supplemental Retirement Account distributed in accordance
with Sections&nbsp;6.1 and&nbsp;6.2 within 45&nbsp;days after such separation from Service, or, if later, within
such timeframe permitted under Code Section&nbsp;409A, and guidance and regulations thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 <U>Death</U>. Upon the death of a Participant prior to final distribution of his or her
Supplemental Retirement Account after completing five or more years of Service, unless a shorter
period is provided in a separate, written agreement between the Company and the Participant and
approved by the Board, the Participant&#146;s beneficiary, designated in such manner as provided by the
Committee, shall receive the balance of the Participant&#146;s Supplemental Retirement Account
distributed in accordance with Sections&nbsp;6.1 and&nbsp;6.2. If the Participant designates multiple
beneficiaries, he or she shall designate the percentage, in whole numbers, allocated to each such
beneficiary.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any Participant fails to designate a beneficiary in the manner provided above, if the
designation is void or if the beneficiary designated by a deceased Participant dies before the
Participant or before complete distribution of the Participant&#146;s benefits, the Participant&#146;s
beneficiary shall be the person in the first of the following classes in which there is a survivor:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Participant&#146;s spouse;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Participant&#146;s children in equal shares, except that if any of the children
predeceases the Participant but leaves issue surviving, then such issue shall take, by
right of representation, the share the parent would have taken if living;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Participant&#146;s estate.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VI</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Distributions</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <U>Pre-2005 Benefit</U>. This Section&nbsp;6.1 applies only to a Pre-2005 Benefit.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Form of Payment</U>. Notwithstanding Sections&nbsp;4.2, 4.3 and 4.4, a
Participant shall receive distribution of his or her Pre-2005 Benefit, pursuant to
Articles IV or V, in the same form as his or her distribution under the NiSource
Pension Plan, computed in the same manner as in the NiSource Pension Plan, or under any
other Qualified Pension Plan, computed in the same manner as in such Qualified Pension
Plan. Any election under the NiSource Pension Plan or any other Qualified Pension Plan
shall apply to his or her Pre-2005 Benefit pursuant to the preceding sentence only if
it is made by written instrument delivered to the Retirement Committee at least 30&nbsp;days
prior to the date of such distribution. If such election is not so made at least
30&nbsp;days prior to the date of distribution of his or her Pre-2005 Benefit, the
Participant&#146;s Pre-2005 Benefit shall be paid as a 50% joint and survivor Pension if
such Participant is married, or as a single-life Pension if such Participant is
unmarried. If a Participant who makes an election pursuant to this subsection&nbsp;6.1(a)
at least 30&nbsp;days prior to the date of distribution dies prior to distribution pursuant
to such election, such election shall be revoked and the provisions of Article&nbsp;IV and
subsection&nbsp;6.1(b) shall apply.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Small Benefit Amounts</U>. At the discretion of the Committee, the present
value of any Pre-2005 Benefit payable under the Plan that does not exceed $5,000 may be
paid to the Participant or his or her surviving spouse or other designated beneficiary
in quarterly, semi-annual or annual installments, or in a single lump sum.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <U>Post-2004 Benefit</U>. This Section&nbsp;6.2 applies only to a Post-2004 Benefit.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Form of Payment</U>. The Post-2004 Benefit shall be payable in a form
available under the NiSource Pension Plan, computed in the same manner as in the
NiSource Pension Plan, or under any other Qualified Pension Plan, computed in the same
manner as in such Qualified Pension Plan, as elected by a Participant by written notice
delivered to the Retirement Committee on or before December&nbsp;31, 2005. Notwithstanding
the preceding sentence, in the case of an employee who first becomes a Participant on
or after January&nbsp;1, 2005, the aforementioned election with respect to a Post-2004
Benefit shall be made by written notice delivered to the Retirement Committee within
30&nbsp;days after the date the Participant first becomes eligible to participate in the
Plan and such election shall be effective with respect to Compensation related to
services to be performed subsequent to the election; provided, however, that a
Participant shall not be considered first eligible if, on the date he or she becomes a
Participant, he or she participates in any other nonqualified plan of the same category
(account balance or nonaccount balance, as applicable), which is subject to Code
Section&nbsp;409A, maintained by the Company or any Affiliate. If payment in the form of an
annuity is elected, the annuity type shall be elected by the Participant at the time he
or she makes the election described in the first or second sentence of this paragraph
from among those annuities available at that time under the NiSource Pension Plan or
under any other Qualified Pension Plan. If a Participant fails to elect a form of
distribution, the Participant&#146;s Post-2004 Benefit shall be payable in a lump sum.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If a Participant who makes an election pursuant to this subsection&nbsp;6.2(a) dies prior
to distribution pursuant to such election, such election shall be revoked and the
provisions of Article&nbsp;IV and subsection&nbsp;6.2(b) shall apply.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any change in an election of a form of distribution available under the NiSource
Pension Plan or any other Qualified Pension Plan shall apply to his or her Post-2004
Benefit pursuant to the preceding paragraph only if it is made by written instrument
delivered to the Retirement Committee and if (i)&nbsp;such new election does not take
effect until at least 12&nbsp;months after the date on which the election is made,
(ii)&nbsp;the first payment with respect to which such new election is effective is
deferred for a period of not less than five (5)&nbsp;years from the date such payment
would otherwise have been made, and (iii)&nbsp;such new election is not made less than
12&nbsp;months prior to the date of the first scheduled payment; provided, however, that
an election to change from one type of annuity payment to a different, actuarially
equivalent, type of annuity payment shall not be considered a change to the method
of payment for purposes of applying the restrictions in clauses&nbsp;(i), (ii)&nbsp;and&nbsp;(iii).</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>
Notwithstanding the preceding paragraph of this Section&nbsp;6.2(a), a Participant may
change an election with respect to the form of payment of a Post-2004 Benefit,
</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>
without regard to the restrictions imposed under the preceding paragraph, on or
before December&nbsp;31, 2006; provided that such election (i)&nbsp;applies only to amounts
that would not otherwise be payable in calendar year&nbsp;2006, and (ii)&nbsp;shall not cause
an amount to be paid in calendar year&nbsp;2006 that would not otherwise be payable in
such year. Additionally, a Participant may change an election with respect to the
form of payment of a Post-2004 Benefit, without regard to the restrictions imposed
under the preceding paragraph, on or before December&nbsp;31, 2007; provided that such
election (i)&nbsp;applies only to amounts that would not otherwise be payable in calendar
year 2007, and (ii)&nbsp;shall not cause an amount to be paid in calendar year 2007 that
would not otherwise be paid in such year. Additionally, a Participant may change an
election with respect to the form of payment of a Post-2004 Benefit, without regard
to the restrictions imposed by the preceding paragraph, on or before December&nbsp;31,
2008; provided that such election (i)&nbsp;applies only to amounts that would not
otherwise be payable before January&nbsp;1, 2009, and (ii)&nbsp;shall not cause an amount to
be paid in calendar year 2007 or 2008 that would not otherwise be paid in such
years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Specified Employees</U>. Notwithstanding any other provision of the Plan,
in no event can a payment of a Post-2004 Benefit, pursuant to Article&nbsp;IV or
Section&nbsp;5.4, to a Participant who is a Specified Employee of the Company or an
Affiliate, at a time during which the Company&#146;s capital stock or capital stock of an
Affiliate is publicly traded on an established securities market, in the calendar year
of his or her separation from Service be made before the date that is six&nbsp;months after
the date of the Participant&#146;s separation from Service with the Company and all
Affiliates, unless such separation is due to his or her death or Disability.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Participant shall be deemed to be a Specified Employee for purposes of this
paragraph (b)&nbsp;if he or she is in job category C2 or above with respect to the
Company or any Affiliate that employs him or her; provided that if at any time the
total number of employees in job category C2 and above is less than 50, a Specified
Employee shall include any person who meets the definition of Key Employee set forth
in Code Section 416(i) without reference to paragraph (5). A Participant shall be
deemed to be a Specified Employee with respect to a calendar year if he or she is a
Specified Employee on September&nbsp;30th of the preceding calendar year. If a Specified
Employee will receive payments hereunder in the form of installments or an annuity,
the first payment made as of the date six months after the date of the Participant&#146;s
separation from Service with the Company and all Affiliates shall be a lump sum,
paid as soon as practicable after the end of such six-month period, that includes
all payments that would otherwise have been made during such six-month period. From
and after the end of such six month period, any such installment or annuity payments
shall be made pursuant to the terms of the applicable installment or annuity form of
payment.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Miscellaneous</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <U>Plan Financing</U>. Except as set forth below in this Section and in Section&nbsp;8.5,
benefits under the Plan shall be paid from the general assets of the Company. To the extent any
Participant or surviving spouse or other designated beneficiary acquires a right to receive
payments hereunder, such right shall be no greater than the right of any other unsecured creditor
of the Company. Notwithstanding the foregoing, the Company has entered into a trust agreement
(&#147;Trust Agreement&#148;) whereby the Company agrees to contribute to a trust (&#147;Trust&#148;) for the purpose
of accumulating assets to assist the Company in fulfilling its obligations to Participants and
surviving spouses or other designated beneficiaries hereunder. Such Trust includes the provision
that all assets of the Trust shall be subject to the creditors of the Company in the event of its
insolvency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <U>Non-Compete and Related Provisions</U>. Benefits under the Plan may be forfeited if:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Participant, while employed by the Company or within a period of three years
after the Participant&#146;s separation from Service for any reason, including Retirement
(the &#147;Restrictive Period&#148;), engages in activity or employment that directly or
indirectly competes with the business of the Company or its Affiliates, including, but
not by way of limitation, by directly or indirectly owning, managing, operating,
controlling, financing, or by directly or indirectly serving as an employee, officer or
director of or consultant to, or by soliciting or inducing, or attempting to solicit or
induce, any employee or agent of the Company or its Affiliates to terminate employment
with the Company or its Affiliates, and become employed by, any person, firm,
partnership, corporation, trust or other entity that provides commodities, products or
services to customers of the Company or its Affiliates of the same type as commodities,
products or services provided by the Company or its Affiliates (the &#147;Restrictive
Covenant&#148;). The foregoing Restrictive Covenant shall not prohibit a Participant from
owning directly or indirectly capital stock or similar securities which are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System which do not represent more than 1% of the outstanding
capital stock of any such entity; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Participant performs any action or makes any statement that is detrimental to
the Company or its Affiliates, unless such action or statement is retracted to the
Company&#146;s satisfaction after the Participant is notified regarding such action or
statement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 <U>Nonguarantee of Employment</U>. Participation in the Plan does not limit the right of
the Company or an Affiliate to discharge any individual with or without cause.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 <U>Nonalienation of Benefits</U>. Neither a Participant, nor a surviving spouse or other
designated beneficiary may assign or transfer any benefits under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5 <U>Plan Amendment or Termination</U>. The Committee may amend any provision of the Plan.
In addition, the Chief Executive Officer of the Company may amend any provision of the Plan,
except for Articles&nbsp;III, IV and&nbsp;V, which may only be amended by the Committee. The Committee may
terminate the Plan at any time, except that any benefits that are payable due to a Retirement,
death, Disability, or other separation from Service occurring prior to the amendment or termination
shall not be reduced or discontinued. No amendment or termination of the Plan shall directly or
indirectly deprive any current or former Participant (or surviving spouse) of all or any portion of
any Supplemental Retirement Benefit, Supplemental Disability Pension, Supplemental Spouse Pension,
or Supplemental Retirement Account, the payment of which has commenced prior to the effective date
of such amendment or termination, or which would be payable if the Participant experienced a
separation from Service for any reason on such effective date. Upon termination of the Plan,
distribution of a Participant&#146;s Supplemental Retirement Benefits, Supplemental Disability Pension,
Supplemental Retirement Account, or Supplemental Spouse Pension shall be made to the Participant or
his or her surviving spouse or beneficiary in the manner and at the time described in Articles&nbsp;IV,
V and VI of the Plan. In addition, no additional Supplemental Retirement Benefits, Supplemental
Disability Pension, Supplemental Spouse Pension, or Compensation Credits or Supplemental Credits
under a Supplemental Retirement Account, shall be earned after termination of the Plan, except as
provided in Section&nbsp;8.3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6 <U>Indemnification</U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Limitation of Liability</U>. Notwithstanding any other provision of the
Plan or the Trust, none of the Company, any member of the Committee, nor an individual
acting as an employee or agent of any of them, shall be liable to any Participant or
former Participant, or any surviving spouse or other designated beneficiary of any
Participant or former Participant, for any claim, loss, liability or expense incurred
in connection with the Plan or the Trust, except when the same shall have been
judicially determined to be due to the willful misconduct of such person.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Indemnity</U>. The Company shall indemnify and hold harmless each member
of the Committee, or any employee of the Company or any individual acting as an
employee or agent of either of them (to the extent not indemnified or saved harmless
under any liability insurance or any other indemnification arrangement with respect to
the Plan or the Trust) from any and all claims, losses, liabilities, costs and expenses
(including attorneys&#146; fees) arising out of any actual or alleged act or failure to act
made in good faith pursuant to the provisions of the Plan, including expenses
reasonably incurred in the defense of any claim relating thereto with respect to the
administration of the Plan or the Trust, except that no indemnification or defense
shall be provided to any person with respect to any conduct that has been judicially
determined, or agreed by the parties, to have constituted willful misconduct on the
part of such person, or to have resulted in</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>his or her receipt of personal profit or advantage to which he or she is not
entitled. In connection with the indemnification provided by the preceding
sentence, expenses incurred in defending a civil or criminal action, suit or
proceeding, or incurred in connection with a civil or criminal investigation, may be
paid by the Company in advance of the final disposition of such action, suit,
proceeding, or investigation, as authorized by the Committee in the specific case,
upon receipt of an undertaking by or on behalf of the party to be indemnified to
repay such amount unless it shall ultimately be determined that the person is
entitled to be indemnified by the Company pursuant to this paragraph.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Severability</U>. Each of the Sections contained in the Plan, and each
provision in each Section, shall be enforceable independently of every other Section or
provision in the Plan, and the invalidity or unenforceability of any Section or
provision shall not invalidate or render unenforceable any other Section or provision
contained herein. If any Section or provision in a Section is found invalid or
unenforceable, it is the intent of the parties that a court of competent jurisdiction
shall reform the Section or provision to produce its nearest enforceable economic
equivalent.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7 <U>Action by Company</U>. Any action required of, or permitted by, the Company under the
Plan shall be by resolution of the Committee, or by a person or persons authorized by&nbsp;resolution of
the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8 <U>Protective Provisions</U>. A Participant shall cooperate with the Company by
furnishing any and all information requested by the Company and its Affiliates in order to
facilitate the payment of benefits hereunder, and by taking such physical examinations as the
Company and its Affiliates may deem necessary and taking such other action as may be requested by
the Company and its Affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.9 <U>Governing Law</U>. The provisions of the Plan shall be construed and interpreted
according to the laws of the State of Indiana, except as preempted by federal law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.10 <U>Notice</U>. Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed
as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification. Mailed notice to the Committee shall be
directed to the Company&#146;s address. Mailed notice to a Participant, a surviving spouse or other
designated beneficiary shall be directed to the individual&#146;s last known address in the Company&#146;s
records.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.11 <U>Successors</U>. The provisions of the Plan shall bind and inure to the benefit of
the Company, its Affiliates and their successors and assigns. The term successors as used herein
shall include any corporate or other business entity that shall, whether by merger, consolidation,
purchase, or otherwise, acquire all or substantially all of the business and assets of the Company,
and successors of any such corporation or other business entity.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.12 <U>Actuarial Assumptions</U>. Unless otherwise provided in the Plan, all actuarial
adjustments necessary to determine the amount, form or timing of any distribution shall be based on
the same actuarial assumptions used for the pension a Participant is eligible to receive under the
NiSource Pension Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.13 <U>Tax Savings</U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary contained in the Plan, (1)&nbsp;in the
event that the Internal Revenue Service prevails in its claim that benefits under the
Plan constitute taxable income to a Participant, his or her spouse or other designated
beneficiary, for any taxable year, prior to the taxable year in which such benefits are
distributed to him or her, or (2)&nbsp;in the event that legal counsel satisfactory to the
Company and the applicable Participant, his or her spouse or other designated
beneficiary, renders an opinion that the Internal Revenue Service would likely prevail
in such a claim, the Pre-2005 Benefit, to the extent constituting taxable income, shall
be immediately distributed to the Participant, his or her spouse or other designated
beneficiary. For purposes of this Section, the Internal Revenue Service shall be
deemed to have prevailed in a claim if such claim is upheld by a court of final
jurisdiction, or, if based upon an opinion of legal counsel satisfactory to the Company
and the Participant, his or her spouse or other designated beneficiary, the Plan fails
to appeal a decision of the Internal Revenue Service, or a court of applicable
jurisdiction, with respect to such claim to an appropriate Internal Revenue Service
appeals authority or to a court of higher jurisdiction within the appropriate time
period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary contained in the Plan, (1)&nbsp;in the
event that the Internal Revenue Service prevails in its claim that benefits under the
Plan constitute taxable income under Code Section&nbsp;409A, and guidance and regulations
thereunder, to a Participant, his or her spouse or other designated beneficiary, for
any taxable year prior to the taxable year in which such benefits are distributed to
him or her, or (2)&nbsp;in the event that legal counsel satisfactory to the Company and the
applicable Participant, his or her spouse or other designated beneficiary, renders an
