The annual meeting (the “Annual Meeting”) of the stockholders of NiSource Inc. (the “Company”) will be held at the Capitol View Business & ConferenceGrand Wayne Convention Center, 101 Constitution Avenue, Washington, DC 20001120 West Jefferson Boulevard, Fort Wayne, Indiana 46802 on Tuesday, May 8, 2007,13, 2008, at 10:00 a.m., local time, for the following purposes:

All persons who are stockholders of record at the close of business on March 13, 200717, 2008 will be entitled to vote at the Annual Meeting.

Please act promptly to vote your shares with respect to the proposals described above. You may vote your shares by marking, signing, dating and mailing the enclosed proxy card. You may also vote by telephone or through the Internet by following the instructions set forth on the proxy card. If you attend the annual meeting,Annual Meeting, you may vote in person, even if you have previously submitted a proxy.

In order to help us arrange for the Annual Meeting, if you plan to attend the Annual Meeting, please so indicate in the space provided on the proxy card or respond when prompted on the telephone or through the Internet.

This proxy statement and form of proxy are first being sent to stockholders on April 2, 2007.3, 2008. The Company will bear the expense of this solicitation. The original solicitation of proxies by mail and a reminder letter may be supplemented by telephone, facsimile,e-mail and personal solicitation by officers, employees, and regular employeesagents of the Company or its subsidiaries. To aid in the solicitation of proxies, the Company has retained BNY Mellon InvestorShareowner Services for a fee of $7,500$8,500 plus reimbursement of expenses. The Company also will request brokerage houses and other nominees and fiduciaries to forward proxy materials, at the Company’s expense, to the beneficial owners of stock held of record by such persons.

The close of business on March 13, 200717, 2008 is the date for determining stockholders entitled to notice of and to vote at the Annual Meeting. As of March 13, 2007, 273,900,35717, 2008, 274,177,301 shares of common stock were issued and outstanding. Each share of common stock outstanding on that date is entitled to one vote on each matter presented at the Annual Meeting.

If you are a stockholder of record (that is, if you hold shares of common stock of the Company in your own name), you may vote your shares by proxy using any of the following methods:

If your shares are held by a broker, bank or other nominee in “street name,” you will receive voting instructions from that entity, the “record holder,” that you must follow in order to have your shares of common stock voted at the Annual Meeting. If your shares are held by a broker or other nominee and you or any other person entitled to vote those shares does not provide the broker or other nominee with instructions as to how to vote such shares, that broker or nominee will only be able to vote your shares on the matters for which the broker or other nominee has discretionary authority. Brokers and most other nominees will have discretionary authority to vote your shares of common stock with regard to (i) the election of directors, and (ii) the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accountants for 2007.2008. We do not believe that brokers and most other nominees will have discretionary authority to vote your shares with respect to the Charter Amendment Proposal.

If you hold your shares in the Company’s 401(k) plan administered by Fidelity Investments, you will need to vote your shares by one of the methods discussed in this Proxy Statement in order to have your vote counted. Fidelity will not