opinion that the Internal Revenue Service would likely prevail in such a claim, the
Post-2004 Benefit or Supplemental Spouse Pension, to the extent constituting taxable
income, shall be immediately distributed to the Participant, his or her spouse or other
designated beneficiary. For purposes of this Section, the Internal Revenue Service
shall be deemed to have prevailed in a claim if such claim is upheld by a court of
final jurisdiction, or, if based upon an opinion of legal counsel satisfactory to the
Company and the Participant, his or her spouse or other designated beneficiary, the
Plan fails to appeal a decision of the Internal Revenue Service, or a court of
applicable jurisdiction, with respect to such claim to an appropriate Internal Revenue
Service appeals authority or to a court of higher jurisdiction within the appropriate
time period.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE VIII</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Change in Control</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <U>Change in Control</U><B>. </B>A &#147;Change in Control&#148; shall be deemed to take place on the
occurrence of either a &#147;Change in Ownership,&#148; &#147;Change in Effective Control&#148; or a &#147;Change of
Ownership of a Substantial Portion of Assets,&#148; as defined below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Change in Ownership</U>. A Change in Ownership of the Company occurs on
the date that any one person, or more than one Person Acting as a Group (as defined
below), acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value or total
voting power of the stock of the Company. However, if any one person or more than one
Person Acting as a Group, is considered to own more than 50% of the total fair market
value or total voting power of the stock of the Company, the acquisition of additional
stock by the same person or persons is not considered to cause a Change in Ownership of
the Company, as applicable (or to cause a Change in Effective Control of the Company).
An increase in the percentage of stock owned by any one person, or Persons Acting as a
Group, as a result of a transaction in which the Company acquires its stock in exchange
for property s be treated as an acquisition of stock. This paragraph&nbsp;(a) applies only
when there is a transfer of stock of the Company (or issuance of stock of the Company)
and stock in the Company remains outstanding after the transaction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Change in Effective Control</U>. A Change in Effective Control of the
Company occurs on the date that either &#150;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any one person, or more than one Person Acting as a Group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of the
Company possessing 35% or more of the total voting power of the stock of the
Company; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a majority of members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment or
election,</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the absence of an event described in paragraph&nbsp;(i) or (ii), a Change in Effective
Control of the Company will not have occurred.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Acquisition of additional control</U>. If any one person, or more than one
Person Acting as a Group, is considered to effectively control the Company, the
acquisition of additional control of the Company by the same person or persons is
</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not considered to cause a Change in Effective Control of the Company (or to cause a
Change in Ownership of the Company).
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Change of Ownership of a Substantial Portion of Assets</U>. A Change of
Ownership of a Substantial Portion of Assets occurs on the date that any one person, or
more than one Person Acting as a Group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value equal to or more than
40% of the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with such
assets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Transfers to a related person</U>. There is no Change in Control when there is
a transfer to an entity that is controlled by the shareholders of the Company
immediately after the transfer. A transfer of assets by the Company is not treated
as a Change of Ownership of a Substantial Portion of Assets if the assets are
transferred to &#150;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A shareholder of the Company (immediately before the asset
transfer) in exchange for or with respect to its stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An entity, 50% or more of the total value or voting power of
which is owned, directly or indirectly, by the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A person, or more than one Person Acting as a Group, that
owns, directly or indirectly, 50% or more of the total value or voting power of
all the outstanding stock of the Company; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An entity, at least 50% of the total value or voting power of
which is owned, directly or indirectly, by a person described in
paragraph&nbsp;(iii).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A person&#146;s status is determined immediately after the transfer of the assets. For
example, a transfer to a corporation in which the Company has no ownership interest
before the transaction, but which is a majority-owned subsidiary of the Company
after the transaction is not treated as a Change of Ownership of a Substantial
Portion of Assets of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Persons Acting as a Group</U>. Persons shall not be considered to be
acting as a group solely because they purchase or own stock of the same corporation at
the same time or as a result of the same public offering. However, persons shall be
considered to be acting as a group if they are owners of a corporation that enters into
a merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the Company. If a person, including an entity, owns stock in</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>both corporations that enter into a merger, consolidation, purchase or acquisition
of stock, or similar transaction, such shareholder is considered to be acting as a
group with other shareholders in a corporation prior to the transaction giving rise
to the change and not with respect to the ownership interest in the other
corporation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <U>Potential Change in Control</U>. A &#147;Potential Change in Control&#148; shall include any of
the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The delivery to the Company by any &#147;person,&#148; as defined in Section&nbsp;13(d)(3) of
The Securities Exchange Act of 1934 (the &#147;Act&#148;), of a statement containing the
information required by Schedule&nbsp;13-D under the Act, or any amendment to any such
statement, that shows that such person has acquired, directly or indirectly, the
beneficial ownership of (1)&nbsp;more than twenty percent (20%) of any class of equity
security of the Company entitled to vote as a class in the election or removal from
office of directors, or (2)&nbsp;more than twenty percent (20%) of the voting power of any
group of classes of equity securities of the Company entitled to vote as a single class
in the election or removal from office of directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company becomes aware that preliminary or definitive copies of a proxy
statement and information statement or other information have been filed with the
Securities and Exchange Commission pursuant to Rule&nbsp;14a-6, Rule&nbsp;14c-5 or Rule&nbsp;14f-1
under the Act relating to a proposed change in control of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The delivery to the Company pursuant to Rule&nbsp;14d-3 under the Act of a Tender
Offer Statement relating to equity securities of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Board adopts a resolution to the effect that for purposes of the Plan a
Potential Change in Control has occurred.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <U>Additional Service and Compensation Upon Change in Control</U>. With respect to a
Participant who, pursuant to contract with the Company, is entitled to compensation from the
Company for an additional 36&nbsp;months in the event that after a Change in Control the Participant&#146;s
employment is terminated by the Company or an Affiliate under circumstances described in the
contract, such Participant&#146;s years of Service under Article&nbsp;II, and Supplemental Retirement Pension
under Section&nbsp;4.2 or Supplemental Retirement Account under Section&nbsp;5.2, as applicable, shall be
calculated as if the Participant had continued in employment with the Company for an additional
36&nbsp;months at the rate of Compensation in effect immediately prior to his or her employment
termination; provided that, in no event shall the counting of a Participant&#146;s Compensation during
this 36-month period reduce his or her Final Average Compensation figure below its highest level
prior to the Participant&#146;s separation from Service.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 <U>Waiver of Service and Age Requirements Upon Change in Control</U>. A Participant who
separates from service within 24&nbsp;months following a Change in Control for any reason other
</div>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
 <DIV align="left" style="font-size: 10pt; margin-top: 6pt">
than a termination by the Company for Good Cause, but prior to Early Retirement, shall be
eligible for the Supplemental Retirement Pension specified in Section&nbsp;4.2, rather than the
Supplemental Retirement Pension specified in Section&nbsp;4.4, commencing at Normal Retirement.
Notwithstanding the previous sentence, such a Participant may elect to begin receiving the portion
of his or her Supplemental Retirement Pension that constitutes his or her Pre-2005 Benefit pursuant
to this Section&nbsp;8.4 at any time after attaining age&nbsp;55&nbsp;years, subject to the reduction specified in
Section&nbsp;4.3. Such election shall have no effect on the distribution of his or her Post-2004
Benefit at his or her Normal Retirement Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 <U>Funding of Plan Benefits Upon Potential Change in Control</U>. Upon a Potential
Change in Control, the Committee shall identify the amount by which the present value of all
benefits earned to date under the Plan (after offsets) exceeds the then fair market value of the
applicable Trust assets, calculated using the Pension Benefit Guaranty Corporation immediate
annuity interest rate as of the date of the Potential Change in Control, the 1983 GAM mortality
tables, and the most valuable optional payment form (the &#147;Full Funding Amount&#148;), and the Company
shall contribute such Full Funding Amount to the Trust. Each Participant&#146;s benefits for purposes
of calculating present value shall be the highest benefit the Participant would have under the Plan
within the six&nbsp;months following a Potential Change in Control, assuming that the Participant&#146;s
employment continues for six&nbsp;months at the same rate of Compensation, and that the Participant
receives any benefit enhancement provided by the Plan, or any other agreement, upon a Change in
Control.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 <U>Plan Administration and Amendment Upon a Change in Control</U>. Upon and after a
Change in Control, the Company no longer shall have the power to appoint or remove members of the
Committee, nor the power to approve legal counsel or actuaries employed by the Committee. Upon and
after a Change in Control, only the Committee members shall have the power to appoint or remove
members. If, at any time after a Change in Control, all members of the Committee have been removed
or resigned, then all of the powers, rights and duties vested in the Committee by Article&nbsp;IX below
shall be vested in the trustee of the Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7 <U>Committee Discretion to Pay Lump Sum After a Change in Control</U>. Upon and after a
Change in Control, the Committee may, in its sole discretion, distribute, or cause the trustee
under the Trust to distribute, to a Participant or a surviving spouse, the present value
(determined in accordance with the assumptions in Section&nbsp;7.12) of the Participant&#146;s Pre-2005
Benefit, or the portion of Supplemental Disability Pension or the surviving spouse&#146;s Supplemental
Spouse Pension attributable to his or her Pre-2005 Benefit, payable under the Plan in a lump sum
payment. The Committee shall distribute, or cause the trustee under the Trust to distribute, the
present value of the Participant&#146;s Post-2004 Benefit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8 <U>Lump Sum Election</U>. Each calendar year, a Participant shall have the right to
elect to receive the present value (determined in accordance with the assumptions in Section&nbsp;7.12)
of the portion of the Participant&#146;s Supplemental Retirement Pension or the balance of the
Participant&#146;s Supplemental Retirement Account that constitutes the Participant&#146;s Pre-2005 Benefit
or the Participant&#146;s Supplemental Disability Pension, in a lump sum if:
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a Change in Control occurs in the calendar year subsequent to the calendar year
in which the election is made; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within 24&nbsp;months following the Change in Control any one of the payment
triggering conditions set forth in the Change in Control and Termination Agreement
between the Company and the Participant shall have occurred; or</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if no Change in Control and Termination Agreement is in effect
between the Company and the Participant on the date of the Change in Control
and within 24&nbsp;months following the Change in Control the employment of the
Participant with the Company is terminated by the Company for any reason other
than Good Cause or the Participant terminates his or her employment with the
Company for Good Reason.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Such election shall be irrevocable for the calendar year to which it applies. A distribution
pursuant to this Section&nbsp;8.8 shall be made as soon as practicable following the Participant&#146;s
separation from Service. Notwithstanding the preceding provisions of this Section&nbsp;8.8, a
Participant had the right to make the election set forth in this Section at any time during the
first three&nbsp;(3) months of calendar year 2003 with respect to a Change in Control that occurred
during the last nine&nbsp;(9) months of calendar year 2003. Any such election was irrevocable for
calendar year 2003 and was subject to the other provisions of this Section&nbsp;8.8.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9 <U>Definitions</U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Good Cause&#148; shall be deemed to exist if, and only if:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Participant engages in acts or omissions constituting
dishonesty, intentional breach of fiduciary obligation or intentional
wrongdoing or malfeasance, in each case that results in substantial harm to the
Company; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Participant is convicted of a criminal violation involving
fraud or dishonesty.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Good Reason&#148; shall be deemed to exist if, and only if:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>there is a significant change in the nature or the scope of the
Participant&#146;s authorities or duties;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>there is a significant reduction in the Participant&#146;s monthly
rate of base salary, his or her opportunity to earn a bonus under an incentive
bonus compensation plan maintained by the Company or his or her benefits; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company changes by 100&nbsp;miles or more the principal
location in which the Participant is required to perform services.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ARTICLE IX</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Plan Administration:&nbsp;&nbsp;The Committee</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <U>General Powers, Rights and Duties</U>. The Committee has the following powers, rights
and duties in addition to those given it elsewhere in the Plan:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To interpret the Plan and determine all questions arising in the
administration, interpretation and application of the Plan, including, but not limited
to, the power to determine the rights or eligibility of employees or Participants, and
their surviving spouses and any other beneficiaries, and the amount of their respective
benefits under the Plan, and to remedy ambiguities, inconsistencies or omissions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To adopt such rules of procedure and regulations as in its opinion may be
necessary for the proper and efficient administration of the Plan and as are consistent
with the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To enforce the Plan and the rules and regulations, if any, adopted by the
Committee as above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To direct the trustee as respects benefit payments or other distributions from
the Trust fund pursuant to&nbsp;the provisions of the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To furnish the Company with such information as may be required by it for tax
or other purposes as respects the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To employ agents, attorneys, accountants, actuaries or other persons (who also
may be employed by the Company or an Affiliate) and to allocate or delegate to them
such powers, rights and duties as the Committee may consider necessary or advisable to
properly carry out the administration of the Plan, including maintaining the accounts
of Participants, provided that such allocation or delegation, and the acceptance
thereof by such agents, attorneys, accountants, actuaries or other persons, shall be in
writing.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <U>Information Required by Committee</U>. The Company shall furnish the Committee with
such data and information as the Committee may deem necessary or desirable in order to administer
the Plan. The records of the Company as to an employee&#146;s or Participant&#146;s period or periods of
employment, separation from Service and the reason therefore, reemployment and Compensation will be
conclusive on all persons unless determined to the Committee&#146;s satisfaction to be incorrect.
Participants and other persons entitled to benefits under the Plan also shall furnish the Committee
with such evidence, data or information as the Committee considers necessary or desirable to
administer the Plan.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 <U>Committee Decision Final</U>. Subject to applicable law, and the provisions of
Section&nbsp;9.4, any interpretation of the provisions of the Plan and any decision on any matter within
the discretion of the Committee made by the Committee in good faith shall be binding on all
persons. To the extent not inconsistent with the Plan, all definitions, terms and provisions set
forth in the NiSource Pension Plan, including with respect to the administrative powers and duties
of the Committee, the expenses of administration, and the procedures for filing claims, also shall
be applicable with respect to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <U>Claims Procedure</U>. Claims for benefits under the Plan shall be made in writing to
the Committee. If the Committee wholly or partially denies a claim for benefits, the Committee
shall, within a reasonable period of time, but no later than 90&nbsp;days after receiving the claim,
notify the claimant in writing of the denial of the claim. If the Committee fails to notify the
claimant in writing of the denial of the claim within 90&nbsp;days after the Committee receives it, the
claim shall be deemed denied. A notice of denial shall be written in a manner calculated to be
understood by the claimant, and shall contain:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the specific reason or reasons for denial of the claim;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a specific reference to the pertinent Plan provisions upon which the denial is
based;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a description of any additional material or information necessary for the
claimant to perfect the claim, together with an explanation of why such material or
information is necessary; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an explanation of the Plan&#146;s review procedure.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within 60&nbsp;days of the receipt by the claimant of the written notice of denial of the claim, or
within 60&nbsp;days after the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review of the denial of
the claimant&#146;s claim for benefits, including the conducting of a hearing, if the Committee deems
one necessary. In connection with the claimant&#146;s appeal of the denial of his or her benefit, the
claimant may review pertinent documents and may submit issues and comments in writing. The
Committee shall render a decision on the claim appeal promptly, but not later than 60&nbsp;days after
receiving the claimant&#146;s request for review, unless, in the discretion of the Committee, special
circumstances (such as the need to hold a hearing) require an extension of time for processing, in
which case the 60-day period may be extended to 120&nbsp;days. The Committee shall notify the claimant
in writing of any such extension. The decision upon review shall (1)&nbsp;include specific reasons for
the decision, (2)&nbsp;be written in a manner calculated to be understood by the claimant, and
(3)&nbsp;contain specific references to the pertinent Plan provisions upon which the decision is based.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the Company has caused this amendment and restatement of the Plan to be
executed in its name by its duly authorized officer this 28&nbsp;day of October&nbsp;2008, effective as of
the 1st&nbsp;day of January&nbsp;2008.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
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    <TD width="48%">&nbsp;</TD>
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    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>NISOURCE INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="center">/s/ Robert Campbell
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>



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<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>5
<FILENAME>c47397exv10w5.htm
<DESCRIPTION>EX-10.5
<TEXT>
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<TITLE>exv10w5</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit 10.5</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>PENSION RESTORATION PLAN</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>FOR NISOURCE INC. AND AFFILIATES</B></U>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>As Amended and Restated Effective January&nbsp;1, 2008</B>

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I PURPOSE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II DEFINITIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.1 Affiliated Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.2 Basic Plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.3 Code</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.4 Committee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.5 Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.6 DCP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.7 Disability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.8 Employee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.9 Employer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.10 ERISA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.11 Limits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.12 Participant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.13 Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III PARTICIPATION IN THE PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV AMOUNT OF BENEFIT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.1 Participants Before January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.2 Participants On or After January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V TIME AND METHOD OF PAYMENT OF BENEFIT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.1 Method of Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.2 Timing of Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.3 Changes to the Form of Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.4 Specified Employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.5 Interest and Mortality Assumptions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI ADMINISTRATION OF PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII COMPANY&#146;S RIGHT TO AMEND OR TERMINATE PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VIII MISCELLANEOUS PROVISIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.1 Definitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.2 Unsecured General Creditor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.3 Income Tax Payout</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.4 General Conditions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.5 No Guaranty of Benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.6 No Enlargement of Employee Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
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</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->i<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.7 Spendthrift Provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.8 Applicable Law</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.9 Incapacity of Recipient</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.10 Unclaimed Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.11 Limitations on Liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.12 Claims Procedure</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Schedule&nbsp;1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->ii<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>PENSION RESTORATION PLAN<BR>
FOR NISOURCE INC. AND AFFILIATES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>As Amended and Restated Effective January&nbsp;1, 2008</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE I</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>PURPOSE</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Columbia Gas System, Inc. adopted The Pension Restoration Plan for The Columbia Gas
System, Inc., as amended and restated effective March&nbsp;1, 1997. The Plan was amended and restated,
effective January&nbsp;1, 2002, by Columbia Energy Group, successor to Columbia Gas System, Inc., and
renamed the Pension Restoration Plan for the Columbia Energy Group. Effective January&nbsp;1, 2004,
NiSource Inc., the parent company of Columbia Energy Group, assumed sponsorship of the Pension
Restoration Plan for Columbia Energy Group, renamed the Plan the Pension Restoration Plan for
NiSource Inc. and Affiliates, and broadened the Plan to include all employees of NiSource Inc. and
Affiliated Companies. The Plan was amended and restated, effective January&nbsp;1, 2005, to comply with
Internal Revenue Code Section&nbsp;409A with respect to benefits earned under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan is now further amended and restated, effective January&nbsp;1, 2008, to revise certain
election procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Plan is to provide for the payment of pension restoration benefits to
employees of NiSource Inc. and Affiliated Companies, whose benefits under the Basic Plans are
subject to the Limits, or affected by deferrals into the DCP, so that the total pension plan
benefits of such employees will be determined on the same basis as is applicable to all other
employees of the Company. The Plan is adopted solely (1)&nbsp;for the purpose of providing benefits to
Participants in the Plan and their Beneficiaries in excess of the Limits imposed on qualified plans
by Code Sections&nbsp;415 and&nbsp;401(a)(17), and any other Code Sections, by restoring benefits to such
Plan Participants and Beneficiaries that are no longer available under the Basic Plans as a result
of the Limits, and (2)&nbsp;for the purpose of restoring benefits to Plan Participants and Beneficiaries
that are no longer available under the Basic Plans as a result of the Participant&#146;s deferrals into
the DCP. The provisions of the Plan apply only to Participants who actively participate in the
Plan on or after January&nbsp;1, 2005. Any Participant who retired or otherwise terminated employment
with the Company and Affiliated Companies prior to January&nbsp;1, 2005 shall have his or her rights
determined under the provision of the Plan, as it existed when his or her employment relationship
terminated.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE II</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>DEFINITIONS</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <U><B>Affiliated Company</B></U>. &#147;Affiliated Company&#148; means an affiliate of NiSource Inc.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <U><B>Basic Plans</B></U>. &#147;Basic Plan(s)&#148; means the tax qualified retirement plan(s)
maintained by the Company and Affiliated Companies listed on Schedule&nbsp;A, attached hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <U><B>Code</B></U>. &#147;Code&#148; means the Internal Revenue Code of 1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <U><B>Committee</B></U>. &#147;Committee&#148; means the NiSource Inc. and Affiliates Retirement Plan
Administrative and Investment Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <U><B>Company</B></U>. &#147;Company&#148; means NiSource Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <U><B>DCP</B></U>. &#147;DCP&#148; means the Columbia Energy Group Deferred Compensation Plan, on or
prior to December&nbsp;31, 2003, and, thereafter, the NiSource Inc. Executive Deferred Compensation
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 <U><B>Disability</B></U>. &#147;Disability&#148; means a condition that (a)&nbsp;causes a Participant to be
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12&nbsp;months, (b)&nbsp;causes a Participant, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12&nbsp;months, to receive income
replacement benefits for a period of not less than three&nbsp;months under an accident and health plan
covering Employees of the Company or an Affiliated Company or (c)&nbsp;causes a Participant to be
eligible to receive Social Security disability payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 <U><B>Employee</B></U>. &#147;Employee&#148; means any individual who is employed by an Employer on a
basis that involves payment of salary, wages or commissions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 <U><B>Employer</B></U>. &#147;Employer&#148; means the Company or an Affiliated Company whose Employees
participate in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 <U><B>ERISA</B></U>. &#147;ERISA&#148; means the Employee Retirement Income Security Act of 1974, as
amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 <U><B>Limits</B></U>. &#147;Limits&#148; means the limits imposed on tax qualified retirement plans by
Code Sections&nbsp;415 and&nbsp;401(a)(17) and any other Code Sections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 <U><B>Participant</B></U>. &#147;Participant&#148; means any Employee who is participating in the Plan
in accordance with its provisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 <U><B>Plan</B></U>. &#147;Plan&#148; means the Pension Restoration Plan for NiSource Inc. and Affiliates
(formerly known as the Pension Restoration Plan for the Columbia Energy Group, and before that as
the Pension Restoration Plan for The Columbia Gas System, Inc.), as set forth herein.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE III</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>PARTICIPATION IN THE PLAN</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Employee of an Employer shall be a Participant in the Plan if his or her benefits under a
Basic Plan are affected by the Limits or by his or her deferrals under the DCP.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE IV</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>AMOUNT OF BENEFIT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U><B>Participants Before January&nbsp;1, 2004</B></U>. The benefit payable under the Plan to a
Participant who was participating in the Plan prior to January&nbsp;1, 2004, or to his or her
Beneficiary under a Basic Plan, shall be equal to the excess (if any) of the benefit determined
under subsection&nbsp;(a) below over the benefit determined under subsection&nbsp;(b) below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit that would have been payable under a Basic Plan to a Participant,
or to his or her Beneficiary determined under a Basic Plan, which benefit shall be
determined (i)&nbsp;without regard to the Limits and (ii)&nbsp;without regard to the
Participant&#146;s deferrals into the DCP, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit actually payable to the Participant, or to his or her Beneficiary
determined under a Basic Plan, which benefit shall be determined after applying the
Limits and considering deferrals into the DCP, if any.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <U><B>Participants On or After January&nbsp;1, 2004</B></U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit payable under the Plan to a Participant who first becomes a
Participant on or after January&nbsp;1, 2004, and whose Accrued Benefit under a Basic Plan
is a Final Average Pay Option Benefit, or to his or her Beneficiary under the Basic
Plan, shall be equal to the excess (if any) of the benefit determined under
paragraph&nbsp;(1) below over the benefit determined under paragraph&nbsp;(2) below:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit that would have been payable under a Basic Plan to
a Participant, or to his or her Beneficiary determined under a Basic Plan,
calculated based upon the Participant&#146;s Credited Service and Compensation from
and after the date the Participant first becomes eligible to participate in the
Plan, which benefit shall be determined (i)&nbsp;without regard to the Limits and
(ii)&nbsp;without regard to the Participant&#146;s deferrals into the DCP, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit actually payable to the Participant, or to his or
her Beneficiary determined under a Basic Plan, calculated based upon the
Participant&#146;s Credited Service and Compensation from and after the date the
Participant first becomes eligible to participate in the Plan, which benefit
shall be </TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>
determined after applying the Limits and considering deferrals into the DCP,
if any.</TD>
</TR>


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Participant&#146;s service used under the Basic Plan for purposes of determining
eligibility for any retirement benefit shall also be used for similar purposes
hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit payable under the Plan to a Participant who first becomes a
Participant on or after January&nbsp;1, 2004, and whose Accrued Benefit under a Basic Plan
is an Account Balance Option Benefit, or to his or her Beneficiary under a Basic Plan,
shall be equal to the excess (if any) of the benefit determined under paragraph&nbsp;(1)
below over the benefit determined under paragraph&nbsp;(2) below, determined as if the
Participant&#146;s Opening Account Balance is $0 as of January&nbsp;1, 2004:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit that would have been payable under a Basic Plan to
a Participant or his or her Beneficiary, which benefit shall be determined
(i)&nbsp;without regard to the Limits and (ii)&nbsp;without regard to the Participant&#146;s
deferrals into the DCP, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit actually payable to the Participant, or to his or
her Beneficiary determined under a Basic Plan, which benefit shall be
determined after applying the Limits and considering deferrals into the DCP, if
any.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE V</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>TIME AND METHOD OF PAYMENT OF BENEFIT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U><B>Method of Payment</B></U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The benefit earned under the Plan shall be payable to a Participant in a form
available under the Basic Plan, as elected by the Participant by notice delivered to
the Committee on or before December&nbsp;31, 2005. Notwithstanding the preceding sentence,
in the case of an Employee who becomes a Participant on or after January&nbsp;1, 2005, the
aforementioned election with respect to a benefit shall be made no later than January
31 of the calendar year after the calendar year in which the Participant first becomes
eligible to participate in the Plan, and such election shall be effective with respect
to Compensation related to services to be performed subsequent to the election;
provided, however, that a Participant shall not be considered first eligible if, on the
date he or she becomes a Participant, he or she participates in any other nonqualified
plan of the same category that is subject to Code Section&nbsp;409A, maintained by the
Company or an Affiliated Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If payment in the form of an annuity is elected, the annuity type shall be
elected by the Participant at the time he or she makes the election described in the
first or second sentence of subsection&nbsp;(a) above from among those annuities available
at</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that time under the Basic Plan. If a benefit hereunder is paid in an annuity form
other than a straight life annuity, the amount of the benefit under the Plan shall
be reduced by the Basic Plan&#146;s factors in effect at the time of such election for
payment in a form other than a straight life annuity. If payment in the form of a
lump sum is elected, the lump sum amount payable will be calculated in the same
manner and according to the same interest rates and mortality tables as under the
Basic Plan at the time of such election.</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;If the Participant fails to elect a form of payment as required under
subsections&nbsp;(a) and (b)&nbsp;above, the Participant&#146;s benefit shall be payable in a lump
sum.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U><B>Timing of Payment</B></U>. A benefit payable in accordance with Section&nbsp;5.1 will commence
within 45&nbsp;days after: (i)&nbsp;if the Participant qualifies for Early Retirement under a Basic Plan,
when the Participant separates from service, or (ii)&nbsp;if the Participant does not qualify for Early
Retirement under a Basic Plan, the later of when the Participant separates from service or attains
(or would have attained) age&nbsp;65, or, if later, within such timeframe permitted under Code Section
409A, and guidance and regulations thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U><B>Changes to the Form of Payment</B></U>. A Participant cannot change the form of payment
of a benefit elected under Section&nbsp;5.1 or this Section&nbsp;5.3 unless (i)&nbsp;such election does not take
effect until at least 12&nbsp;months after the date on which the election is made, (ii)&nbsp;in the case of
an election related to a payment not due to the Participant&#146;s Disability or death, the first
payment with respect to which such new election is effective is deferred for a period of not less
than five&nbsp;years from the date such payment would otherwise have been made, and (iii)&nbsp;any election
related to a payment based upon a specific time or pursuant to a fixed schedule may not be made
less than 12&nbsp;months prior to the date of the first scheduled payment; provided, however, that an
election to change from one type of annuity payment to a different, actuarially equivalent, type of
annuity payment shall not be considered a change to the form of payment for purposes of applying
the restrictions in clauses&nbsp;(i), (ii)&nbsp;and&nbsp;(iii).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the preceding paragraphs of this Section&nbsp;5.3, a Participant may change an
election with respect to the form of payment of a benefit, without regard to the restrictions
imposed under the preceding paragraph, on or before December&nbsp;31, 2006; provided that such election
(i)&nbsp;applies only to amounts that would not otherwise be payable in calendar year&nbsp;2006, and
(ii)&nbsp;shall not cause an amount to be paid in calendar year&nbsp;2006 that would not otherwise be payable
in such year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 <U>Specified Employees</U>. Notwithstanding any other provision of the Plan, in no event
can a payment of a benefit to a Participant who is a Specified Employee of the Company or an
Affiliated Company, at a time during which the Company&#146;s capital stock or capital stock of an
Affiliated Company is publicly traded on an established securities market, in the calendar year of
his or her separation from service, be made before the date that is six&nbsp;months after the date of
the Participant&#146;s separation from service with the Company and all Affiliated Companies, unless
such separation is due to his or her death or Disability.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant shall be deemed to be a Specified Employee for purposes of this Section&nbsp;5.4 if
he or she is in a job category C2 or above with respect to the Company or Affiliated Company that
employs him or her; provided if at any time the total number of Employees in job category C2 and
above is less than 50, a Specified Employee shall include any person who meets the definition of
Key Employee set forth in Code Section 416(i) without reference to paragraph (5). A Participant
shall be deemed to be a Specified Employee with respect to a calendar year if he or she is a
Specified Employee on September&nbsp;30th of the preceding calendar year. If a Specified Employee will
receive payments hereunder in the form of installments or an annuity, the first payment made as of
the date six months after the date of the Participant&#146;s separation from service with the Company
and all Affiliated Companies shall be a lump sum, paid as soon as practicable after the end of such
six-month period, that includes all payments that would otherwise have been made during such
six-month period. From and after the end of such six month period, any such installment or annuity
payments shall be made pursuant to the terms of the applicable installment or annuity form of
payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 <U><B>Interest and Mortality Assumptions</B></U>. Determinations under the Plan shall be based
on the interest and mortality assumptions used in the applicable Basic Plan on the date of such
determination.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE VI</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ADMINISTRATION OF PLAN</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be administered by the Committee.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE VII</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>COMPANY&#146;S RIGHT TO AMEND OR TERMINATE PLAN</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the Company intends to maintain the Plan in conjunction with the Basic Plans, the
Company, or the Officer Nomination and Compensation Committee of the Board of Directors of the
Company, reserves the right to amend the Plan at any time and from time to time, or to terminate it
at any time for any reason; provided, however, that no amendment or termination of the Plan shall
impair or alter such right to a benefit that would have arisen under the Plan as it read before the
effective date of such amendment or termination to or with respect to any employee who has become a
Participant in the Plan before the effective date of such amendment or termination or with respect
to his or her Beneficiary. Upon termination of the Plan, distribution of Plan benefits shall be
made to Participants and Beneficiaries in the manner and at the time described in Article&nbsp;V of the
Plan. No additional benefits shall be earned after termination of the Plan.
</DIV>

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</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ARTICLE VIII</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>MISCELLANEOUS PROVISIONS</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <U><B>Definitions</B></U>. The terms used in the Plan that are defined in the Basic Plans shall
have the meanings assigned to them in the Basic Plans, unless otherwise defined in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <U><B>Unsecured General Creditor</B></U>. Participants and Beneficiaries shall be unsecured
general creditors, with no secured or preferential right to any assets of the Company, any other
Employer, or any other party for payment of benefits under the Plan. Obligations of the Company
and each other Employer under the Plan shall be an unfunded and unsecured promise to pay money in
the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <U><B>Income Tax Payout</B></U>. In the event that the Internal Revenue Service prevails in its
claim that that any amount of a Participant&#146;s benefit payable pursuant to the Plan and held in the
general assets of the Company or any other Employer constitutes taxable income under Code
Section&nbsp;409A, and guidance and regulations thereunder, to a Participant or his or her Beneficiary
for any taxable year prior to the taxable year in which such amount is distributed to him or her,
or in the event that legal counsel satisfactory to the Company and the applicable Participant or
his or her Beneficiary renders an opinion that the Internal Revenue Service would likely prevail in
such a claim, the amount of such benefit held in the general assets of the Company or any other
Employer, to the extent constituting such taxable income, shall be immediately distributed to the
Participant or his or her Beneficiary. For purposes of this Section, the Internal Revenue Service
shall be deemed to have prevailed in a claim if such claim is upheld by a court of final
jurisdiction, or if the Participant or Beneficiary, based upon an opinion of legal counsel
satisfactory to the Company and the Participant or his or her Beneficiary, fails to appeal a
decision of the Internal Revenue Service, or a court of applicable jurisdiction, with respect to
such claim, to an appropriate Internal Revenue Service appeals authority or to a court of higher
jurisdiction within the appropriate time period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 <U><B>General Conditions</B></U>. Except as otherwise expressly provided herein, all terms and
conditions of a Basic Plan applicable to a Basic Plan benefit shall also be applicable to a benefit
payable hereunder. Any Basic Plan benefit shall be paid solely in accordance with the terms and
conditions of the applicable Basic Plan and nothing in the Plan shall operate or be construed in
any way to modify, amend or affect the terms and provisions of the Basic Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 <U><B>No Guaranty of Benefits</B></U>. Nothing contained in the Plan shall constitute a
guaranty by the Company or any other Employer or any other entity or person that the assets of the
Company or any other Employer will be sufficient to pay any benefit hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 <U><B>No Enlargement of Employee Rights</B></U>. No Participant or Beneficiary shall have any
right to a benefit under the Plan except in accordance with the terms of the Plan. Establishment
of the Plan shall not be construed to give any Participant or Beneficiary the right to be retained
in the service of the Company or any Affiliated Company.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7 <U><B>Spendthrift Provision</B></U>. No interest of any person or entity in, or right to
receive a benefit under, the Plan shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a benefit be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such person or entity,
including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the preceding paragraph, the benefit of any Participant shall be subject to
and payable in the amount determined in accordance with any qualified domestic relations order, as
that term is defined in ERISA Section&nbsp;206(d)(3). The Committee shall provide for payment of such
benefit to an alternate payee (as defined in ERISA Section&nbsp;206(d)(3)) as soon as administratively
possible following receipt of such order. Any federal, state or local income tax associated with
such payment shall be the responsibility of the alternate payee. The benefit that is subject to
any qualified domestic relations order shall be reduced by the amount of any payment made pursuant
to such order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8 <U><B>Applicable Law</B></U>. The Plan shall be construed and administered under the laws of
the State of Indiana, except to the extent preempted by applicable federal law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9 <U><B>Incapacity of Recipient</B></U>. If any person entitled to a benefit payment under the
Plan is deemed by the Committee to be incapable of personally receiving and giving a valid receipt
for such payment, then, unless and until claim therefore shall have been made by a duly appointed
guardian or other legal representative of such person, the Committee may provide for such payment
or any part thereof to be made to any other person or institution then contributing toward or
providing for the care and maintenance of such person. Any such payment shall be a payment for the
account of such person and a complete discharge of any liability of the Company, any other
Employer, the Committee and the Plan therefore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.10 <U><B>Unclaimed Benefit</B></U>. Each Participant shall keep the Committee informed of his or
her current address and the current address of his or her Beneficiaries. The Committee shall not
be obligated to search for the whereabouts of any person. If the location of a Participant is not
made known to the Committee within three&nbsp;years after the date on which payment of the Participant&#146;s
benefit may first be made, payment may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three-year period has elapsed, or,
within three years after the actual death of a Participant, the Committee is unable to locate any
Beneficiary of the Participant, then the Committee shall have no further obligation to pay any
benefit hereunder to such Participant, Beneficiary, or any other person and such benefit shall be
irrevocably forfeited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.11 <U><B>Limitations on Liability</B></U>. Notwithstanding any of the preceding provisions of the
Plan, none of the Company, any other Employer, or any individual acting as an employee, or agent at
the direction of the Company or any other Employer, or any member of the Committee, shall be liable
to any Participant, former Participant, Beneficiary, or any other person for any claim, loss,
liability or expense incurred in connection with the Plan.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.12 <U><B>Claims Procedure</B></U>. Claims for benefits under the Plan shall be made in writing to
the Committee. If the Committee wholly or partially denies a claim for benefits, the Committee
shall, within a reasonable period of time, but no later than 90&nbsp;days after receiving the claim,
notify the claimant in writing of the denial of the claim. If the Committee fails to notify the
claimant in writing of the denial of the claim within 90&nbsp;days after the Committee receives it, the
claim shall be deemed denied. A notice of denial shall be written in a manner calculated to be
understood by the claimant, and shall contain:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the specific reason or reasons for denial of the claim;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a specific reference to the pertinent Plan provisions upon which the denial is
based;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a description of any additional material or information necessary for the
claimant to perfect the claim, together with an explanation of why such material or
information is necessary; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an explanation of the Plan&#146;s review procedure.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Within 60&nbsp;days of the receipt by the claimant of the written notice of denial of the claim, or
within 60&nbsp;days after the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review of the denial of
the claimant&#146;s claim for benefits, including the conducting of a hearing, if the Committee deems
one necessary. In connection with the claimant&#146;s appeal of the denial of his or her benefit, the
claimant may review pertinent documents and may submit issues and comments in writing. The
Committee shall render a decision on the claim appeal promptly, but not later than 60&nbsp;days after
receiving the claimant&#146;s request for review, unless, in the discretion of the Committee, special
circumstances (such as the need to hold a hearing) require an extension of time for processing, in
which case the 60-day period may be extended to 120&nbsp;days. The Committee shall notify the claimant
in writing of any such extension. The decision upon review shall (i)&nbsp;include specific reasons for
the decision, (ii)&nbsp;be written in a manner calculated to be understood by the claimant, and
(iii)&nbsp;contain specific references to the pertinent Plan provisions upon which the decision is
based.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, NiSource Inc. has caused this amended and restated Plan to be executed in
its name, by its duly authorized officer, on this 28&nbsp;day of October, 2008, effective as of
January&nbsp;1, 2008.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">NISOURCE INC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10/28/2008
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Robert Campbell</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">ATTEST:</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">SCHEDULE A
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource Inc. and Northern Indiana Public Service Company Pension Plan Provisions Pertaining to
Salaried and Non-Exempt Employees
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NiSource Subsidiary Pension Plan
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Retirement Plan of Columbia Energy Group Companies
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Bay State Gas Company Pension Plan
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>6
<FILENAME>c47397exv10w6.htm
<DESCRIPTION>EX-10.6
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w6</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit 10.6</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>SAVINGS RESTORATION PLAN</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>FOR NISOURCE INC. AND AFFILIATES</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>As Amended and Restated Effective January&nbsp;1, 2008</B>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I PURPOSE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II DEFINITIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.1 Affiliated Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.2 Annual Addition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.3 Basic Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.4 Code</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.5 Committee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.6 Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.7 DCP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.8 Disability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.9 Employee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.10 Employer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.11 ERISA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.12 Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.13 Limits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.14 Participant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.15 Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.16 Plan Year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.17 Post-2004 Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.18 Pre-2005 Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.19 Supplemental Savings Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.20 Unforeseeable Emergency</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III ELIGIBILITY</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.1 Eligibility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.2 Notice of Eligibility to Participants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.3 Method of Becoming a Participant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.4 Continuation of Participation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV SUPPLEMENTAL SAVINGS ACCOUNT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.1 Supplemental Savings Account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.2 Employer Credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.3 Special Employer Credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.4 Participant Credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.5 Interest Credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->i<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V IN-SERVICE WITHDRAWALS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.1 Pre-2005 Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.2 Post-2004 Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.3 Limitations on In-Service Withdrawals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI TERMINATION OF PARTICIPATION AND PAYMENT OF BENEFITS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.1 Termination of Participation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.2 Benefits at Termination of Participation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.3 Method and Time of Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII ADMINISTRATION OF PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VIII COMPANY&#146;S RIGHTS TO AMEND OR TERMINATE PLAN</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IX MISCELLANEOUS PROVISIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.1 Definitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.2 Unsecured General Creditor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.3 Income Tax Payout</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.4 General Conditions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.5 No Guaranty of Benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.6 No Enlargement of Employee Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.7 Spendthrift Provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.8 Applicable Law</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.9 Incapacity of Recipient</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.10 Unclaimed Benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.11 Limitations on Liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.12 Claims Procedure</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->ii<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>SAVINGS RESTORATION PLAN<BR>
FOR NISOURCE INC. AND AFFILIATES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>As Amended and Restated Effective January&nbsp;1, 2008</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE I</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>PURPOSE</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January&nbsp;1, 2004, Columbia Energy Group sponsored the Savings Restoration Plan for
Columbia Energy Group for eligible executives of Columbia Energy Group and certain affiliated
companies. Effective January&nbsp;1, 2004, NiSource Inc., the parent company of Columbia Energy Group,
assumed sponsorship of the Savings Restoration Plan for Columbia Energy Group, renamed the Plan the
Savings Restoration Plan for NiSource Inc. and Affiliates, and broadened the Plan to include all
employees of NiSource Inc. and Affiliated Companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Plan is to provide for the payment of savings restoration benefits to
employees of NiSource Inc. and Affiliated Companies, whose benefits under the Basic Plan are
subject to the Limits or affected by deferrals into the DCP, so that the total savings plan
benefits of such employees shall be determined on the same basis as is applicable to all other
employees of the Company. The Plan is adopted solely (1)&nbsp;for the purpose of providing benefits to
Participants in the Plan and their Beneficiaries in excess of the Limits imposed on qualified plans
by Code Section&nbsp;401(a)(17) and any other Code Sections, by restoring benefits to such Plan
Participants and Beneficiaries that are no longer available under the Basic Plan as a result of the
Limits, and (2)&nbsp;for the purpose of restoring benefits to Plan Participants and Beneficiaries that
are no longer available under the Basic Plan as a result of the Participant&#146;s deferrals into the
DCP. The Plan was amended and restated effective January&nbsp;1, 2004, and amended effective January&nbsp;1,
2005. The Plan was then amended and restated again effective January&nbsp;1, 2005, to comply with Code
Section&nbsp;409A, and guidance and regulations thereunder, with respect to benefits earned under the
Plan from and after January&nbsp;1, 2005. Benefits under the Plan earned and vested prior to January&nbsp;1,
2005 shall be administered without giving effect to Code Section&nbsp;409A, and guidance and regulations
thereunder. The provisions of the Plan as set forth herein apply only to Participants who actively
participate in the Plan on or after January&nbsp;1, 2005. Any Participant who retired or otherwise
terminated employment with the Company and all Affiliated Companies prior to January&nbsp;1, 2005 shall
have his or her rights determined under the provision of the Plan as it existed when his or her
employment relationship terminated. The Plan is now further amended and restated, effective
January&nbsp;1, 2008, to provide for mandatory lump sum payments of small account balances in accordance
with Code Section&nbsp;409A.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE II</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>DEFINITIONS</B></U>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <U><B>Affiliated Company</B></U><B>. </B>&#147;Affiliated Company&#148; means an affiliate of NiSource Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <U><B>Annual Addition</B></U><B>. </B>&#147;Annual Addition&#148; for any Participant means the sum, in any Plan
Year, of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company&#146;s, or any Affiliated Company&#146;s, matching or profit sharing
contributions to the Basic Plan on behalf of the Participant; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all Participant deposits to the Basic Plan, including before-tax and after-tax
deposits.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the Plan, the determination of a Participant&#146;s Annual Addition shall be made
without regard to the Limits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <U><B>Basic Plan</B></U>. &#147;&#145;Basic Plan&#148; means the NiSource Inc. Retirement Savings Plan, as
amended and restated effective January&nbsp;1, 2002, and as further amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <U><B>Code</B></U><B>. </B>&#147;Code&#148; means the Internal Revenue Code of&nbsp;1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <U><B>Committee</B></U><B>. </B>&#147;Committee&#148; means the NiSource Inc. and Affiliates Retirement Plan
Administrative and Investment Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <U><B>Company</B></U><B>. </B>&#147;Company&#148; means NiSource Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 <U><B>DCP</B></U><B>. </B>&#147;DCP&#148; means the Columbia Energy Group Deferred Compensation Plan on or prior
to December&nbsp;31, 2003, and, thereafter, the NiSource Inc. Executive Deferred Compensation Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 <U><B>Disability</B></U><B>. </B>&#147;Disability&#148; means a condition that (a)&nbsp;causes a Participant to be
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12&nbsp;months, (b)&nbsp;causes a Participant, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12&nbsp;months, to receive income
replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Company or an Affiliated Company or (c)&nbsp;causes a Participant to be
eligible to receive Social Security disability payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 <U><B>Employee</B></U><B>. </B>&#147;Employee&#148; means any individual who is employed by an Employer on a
basis that involves payment of salary, wages or commissions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 <U><B>Employer</B></U><B>. </B>&#147;Employer&#148; means the Company or an Affiliated Company whose Employees
participate in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 <U><B>ERISA</B></U><B>. </B>&#147;ERISA&#148; means the Employee Retirement Income Security Act of 1974, as
amended.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 <U><B>Interest</B></U><B>. </B>&#147;Interest&#148; means the average of the prime rates of interest charged as
of the last business day of a month, determined under procedures established by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 <U><B>Limits</B></U><B>. </B>&#147;Limits&#148; means the limits imposed on tax qualified retirement plans by
Code Sections&nbsp;415 and&nbsp;401(a)(17) and any other Code Sections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 <U><B>Participant</B></U><B>. </B>&#147;Participant&#148; means any Employee who is participating in the Plan
in accordance with its provisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 <U><B>Plan</B></U><B>. </B>&#147;Plan&#148; means the Savings Restoration Plan for NiSource Inc. and Affiliates
(formerly known as the Savings Restoration Plan for the Columbia Energy Group, and before that as
the Thrift Restoration Plan for the Columbia Energy Group), as set forth herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 <U><B>Plan Year</B></U><B>. </B>&#147;Plan Year&#148; means the 12-month period commencing each January&nbsp;1 and
ending the following December&nbsp;31.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 <U><B>Post-2004 Benefit</B></U><B>. </B>&#147;Post-2004 Benefit&#148; means the portion of a Participant&#146;s
Supplemental Savings Account equal to the excess of (1)&nbsp;the balance of the Participant&#146;s
Supplemental Savings Account determined as of a Participant&#146;s date of separation from service with
the Company and all Affiliated Companies after December&nbsp;31, 2004 over (2)&nbsp;the Pre-2005 Benefit, to
which the Participant would be entitled under the Plan if he voluntarily separated from service
without cause as of such date and received a full payment of benefits from the Plan on the earliest
possible date allowed under the Plan following his separation from service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 <U><B>Pre-2005 Benefit</B></U><B>. </B>&#147;Pre-2005 Benefit&#148; means the portion of a Participant&#146;s
Savings Account determined as of December&nbsp;31, 2004, adjusted to reflect Interest credited to such
balance from and after such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 <U><B>Supplemental Savings Account</B></U><B>. </B>&#147;Supplemental Savings Account&#148; means the sum of
credits accrued under Article&nbsp;IV on behalf of a Participant, adjusted to reflect Interest credited
to the Account, and reduced by any withdrawals under Article&nbsp;V.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20 <U><B>Unforeseeable Emergency</B></U><B>. </B>&#147;Unforeseeable Emergency&#148; means a severe financial
hardship to a Participant resulting from an illness or accident of the Participant, the
Participant&#146;s spouse or a dependent (as defined in Code Section&nbsp;152(a)), of the Participant, loss
of the Participant&#146;s property due to casualty or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant. The amount
distributed with respect to an Unforeseeable Emergency shall not exceed the amount necessary to
satisfy the Emergency, plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution, after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the
Participant&#146;s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship).
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE III</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ELIGIBILITY</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <U><B>Eligibility</B></U>. Any Employee who is not a Participant in the Plan on December&nbsp;31,
2004, who is participating in the Basic Plan and (i)&nbsp;whose Compensation in a Plan Year will exceed
the Limits, or (ii)&nbsp;who has deferrals in the DCP excluded for purposes of benefit allocations in
the Basic Plan, shall be eligible to become a Participant in the Plan as of January&nbsp;1 of such Plan
Year. Any Participant in the Plan on December&nbsp;31, 2004 shall continue as a Participant after that
date. If an Employee who was not expected to be eligible to become a Participant in a given Plan
Year subsequently qualifies because his or her Compensation exceeds the Limits for that Plan Year,
or because he or she becomes eligible for, or begins to participate in, the DCP, such Employee
shall be eligible to participate in the Plan as soon as practicable after this determination has
been made or deferrals begin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <U><B>Notice of Eligibility to Participants</B></U>. The Committee shall inform each Employee
of his or her eligibility to participate in the Plan as soon as practicable but before the earliest
date such Employee&#146;s participation could become effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <U><B>Method of Becoming a Participant</B></U>. In order to become a Participant, each eligible
Employee must sign a written agreement with his or her Employer providing for a reduction of his or
her Compensation and a corresponding direction of Employer contributions or Participant Pre-tax
Contributions that would normally be made to the Basic Plan, except for the Limits or deferrals
into the DCP, to be credited to his or her Supplemental Savings Account under the Plan, to the
extent necessary to satisfy the Limits with respect to the Basic Plan or deferrals into the DCP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant in the Plan as of December&nbsp;31, 2004 who remains a Participant in the Plan as of
January&nbsp;1, 2005 shall deliver to the Committee the written agreement referenced in the preceding
paragraph with respect to his or her Compensation earned from and after January&nbsp;1, 2006 no later
than December&nbsp;31, 2005. An Employee who becomes a Participant on or after January&nbsp;1, 2005 shall
deliver the aforementioned written agreement to the Committee within 30&nbsp;days after the date the
Participant first becomes eligible to participate, and such agreement shall be effective with
respect to Compensation related to services to be performed subsequent to the election; provided
that such a Participant shall not be considered first eligible if, on the date he or she becomes a
Participant, he or she participates in any other nonqualified account balance plan that is subject
to Code Section&nbsp;409A, maintained by the Company or an Affiliated Company. If an Employee referred
to in the preceding sentence does not deliver the
aforementioned written agreement to the Committee within such 30-day period, he or she shall
be entitled to deliver to the Committee a written agreement of the type referenced in the preceding
paragraph with respect to his or her Compensation earned from and after the first day of the Plan
Year next following the Plan Year in which the written agreement is delivered. Any election made
pursuant to a written agreement, delivered pursuant to the preceding sentences of this paragraph,
shall continue in effect until revoked by a Participant by notice delivered to the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Committee no later than the last day of the Plan Year immediately preceding the first day of the Plan Year in
which such election is to become effective.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <U><B>Continuation of Participation</B></U>. A Participant shall remain a Participant so long
as his or her Supplemental Savings Account has not been fully distributed to him or her.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE IV</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>SUPPLEMENTAL SAVINGS ACCOUNT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U><B>Supplemental Savings Account</B></U>. A Supplemental Savings Account shall be established
for each Participant. The amounts to be credited to a Participant&#146;s Supplemental Savings Account
shall be determined under procedures established by the Committee and shall consist of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employer credits, as described in Sections&nbsp;4.2 and 4.3; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Participant credits, as described in Section&nbsp;4.4; plus</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest credits under Section&nbsp;4.5.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant&#146;s Supplemental Savings Account shall be reduced by any withdrawals made under
Article&nbsp;V.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <U><B>Employer Credits</B></U>. The amount of Employer credits for a Participant shall equal
(a)&nbsp;minus&nbsp;(b) below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The total amount of Matching Contributions that would otherwise have been
contributed to the Basic Plan for the Participant without regard to the Limits or
deferrals into the DCP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The actual amount of Matching Contributions contributed to the Basic Plan for
the Participant.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <U><B>Special Employer Credits</B></U>. Any Participant who (1)&nbsp;during the 2003 and/or 2004
Plan Years had a Matching Contribution allocated to his Matching Contribution Account under the
Basic Plan that was less than the maximum Matching Contribution available under the Basic Plan,
(2)&nbsp;authorized After-tax Contributions and/or Pre-tax Contributions under the Basic Plan
equal to at least 6% of his Compensation for such Plan Year(s), (3)&nbsp;commenced employment with
an Employer prior to January&nbsp;1, 2002 and was still employed by an Employer on January&nbsp;1, 2005 and
(4)&nbsp;participated in the Account Balance Option of the NiSource Inc. and Northern Indiana Public
Service Company Pension Plan Provisions Pertaining to Salaried and Non-Exempt Employees, the
NiSource Subsidiary Pension Plan or the Bay State Gas Company Pension Plan, as applicable, shall be
eligible for an additional Employer credit hereunder. The additional Employer credit shall be
calculated as the difference between (i)&nbsp;the Matching
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Contributions that would have been allocated
to the Participant&#146;s Matching Contribution Account under the Basic Plan during the 2003 and/or 2004
Plan Year(s) if his or her total After-tax Contributions, if any, and Pre-tax Contributions under
the Basic Plan for such Plan Year(s) had been contributed evenly over each pay period throughout
the Plan Year(s) and (ii)&nbsp;the Matching Contribution actually allocated to the Participant&#146;s
Matching Contribution Account under the Basic Plan for such Plan Year(s).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The additional Employer credit, plus interest (calculated using a rate equal to 4.5% from
January&nbsp;1, 2005 to the date the additional Employer credit is credited to his or her Supplemental
Savings Account as provided herein) shall be credited to the Participant&#146;s Supplemental Savings
Account in accordance with Section&nbsp;4.1. The additional Employer credit shall be credited to his or
her Supplemental Savings Account as soon as administratively practicable after September&nbsp;1, 2005,
but in any event no later than December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except where inconsistent with this Section&nbsp;4.3, the additional Employer credit shall be
subject to all provisions of the Plan applicable to Employer credits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <U><B>Participant Credits</B></U>. The amount of Participant credits for a Participant shall
equal (a)&nbsp;minus&nbsp;(b) below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The total amount of Pre-tax Contributions that would otherwise have been
contributed to the Basic Plan for the Participant without regard to the Limits or
deferrals into the DCP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The actual amount of Pre-tax Contributions contributed to the Basic Plan for
the Participant.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <U><B>Interest Credits</B></U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest credits to a Participant&#146;s Supplemental Savings Account, if
applicable, shall be considered made on a monthly basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All credits shall accrue Interest starting with the first full calendar month
in which they are deemed to be a part of the applicable Supplemental Savings Account
and ending with the last full calendar month in which credits are still deemed to be
part of the Supplemental Savings Account.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest shall be based on the balance of the value of the Participant&#146;s
Supplemental Savings Account as of the first working day of the calendar month and
credited as of the last working day of the calendar month.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event there is a withdrawal by a Participant from his or her
Supplemental Savings Account, the value of such Supplemental Savings Account, prior to
the withdrawal, shall be credited with Interest to the end of the
calendar month in </TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which the withdrawal is actually made. The amount of the withdrawal shall then be
subtracted from the balance so determined.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest shall be earned only on monies held under reserve by an Employer. If
the Committee has invested any portion of a Participant&#146;s Supplemental Savings Account,
Interest shall not be earned on such portion, but such Account shall be adjusted for
actual earnings, gains, and losses on such investment.</TD>
</TR>


</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE V</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>IN-SERVICE WITHDRAWALS</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U><B>Pre-2005 Benefit</B></U>. This section applies only to a Pre-2005 Benefit.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>In-Service Withdrawals</U>. Subject to the limitations of Section&nbsp;5.3, a
Participant, by filing a written request with the Committee, may, while employed by an
Employer or an Affiliated Company, elect to withdraw 33%, 67% or 100% of his or her
Pre-2005 Benefit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Limitation on In-Service Withdrawals</U>. Any In-Service withdrawal under
paragraph&nbsp;(a) of this Section&nbsp;5.1 shall be subject to a 10% early distribution penalty.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Unforeseeable Emergency</U>. At the written request of a Participant, and
in the written discretion of the Committee, up to 100% of the balance of a
Participant&#146;s Pre-2005 Benefit, determined as of the last day of the calendar month
prior to the date of distribution may be distributed to a Participant in a lump sum in
the case of an Unforeseeable Emergency.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U><B>Post-2004 Benefit</B></U>. A Participant shall be entitled to withdraw all or any portion
of his or her Post-2004 Benefit, as he or she may request in a direction delivered to the
Committee, in the case of an Unforeseeable Emergency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U><B>Limitations on In-Service Withdrawals</B></U>. Any In-Service Withdrawal under this
Article&nbsp;V shall be subject to the following provisions:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Only one In-Service Withdrawal shall be permitted in any 12-month period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In-Service Withdrawals under this Article&nbsp;V shall require suspension of
Employer credits and Participant credits (but not Interest credits) under the Plan for
a period of time varying with the percentage of the value of the Participant&#146;s
Supplemental Savings Account which is withdrawn, according to the following schedule:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Percentage</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Suspension</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Up to 33%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 months</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">34 - 67%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">4 months</TD>
</TR>
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Percentage</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Suspension</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">68 - 100%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">6 months</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This suspension shall not affect a Participant&#146;s participation in the Basic Plan nor the basis
for determining the Employer contributions or Participant Pre-tax Contributions under the Basic
Plan.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE VI</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>TERMINATION OF PARTICIPATION</B></U><BR>
<U><B>AND PAYMENT OF BENEFITS</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <U><B>Termination of Participation</B></U>. A Participant&#146;s participation in the Plan shall
terminate at separation from service with the Company and all Affiliated Companies for any reason,
including Disability or death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <U><B>Benefits at Termination of Participation</B></U>. Upon his or her separation from
service, a Participant, his or her spouse, or his or her Beneficiary or legal representative shall
be entitled to 100% of the Participant&#146;s Supplemental Savings Account credited with Interest, if
applicable, through the calendar month preceding the date payment is made to the Participant (or to
his or her spouse, legal representative or Beneficiary in the case of his or her incapacity or
death).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 <U><B>Method and Time of Payment</B></U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Pre-2005 Benefit</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Pre-2005 Benefit payable under the Plan to a Participant or
his or her spouse, Beneficiary, or legal representative shall be paid in the
same form under which the Basic Plan benefit is payable to the Participant or
his or her spouse, Beneficiary, or legal representative. The Participant&#146;s
election under the Basic Plan of any optional form of payment of his or her
Basic Plan benefit (with the valid consent of his or her surviving spouse where
required under the Basic Plan) shall also be applicable to the payment of his
or her Pre-2005 Benefit under the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of the Pre-2005 Benefit under the Plan to a Participant
or his or her spouse, Beneficiary, or legal representative under the Plan shall
commence on the same date as payment of the benefit to the Participant or his
or her spouse, Beneficiary, or legal representative under the Basic Plan
commences. Any election under the Basic Plan made by the Participant with
respect to the commencement of payment of his or her benefit under the Basic
Plan shall also be applicable with respect to the commencement of payment of
his or her Pre-2005 Benefit under the Plan.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the provisions of paragraphs&nbsp;(i) and&nbsp;(ii)
above, an election made by the Participant under the Basic Plan with respect to
the form of payment of his or her Pre-2005 Benefit thereunder (with the valid
consent of his or her surviving spouse where required under the Basic Plan), or
the date for commencement of payment thereof, shall not be effective with
respect to the form of payment or date for commencement of payment of his or
her Pre-2005 Benefit under the Plan unless such election is expressly approved
in writing by the Committee. If the Committee shall not approve such election
in writing, then the form of payment or date for commencement of payment of the
Participant&#146;s Pre-2005 Benefit under the Plan shall be selected by the
Committee at its sole discretion.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Post-2004 Benefit</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of a Post-2004 Benefit in accordance with this
Section&nbsp;6.3 shall commence within 45&nbsp;days after the Participant&#146;s date of
separation from service with the Company and all Affiliated Companies, or, if
later, within such timeframe permitted under Code Section&nbsp;409A, and guidance
and regulations thereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Post-2004 Benefit shall be payable in a form elected by a
Participant no later than December&nbsp;31, 2005. Notwithstanding the preceding
sentence, in the case of an Employee who becomes a Participant on or after
January&nbsp;1, 2005, the aforementioned election with respect to the form of
payment of a Post-2004 Benefit shall be made within 30&nbsp;days after the date the
Participant first becomes eligible to participate, and such election shall be
effective with respect to Compensation related to services to be performed
subsequent to the election; provided that such a Participant shall not be
considered first eligible if on the date he becomes a Participant he
participates in any other nonqualified account balance plan that is subject to
Code Section&nbsp;409A, maintained by the Company or an Affiliated Company. The
form of payment shall be elected by the Participant at the time he makes the
election described in the first or second sentence of this paragraph (iii)&nbsp;from
among those forms of
payment available at that time under the Basic Plan. If a timely payment
election is not made by a Participant, payment shall be made in a lump sum.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Participant cannot change the time or form of payment of a
Post-2004 Benefit under this Section&nbsp;6.3(b) unless (A)&nbsp;such election does not
take effect until at least 12&nbsp;months after the date the election is made,
(B)&nbsp;in the case of an election related to a payment not related to the
Participant&#146;s Disability or death, the first payment with respect to which such
new election is effective is deferred for a period of not less than five&nbsp;years
from</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date such payment would otherwise have been made, and (C)&nbsp;any election
related to a payment based upon a specific time or pursuant to a fixed schedule
may not be made less than 12&nbsp;months prior to the date of the first scheduled
payment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding any preceding provision of this Section&nbsp;6.3(b),
a Participant may change an election with respect to the time and form of
payment of a Post-2004 Benefit, without regard to the restrictions imposed
under paragraph&nbsp;(iii) next above, on or before December&nbsp;31, 2006; provided that
such election (A)&nbsp;applies only to amounts that would not otherwise be payable
in calendar year&nbsp;2006, and (B)&nbsp;shall not cause an amount to be paid in calendar
year&nbsp;2006 that would not otherwise be payable in such year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding any other provision of the Plan, in no event
can a payment of a Post-2004 Benefit to a Participant who is a Specified
Employee of the Company or an Affiliated Company, at a time during which the
Company&#146;s capital stock or capital stock of an Affiliated Company is publicly
traded on an established securities market, in the calendar year of his or her
separation from service be made before the date that is six&nbsp;months after the
date of the Participant&#146;s separation from service with the Company and all
Affiliated Companies, unless such separation is due to death or Disability.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Participant shall be deemed to be a Specified Employee for purposes
of this subparagraph (iv)&nbsp;if he or she is in job category C2 or above with
respect to the Company or the Affiliated Company that employs him or her;
provided that if at any time the total number of Employees in job category
C2 and above is less than 50, a Specified Employee shall include any person
who meets the definition of a Key Employee set forth in Code Section&nbsp;416(i)
without reference to paragraph (5). A Participant shall be deemed to be a
Specified Employee with respect to a calendar year if he is a Specified
Employee on September&nbsp;30th of the preceding calendar year. If a Specified
Employee will receive
payments hereunder in the form of installments or an annuity, the first
payment made as of the date six months after the date of the Participant&#146;s
separation from service with the Company and all Affiliated Companies shall
be a lump sum, paid as soon as practicable after the end of such six-month
period, that includes all payments that would otherwise have been made
during such six-month period. From and after the end of such six month
period, any such installment or annuity payments shall be made pursuant to
the terms of the applicable installment or annuity form of payment.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Mandatory Lump Sum Payments</U>.</TD>
</TR>

</TABLE>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding any other provision in this Section&nbsp;6.3, if (1)&nbsp;the sum of the
Participant&#146;s Pre-2005 Benefit and Post-2004 Benefit does not exceed the applicable
dollar limit under code Section&nbsp;402(g)(1)(B) and (2)&nbsp;this sum is the entirety of the
Participant&#146;s interest in the Plan and all other arrangements with respect to which
deferrals of compensation are treated as having been deferred under a single
nonqualified deferred compensation plan under Code Section&nbsp;409A and applicable
guidance thereunder, then the form of payment of both the Pre-2005 Benefit and
Post-2004 Benefit shall be a single lump sum.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE VII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>ADMINISTRATION OF PLAN</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be administered by the Committee.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE VIII</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>COMPANY&#146;S RIGHTS TO AMEND OR TERMINATE PLAN</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the Company intends to maintain the Plan in conjunction with the Basic Plan, the
Company, or the Officer Nomination and Compensation Committee of the Board of Directors of the
Company, reserves the right to amend the Plan at any time and from time to time, or to terminate it
at any time for any reason; provided, however, that no amendment or termination of the Plan shall
impair or alter such right to a benefit that would have arisen under the Plan as it read before the
effective date of such amendment or termination to or with respect to any Employee who has become a
Participant in the Plan before the effective date of such amendment or termination or with respect
to his or her Beneficiary. Upon termination of the Plan, distribution of Plan benefits shall be
made to Participants, surviving spouses and beneficiaries in the manner and at the time described
in Article&nbsp;VI of the Plan. No additional benefits shall be earned after termination of the Plan
other than the crediting of Interest until the date of distribution of a Participant&#146;s Supplemental
Savings Account.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>ARTICLE IX</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><U><B>MISCELLANEOUS PROVISIONS</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <U><B>Definitions</B></U>. The terms used in the Plan that are defined in the Basic Plan shall
have the meanings assigned to them in the Basic Plan unless otherwise defined in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <U><B>Unsecured General Creditor</B></U>. Participants and Beneficiaries shall be unsecured
general creditors, with no secured or preferential right to any assets of the Company, any other
Employer, or any other party for payment of benefits under the Plan. Obligations of the Company
and each other Employer under the Plan shall be an unfunded and unsecured promise to pay money in
the future.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 <U><B>Income Tax Payout</B></U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary contained herein, (1)&nbsp;in the event
that the Internal Revenue Service prevails in its claim that any amount of a Pre-2005
Benefit, payable pursuant to the Plan and held in the general assets of the Company or
any other Employer, constitutes taxable income to a Participant or his or her
Beneficiary for a taxable year prior to the taxable year in which such amount is
distributed to him or her, or (2)&nbsp;in the event that legal counsel satisfactory to the
Company, and the applicable Participant or his or her Beneficiary, renders an opinion
that the Internal Revenue Service would likely prevail in such a claim, the amount of
such Benefit held in the general assets of the Company or any other Employer, to the
extent constituting taxable income, shall be immediately distributed to the Participant
or his or her Beneficiary. For purposes of this Section, the Internal Revenue Service
shall be deemed to have prevailed in a claim if such claim is upheld by a court of
final jurisdiction, or if the Participant or Beneficiary, based upon an opinion of
legal counsel satisfactory to the Company and the Participant or his or her
Beneficiary, fails to appeal a decision of the Internal Revenue Service, or a court of
applicable jurisdiction, with respect to such claim, to an appropriate Internal Revenue
Service appeals authority or to a court of higher jurisdiction within the appropriate
time period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary contained herein, (1)&nbsp;in the event
that the Internal Revenue Service prevails in its claim that any amount of a Post-2004
Benefit, payable pursuant to the Plan and held in the general assets of the Company or
any other Employer, constitutes taxable income under Code Section&nbsp;409A, and guidance
and regulations thereunder, to a Participant or his or her Beneficiary for a taxable
year prior to the taxable year in which such amount is distributed to him or her, or
(2)&nbsp;in the event that legal counsel satisfactory to the Company, and the applicable
Participant or his or her Beneficiary, renders an opinion that the Internal Revenue
Service would likely prevail in such a claim, the amount of such Benefit held in the
general assets of the Company or any other
Employer, to the extent constituting such taxable income, shall be immediately
distributed to the Participant or his or her Beneficiary. For purposes of this
Section, the Internal Revenue Service shall be deemed to have prevailed in a claim
if such claim is upheld by a court of final jurisdiction, or if the Participant or
Beneficiary, based upon an opinion of legal counsel satisfactory to the Company and
the Participant or his or her Beneficiary, fails to appeal a decision of the
Internal Revenue Service, or a court of applicable jurisdiction, with respect to
such claim, to an appropriate Internal Revenue Service appeals authority or to a
court of higher jurisdiction within the appropriate time period.</TD>
</TR>


</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <U><B>General Conditions</B></U>. Except as otherwise expressly provided herein, all terms and
conditions of the Basic Plan applicable to a Basic Plan benefit shall also be applicable to a
benefit payable hereunder. Any Basic Plan benefit shall be paid solely in accordance with the
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">terms and conditions of the Basic Plan and nothing in the Plan shall operate or be construed in any
way to modify, amend or affect the terms and provisions of the Basic Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 <U><B>No Guaranty of Benefits</B></U>. Nothing contained in the Plan shall constitute a
guaranty by the Company or any other Employer or any other entity or person that the assets of the
Company or any other Employer shall be sufficient to pay any benefit hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6 <U><B>No Enlargement of Employee Rights</B></U>. No Participant or Beneficiary shall have any
right to a benefit under the Plan except in accordance with the terms of the Plan. Establishment
of the Plan shall not be construed to give any Participant or Beneficiary the right to be retained
in the service of the Company or any other Employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7 <U><B>Spendthrift Provision</B></U>. No interest of any person or entity in, or right to
receive a benefit under, the Plan shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a benefit be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such person or entity,
including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings.
Notwithstanding the preceding sentence, the Supplemental Savings Account of any Participant shall
be subject to and payable in the amount determined in accordance with any qualified domestic
relations order, as that term is defined in Section&nbsp;206(d)(3) of ERISA. The Committee shall
provide for payment of such portion of a Supplemental Savings Account to an alternate payee (as
defined in Section&nbsp;206(d)(3) of ERISA) as soon as administratively possible following receipt of
such order. Any federal, state or local income tax associated with such payment shall be the
responsibility of the alternate payee. The balance of any Supplemental Savings Account that is
subject to any qualified domestic relations order shall be reduced by the amount of any payment
made pursuant to such order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8 <U><B>Applicable Law</B></U>. The Plan shall be construed and administered under the laws of
the State of Indiana, except to the extent preempted by applicable federal law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9 <U><B>Incapacity of Recipient</B></U>. If any person entitled to a benefit payment under the
Plan is deemed by the Committee to be incapable of personally receiving and giving a valid receipt
for such payment, then, unless and until claim therefor shall have been made by a duly appointed
guardian or other legal representative of such person, the Committee may provide for such payment
or any part thereof to be made to any other person or institution then contributing toward or
providing for the care and maintenance of such person. Any such payment shall be a payment for the
account of such person and a complete discharge of any liability of the Company, any other
Employer, the Committee and the Plan therefor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10 <U><B>Unclaimed Benefit</B></U>. Each Participant shall keep the Committee informed of his or
her current address and the current address of his or her Beneficiaries. The Committee shall not
be obligated to search for the whereabouts of any person. If the location of a Participant is not
made known to the Committee within three&nbsp;years after the date on which payment of the Participant&#146;s
benefit may first be made, payment may be made as though the Participant had died
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">at the end of the three-year period. If, within one additional year after such three-year period has elapsed or
within three&nbsp;years after the actual death of a Participant, the Committee is unable to locate any
Beneficiary of the Participant, then the Committee shall have no further obligation to pay any
benefit hereunder to such Participant, Beneficiary, or any other person and such benefit shall be
irrevocably forfeited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.11 <U><B>Limitations on Liability</B></U>. Notwithstanding any of the preceding provisions of the
Plan, none of the Company, any other Employer, or any individual acting as an employee, or agent at
the direction of the Company or any other Employer, or any member of the Committee, shall be liable
to any Participant, former Participant, Beneficiary, or any other person for any claim, loss,
liability or expense incurred in connection with the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.12 <U><B>Claims Procedure</B></U>. Claims for benefits under the Plan shall be made in writing to
the Committee. If the Committee wholly or partially denies a claim for benefits, the Committee
shall, within a reasonable period of time, but no later than 90&nbsp;days after receiving the claim,
notify the claimant in writing of the denial of the claim. If the Committee fails to notify the
claimant in writing of the denial of the claim within 90&nbsp;days after the Committee receives it, the
claim shall be deemed denied. A notice of denial shall be written in a manner calculated to be
understood by the claimant, and shall contain:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the specific reason or reasons for denial of the claim;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a specific reference to the pertinent Plan provisions upon which the denial is
based;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a description of any additional material or information necessary for the
claimant to perfect the claim, together with an explanation of why such material or
information is necessary; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an explanation of the Plan&#146;s review procedure.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within 60&nbsp;days of the receipt by the claimant of the written notice of denial of the claim, or
within 60&nbsp;days after the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review of the denial of
the claimant&#146;s claim for benefits, including the conducting of a hearing, if the Committee deems
one necessary. In connection with the claimant&#146;s appeal of the denial of his or her benefit, the
claimant may review pertinent documents and may submit issues and comments in writing. The
Committee shall render a decision on the claim appeal promptly, but not later than 60&nbsp;days after
receiving the claimant&#146;s request for review, unless, in the discretion of the Committee, special
circumstances (such as the need to hold a hearing) require an extension of time for processing, in
which case the 60-day period may be extended to 120&nbsp;days. The Committee shall notify the claimant
in writing of any such extension. The decision upon review shall (1)&nbsp;include specific reasons for
the decision, (2)&nbsp;be written in a manner calculated to be understood by the claimant, and
(3)&nbsp;contain specific references to the pertinent Plan provisions upon which the decision is based.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, NiSource Inc. has caused this amended and restated Plan to be executed in
its name, by its duly authorized officer, on this 28&nbsp;day of October, 2008, effective as of
January&nbsp;1, 2008.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">NISOURCE INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Robert Campbell
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>



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<TYPE>EX-10.7
<SEQUENCE>7
<FILENAME>c47397exv10w7.htm
<DESCRIPTION>EX-10.7
<TEXT>
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<HEAD>
<TITLE>exv10w7</TITLE>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.7</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISOURCE INC.<BR>
FORM OF<BR>
CHANGE IN CONTROL AND TERMINATION AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NiSource Inc., a Delaware corporation (&#147;Employer&#148;), which as used herein shall mean NiSource
Inc. and all of its Affiliates, and
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (&#147;Executive&#148;) hereby enter into a Change in
Control and Termination Agreement as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, (the &#147;Effective Date&#148;), which
Agreement is hereinafter set forth (&#147;Agreement&#148;).
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>WITNESSETH</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Employer considers the ability to attract and retain talented management to be part
of its corporate strategy and necessary in protecting and enhancing the interests of the Employer
and its shareholders. As part of this strategy, Employer desires to retain Executive in its
employment notwithstanding any actual or threatened Change in Control; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Executive and Employer desire to enter into this Agreement pertaining to the terms of
Executive&#146;s employment in the event of any actual or threatened Change in Control;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and
other good and valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Term</U>. This Agreement shall begin on the Effective Date and shall continue in
effect until the date which is 24&nbsp;months after the date on which either Employer or Executive has
given written notice to the other party of its or his election to have this Agreement terminate
(&#147;Term&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Definitions</U>. For purposes of this Agreement:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &#147;Affiliate&#148; or &#147;Associate&#148; shall have the meaning set forth in Rule&nbsp;12b-2 under the
Securities Exchange Act of 1934.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &#147;Base Salary&#148; shall mean Executive&#146;s monthly base salary at the rate in effect on the date
of a reduction for purposes of paragraph (g)&nbsp;of this Section, or on the date of a termination of
employment under circumstances described in subsections 3(a) or (b)&nbsp;below, whichever is higher;
provided, however, that such rate shall in no event be less than the highest rate in effect for
Executive at any time during the Term.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &#147;Beneficiary&#148; shall mean the person or entity designated by Executive, by written
instrument delivered to Employer, to receive the benefits payable under this Agreement in the event
of his death. If Executive fails to designate a Beneficiary, or if no Beneficiary survives
Executive, such death benefits shall be paid:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;to his surviving spouse; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;if there is no surviving spouse, to his living descendants <U>per stirpes</U>; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;if there is neither a surviving spouse nor descendants, to his duly appointed and
qualified executor or personal representative.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &#147;Bonus&#148; shall mean Executive&#146;s target annual incentive bonus compensation for the calendar
year in which the date of a termination of employment under circumstances described in subsection
3(a) below occurs, under the NiSource Inc. Corporate Incentive Plan or such other incentive bonus
compensation plan then maintained by Employer (&#147;Annual Incentive Plan&#148;); provided, however, that
such target annual incentive bonus compensation shall in no event be less than the highest target
annual incentive bonus compensation of Executive under any such Annual Incentive Plan for any
calendar year commencing during the Term.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;A &#147;Change in Control&#148; shall be deemed to take place on the occurrence of any of the
following events:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The acquisition by an entity, person or group (including all Affiliates or
Associates of such entity, person or group) of beneficial ownership, as that term is
defined in Rule&nbsp;13d-3 under the Securities Exchange Act of 1934, of capital stock of
NiSource Inc. entitled to exercise more than 30% of the outstanding voting power of all
capital stock of NiSource Inc. entitled to vote in elections of directors (&#147;Voting
Power&#148;);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The effective time of (i)&nbsp;a merger or consolidation of NiSource Inc. with one
or more other corporations unless the holders of the outstanding Voting Power of
NiSource Inc. immediately prior to such merger or consolidation (other than the
surviving or resulting corporation or any Affiliate or Associate thereof) hold at least
50% of the Voting Power of the surviving or resulting corporation (in substantially the
same proportion as the Voting Power of NiSource Inc. immediately prior to such merger or
consolidation), or (ii)&nbsp;a transfer of a
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Substantial Portion of the Property, of NiSource Inc. other than to an entity of which
NiSource Inc. owns at least 50% of the Voting Power; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The election to the Board of Directors of NiSource Inc. (the &#147;Board&#148;) of
candidates who were not recommended for election by the Board, if such candidates
constitute a majority of those elected in that particular election (for this purpose,
recommended directors will not include any candidate who becomes a member of the Board
as a result of an actual or threatened election contest or proxy or consent solicitation
on behalf of anyone other than the Board or as a result of any appointment, nomination,
or other agreement intended to avoid or settle a contest or solicitation).
Notwithstanding the foregoing, a Change in Control shall not be deemed to take place by
virtue of any transaction in which Executive is a participant in a group effecting an
acquisition of NiSource Inc. and, after such acquisition, Executive holds an equity
interest in the entity that has acquired NiSource Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &#147;Good Cause&#148; shall be deemed to exist if, and only if Employer notifies Executive, in
writing, within 60&nbsp;days of its knowledge that one of the following events occurred:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Executive engages in acts or omissions constituting dishonesty, intentional
breach of fiduciary obligation or intentional wrongdoing or malfeasance, in each case
that results in substantial harm to Employer; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Executive is convicted of a criminal violation involving fraud or dishonesty.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">(g) &#147;Good Reason&#148; shall be deemed to exist if, and only if:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) there is a significant diminution in the nature or the scope of Executive&#146;s
authorities or duties;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) there is a significant reduction in Executive&#146;s monthly rate of Base Salary and
his opportunity to earn a bonus under an incentive bonus compensation plan maintained by
Employer or his benefits; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Employer changes by 50 miles or more the principal location at which Executive
is required to perform services as of the date of a Change in Control.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) &#147;Pension Plan&#148; shall mean any Retirement Plan that is a defined benefit plan as defined in
Section&nbsp;3(35) of the Employee Retirement Income Security Act of 1974, as amended (&#147;ERISA&#148;).
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &#147;Retirement Plan&#148; shall mean any qualified or nonqualified supplemental employee pension
benefit plan, as defined in Section&nbsp;3(2) of ERISA, currently or hereinafter made available by
Employer in which Executive is eligible to participate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) &#147;Severance Period&#148; shall mean the period beginning on the date Executive&#146;s employment with
Employer terminates under circumstances described in subsection 3(a) and ending on the date
24<SUP style="font-size: 85%; vertical-align: text-top">1</SUP> months thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) &#147;Substantial Portion of the Property of NiSource Inc.&#148; shall mean 50% of the aggregate
book value of the assets of NiSource Inc. and its Affiliates and Associates as set forth on the
most recent balance sheet of NiSource Inc., prepared on a consolidated basis, by its regularly
employed, independent, certified public accountants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) &#147;Welfare Plan&#148; shall mean any health and dental plan, disability plan, survivor income
plan or life insurance plan, as defined in Section&nbsp;3(1) of ERISA, currently or hereafter made
available by Employer in which Executive is eligible to participate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Benefits Upon Termination of Employment</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The following provisions will apply if a Change in Control occurs during the Term, and at
any time during the 24&nbsp;months after the Change in Control occurs (whether during or after the
expiration of the Term), the employment of Executive with Employer is terminated by Employer for
any reason other than Good Cause, or Executive terminates his employment with Employer for Good
Reason. In addition, the following provisions also will apply if (i)&nbsp;a Change in Control occurs
during the Term, (ii)&nbsp;Employer has terminated Executive&#146;s employment other than for Good Cause
during the year prior to the Change in Control but after a third party and/or Employer had taken
steps reasonably calculated to effect a Change in Control and (iii)&nbsp;it is reasonably demonstrated
by Executive that such termination of employment was in connection with or in anticipation of a
Change in Control.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Employer shall pay Executive an amount equal to 24<SUP style="font-size: 85%; vertical-align: text-top">2</SUP> times the sum of
(a)&nbsp;Executive&#146;s Base Salary plus (b)&nbsp;one-twelfth of his Bonus. Such amount shall be
paid to Executive in a lump sum within 60&nbsp;days following Executive&#146;s
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>With respect to the agreement with Mr.&nbsp;Skaggs, the
Severance Period will end 36&nbsp;months following termination.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>With respect to the agreement with Mr.&nbsp;Skaggs, the
agreement provides that Mr.&nbsp;Skaggs would receive a payment equal to 36 times
his times the sum of (a)&nbsp;his Base Salary plus (b)&nbsp;one-twelfth of his Bonus.
</TD>
</TR>

</TABLE>



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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0%">
termination of employment.</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Employer shall pay Executive an amount equal to the pro rata portion of
Executive&#146;s target annual incentive bonus compensation for the calendar year under the
Annual Incentive Plan then maintained by Employer, that is applicable to the period
commencing on the first day of such calendar year and ending on the date of termination.
Such bonus amount shall be paid to Executive in a lump sum within 30&nbsp;days after his
date of termination of employment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Executive shall receive any and all benefits accrued through the date of
termination of employment under any Retirement Plan, Welfare Plan or other plan or
program in which he participates at the date of termination of employment. The amount,
form and time of payment of such benefits will be determined by the terms of such
Retirement Plan, Welfare Plan and other plan or program. Further, Executive&#146;s
employment shall be deemed to have terminated by reason of retirement without regard to
vesting limitations in all such plans and other plans or programs not subject to the
qualification requirements of Section 401(a) of the Internal Revenue Code of 1986 as
amended (&#147;Code&#148;), under circumstances that have the most favorable result for Executive
thereunder for all purposes of such Plans and other plans or programs. Payment shall be
made at the earliest date permitted under any such Plan or other plan or program that is
not funded with a trust agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) If upon the date of termination of Executive&#146;s employment Executive holds any
options with respect to stock of Employer, all such options will immediately become
exercisable upon such date and will be exercisable for 200&nbsp;days thereafter (but not
longer than the regularly scheduled term of such options). Any restrictions on stock of
Employer owned by Executive on the date of termination of his employment will lapse on
such date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) In lieu of a contribution by Employer to, or a reimbursement to Executive for,
any coverage premiums and any other expenses payable by Executive during the Severance
Period under all Welfare Plans maintained by Employer in which he and his spouse and
other dependents were participating immediately prior to the date of his termination,
Employer will pay to
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Executive an amount equal to 130% of such coverage premiums and expenses otherwise
payable during the Severance Period. Such amount shall be paid to Executive in a lump
sum within 60&nbsp;days following Executive&#146;s termination of employment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Executive shall receive outplacement services for a period commencing on the
date of termination of employment and continuing until the earlier to occur of the
Executive accepting other employment or 12&nbsp;months after the date of termination, in an
amount not to exceed $25,000.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) During the Severance Period, Executive shall not be entitled to reimbursement
for fringe benefits, including without limitation, dues and expenses related to club
memberships, automobile expenses, expenses for professional services and other similar
perquisites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;If the employment of Executive with Employer is terminated by Employer or Executive other
than under circumstances set forth in subsection 3(a), Executive&#146;s Base Salary shall be paid
through the date of his termination, and Employer shall have no further obligation to Executive or
any other person under this Agreement. Such termination shall have no effect upon Executive&#146;s
other rights, including but not limited to, rights under the Retirement Plans and the Welfare
Plans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Notwithstanding anything herein to the contrary, (1)&nbsp;in the event Employer shall terminate
the employment of Executive for Good Cause hereunder, Employer shall give Executive at least thirty
(30)&nbsp;days prior written notice specifying in detail the reason or reasons for Executive&#146;s
termination, and (2)&nbsp;in the event Executive terminates his employment for Good Reason hereunder,
Executive shall give Employer at least 30&nbsp;days prior written notice specifying in detail the Good
Reason conditions. If Employer cures such conditions, any subsequent termination of employment by
Executive will not be considered to be made for Good Reason.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;This Agreement shall have no effect, and Employer shall have no obligations hereunder, if
Executive&#146;s employment terminates for any reason at any time other than during the 24&nbsp;months
following a Change in Control.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Excise Tax</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;In the event that a Change in Control shall occur, and a final
 </div>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">


determination is made by legislation, regulation, ruling directed to Executive or Employer, by
court decision, or by independent tax counsel described in subsection (b)&nbsp;next below, that the
aggregate amount of any payment made to Executive (1)&nbsp;hereunder, and (2)&nbsp;pursuant to any plan,
program or policy of Employer in connection with, on account of, or as a result of, such Change in
Control (&#147;Total Payments&#148;) will be subject to the excise tax provisions of Section&nbsp;4999 of the Code
(&#147;Excise Tax&#148;), or any successor section thereof, Executive shall be entitled to receive from
Employer, in addition to any other amounts payable hereunder, a lump sum payment (the &#147;Gross-Up
Payment&#148;), sufficient to cover the full cost of such excise taxes and Executive&#146;s federal, state
and local income and employment taxes on this additional payment so that the net amount retained by
Executive, after the payment of all such excise taxes on the Total Payments, and all federal, state
and local income and employment taxes and excise taxes on the Gross-Up Payment, shall be equal to
the Total Payments. The Total Payments, however, shall be subject to any federal, state and local
income and employment taxes thereon. For this purpose, Executive shall be deemed to be in the
highest marginal rate of federal, state and local taxes. The Gross-Up Payment shall be made at the
same time as the payments described in subsections 3(a)(1) above. Notwithstanding the foregoing
provisions of this Section&nbsp;4(a), if it shall be determined that Executive is entitled to the
Gross-Up Payment, but that the Total Payments do not exceed 110% of the greatest amount that could
be paid to Executive such that the receipt of the Total Payments will not give rise to any Excise
Tax (the &#147;Reduced Amount&#148;), then no Gross-Up Payment shall be made to Executive and the Total
Payments shall be reduced to the Reduced Amount. In the event that the Total Payments would be
reduced as provided in the previous sentence, then such reduction shall be determined in a manner
which has the least economic cost to Executive and, to the extent the economic cost is equivalent,
the Total Payments will be reduced in the inverse order of when the Total Payments would have been
made to Executive until the reduction specified is achieved.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Employer and Executive shall mutually and reasonably determine the amount of the Gross-Up
Payment to be made to Executive pursuant to the preceding subsection. Prior to the making of any
such Gross-Up Payment, either party may request a determination as to the amount of such Gross-Up
Payment. If such a determination is requested, it shall be made promptly, at Employer&#146;s expense,
by independent tax
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">counsel selected by Executive and approved by Employer (which approval shall not unreasonably be
withheld), and such determination shall be conclusive and binding on the parties. Employer shall
provide such information as such counsel may reasonably request, and such counsel may engage
accountants or other experts at Employer&#146;s expense to the extent that they deem necessary or
advisable to enable them to reach a determination. The term &#147;independent tax counsel,&#148; as used
herein, shall mean a law firm of recognized expertise in federal income tax matters that has not
previously advised or represented either party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In the event the Internal Revenue Service subsequently adjusts the excise tax computation
made pursuant to subsections 4(a) and (b)&nbsp;above, Employer shall pay to Executive, or Executive
shall pay to Employer, as the case may be, the full amount necessary to make either Executive or
Employer whole had the excise tax initially been computed as subsequently adjusted, including the
amount of any underpaid or overpaid excise tax, and any related interest and/or penalties due to
the Internal Revenue Service. Any payment by Employer or reimbursement made by Executive pursuant
to this Section 4(c) shall be paid or reimbursed by the end of the taxable year next following the
taxable year in which the payment or reimbursement of taxes is made or received, as the case may
be.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Setoff</U>. No payments or benefits payable to or with respect to Executive pursuant
to this Agreement shall be reduced by any amount Executive or his spouse or Beneficiary, or any
other beneficiary under the Pension Plans, may earn or receive from employment with another
employer or from any other source, except as expressly provided in subsection 3(a)(6).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Death</U>. If Executive&#146;s employment with Employer terminates under circumstances
described in subsections 3(a) or (b), then upon Executive&#146;s subsequent death, all unpaid amounts
payable to Executive under subsections 3(a)(1), (2)&nbsp;or (3)&nbsp;or 3(b), or Section&nbsp;4, if any, shall be
paid to his Beneficiary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>No Solicitation of Representatives and Employees</U>. Executive agrees that he shall
not, during the Term or the Severance Period, directly or indirectly, in his individual capacity or
otherwise, induce, cause, persuade, or attempt to do any of the foregoing in order to cause, any
representative, agent or employee of Employer to terminate such person&#146;s employment relationship
with Employer, or to violate the terms of any agreement between said representative, agent or
employee and Employer.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Confidentiality</U>.
Executive acknowledges that preservation of a continuing
business</div>
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<DIV style="font-family: 'Times New Roman',Times,serif">
 <DIV align="left" style="font-size: 10pt; margin-top: 6pt">

relationship between Employer and their respective customers, representatives, and employees is of
critical importance to the continued business success of Employer and that it is the active policy
of Employer to guard as confidential certain information not available to the public and relating
to the business affairs of Employer. In view of the foregoing, Executive agrees that he shall not
during the Term and at any time thereafter, without the prior written consent of Employer, disclose
to any person or entity any such confidential information that was obtained by Executive in the
course of his employment by Employer. This section shall not be applicable if and to the extent
Executive is required to testify in a legislative, judicial or regulatory proceeding pursuant to an
order of Congress, any state or local legislature, a judge, or an administrative law judge or is
otherwise required by law to disclose such information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Forfeiture</U>. If Executive shall at any time violate any obligation of his under
Sections&nbsp;7 or 8 in a manner that results in significant damage to the Employer or its business, he
shall immediately forfeit his right to any benefits under this Agreement, and Employer shall
thereafter have no further obligation hereunder to Executive or his spouse, Beneficiary or any
other person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Executive Assignment</U>. No interest of Executive, his spouse or any Beneficiary, or
any other beneficiary under the Pension Plans, under this Agreement, or any right to receive any
payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such
interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for
the satisfaction of the obligations or debts of, or other claims against, Executive or his spouse,
Beneficiary or other beneficiary, including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Benefits Unfunded</U>. All rights under this Agreement of Executive and his spouse,
Beneficiary or other beneficiary under the Pension Plans, shall at all times be entirely unfunded,
and no provision shall at any time be made with respect to segregating any assets of Employer for
payment of any amounts due hereunder. None of Executive, his spouse, Beneficiary or any other
beneficiary under the Pension Plans shall have any interest in or rights against any specific
assets of Employer, and Executive and his spouse, Beneficiary or other beneficiary shall have only
the rights of a general unsecured

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-9-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
creditor of Employer.

</div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Waiver</U>. No waiver by any party at any time of any breach by the other party of,
or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any other provisions or conditions at the same time or at any
prior or subsequent time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Litigation Expenses</U>. Following the occurrence of Change in Control, Employer
shall pay Executive&#146;s reasonable attorneys&#146; fees and legal expenses in connection with any judicial
proceeding to enforce this Agreement, or to construe or determine the validity of this Agreement or
otherwise in the event Executive is successful in one material claim in such litigation. Such
reimbursement shall occur by March&nbsp;15 of the calendar year after the calendar year in which such
reimbursement obligation was finally determined.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Continuing Indemnification and Advancement of Expenses</U>. Following the occurrence
of a Change in Control, to the full extent permitted by law, Employer shall indemnify Executive
against any actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, arising by reason of Executive&#146;s status as a director, officer,
employee and/or agent of Employer. In addition, to the extent permitted by law, Employer shall
advance or reimburse any expenses, including reasonable attorney&#146;s fees, Executive incurs in
investigating and defending any actual or threatened action, suit or proceeding for which Executive
may be entitled to indemnification under this Section&nbsp;14. Executive agrees to repay any expenses
paid or reimbursed by Employer if it is ultimately determined that Executive is not legally
entitled to be indemnified by Employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Applicable Law</U>. This Agreement shall be construed and interpreted pursuant to the
laws of Indiana.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Entire Agreement</U>. This Agreement contains the entire Agreement between the
Employer and Executive and supersedes any and all previous agreements; written or oral; between the
parties relating to the subject matter hereof. For the avoidance of doubt, if Executive becomes
entitled to the benefits under this Agreement, Executive shall not be eligible for any duplicative
benefits under any other agreement, offer letter, plan, program or policy. No amendment or
modification of the terms of this Agreement shall be binding upon the parties hereto unless reduced
to writing and signed by Employer and Executive.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>No
Employment Contract</U>. Nothing contained in this Agreement shall be
construed to</div>
<P align="center" style="font-size: 10pt"><!-- Folio -->-10-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
be an employment contract between Executive and Employer or provide Executive with the right to
continued Employment with Employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Counterparts</U>. This Agreement may be executed in counterparts, each of which shall
be deemed an original.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Severability</U>. In the event any provision of this Agreement is held illegal or
invalid, the remaining provisions of this Agreement shall not be affected thereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Successors</U>. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, representatives and successors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;<U>Employment with an Affiliate</U>. For purposes of this Agreement, (A)&nbsp;employment or
termination of employment of Executive shall mean employment or termination of employment with
Employer and all Affiliates, (B)&nbsp;Base Salary and Bonus shall include remuneration received by
Executive from Employer and all Affiliates, and (C)&nbsp;the terms Pension Plan, Retirement Plan and
Welfare Plan maintained or made available by Employer shall include any such plans of any Affiliate
of Employer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;<U>Notice</U>. Notices required under this Agreement shall be in writing and sent by
registered mail, return receipt requested, to the following addresses or to such other address as
the party being notified may have previously furnished to the other party by written notice:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to Employer:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NiSource Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><!-- Blank Space -->
    <TD style="font-size: 10pt">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">801 E. 86th Avenue</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Merrillville, Indiana 46410</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Robert D. Campbell</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to Executive:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;<U>409A Savings Clause</U>. Employer and Executive intend that this Agreement be
interpreted in a manner that is compliant with Code Section&nbsp;409A so that Executive does not incur
additional taxes or penalties under Code Section&nbsp;409A. If and to the extent that any payment or
benefit under this Agreement is determined by Employer to constitute &#147;non-qualified deferred
compensation&#148; subject to Code Section&nbsp;409A and is payable to Executive by reason of Executive&#146;s
termination of employment, then (a)&nbsp;such payment or benefit shall be made or provided to Executive
only upon a &#147;separation from service&#148; as defined for purposes of Code Section&nbsp;409A under applicable
regulations and (b)&nbsp;if Executive is a &#147;specified employee&#148; (within
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-11-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the meaning of Code Section&nbsp;409A and as determined by Employer), such payment or benefit shall not
be made or provided before the date that is six months after the date of Executive&#146;s separation
from service (or Executive&#146;s earlier death). Any amount not paid in respect of the six month
period specified in the preceding sentence will be paid to Executive in a lump sum after the
expiration of such six month period. Any such payment or benefit shall be treated as a separate
payment for purposes of Section&nbsp;Code 409A to the extent Code Section&nbsp;409A applies to such payments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF, </B>Executive has hereunto set his hand, and Employer has caused these
presents to be executed in its name on its behalf, all on the
&#095;&#095;&#095;&nbsp;day of &#095;&#095;&#095;&#095;, 20&#095;&#095;&#095;.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" valign="top" align="left"><B>NISOURCE INC.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:<BR>
Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV><BR>
<BR>

<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>

</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" valign="top" align="left"><B>EXECUTIVE</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-12-<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>8
<FILENAME>c47397exv31w1.htm
<DESCRIPTION>EX-31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Certification Pursuant to<BR>
Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Robert C. Skaggs, Jr., certify that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Quarterly Report of NiSource Inc. on Form 10-Q for the quarter
ended September&nbsp;30, 2008;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules&nbsp;13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control over
financial reporting that occurred during the registrant&#146;s most recent fiscal quarter
(the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant&#146;s
internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrant&#146;s ability to record, process, summarize and report financial
information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant&#146;s internal control over financial
reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date:  November 4, 2008&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="center">/s/ Robert C. Skaggs, Jr.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Robert C. Skaggs, Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>9
<FILENAME>c47397exv31w2.htm
<DESCRIPTION>EX-31.2
<TEXT>
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<TITLE>exv31w2</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Certification Pursuant to<BR>
Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Stephen P. Smith, certify that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Quarterly Report of NiSource Inc. on Form 10-Q for the quarter
ended September&nbsp;30, 2008;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules&nbsp;13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control over
financial reporting that occurred during the registrant&#146;s most recent fiscal quarter
(the registrant&#146;s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant&#146;s
internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrant&#146;s ability to record, process, summarize and report financial
information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant&#146;s internal control over financial
reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date:  November 4, 2008&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="center">/s/ Stephen P. Smith
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Stephen P. Smith&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>

    <TD colspan="3" nowrap align="center">Executive Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>10
<FILENAME>c47397exv32w1.htm
<DESCRIPTION>EX-32.1
<TEXT>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Certification Pursuant to<BR>
Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Quarterly Report of NiSource Inc. (the &#147;Company&#148;) on Form 10-Q for the
quarter ending September&nbsp;30, 2008 as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), I, Robert C. Skaggs, Jr., Chief Executive Officer of the Company, certify,
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="center">     /s/ Robert C. Skaggs, Jr.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="center">Robert C. Skaggs, Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="center">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date: November&nbsp;4, 2008
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>11
<FILENAME>c47397exv32w2.htm
<DESCRIPTION>EX-32.2
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Certification Pursuant to<BR>
Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Quarterly Report of NiSource Inc. (the &#147;Company&#148;) on Form 10-Q for the
quarter ending September&nbsp;30, 2008 as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), I, Stephen P. Smith, Executive Vice President and Chief Financial Officer of
the Company, certify, pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="center">/s/ Stephen P. Smith
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="center">Stephen P. Smith&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" nowrap align="center">Executive Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date: November&nbsp;4, 2008
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




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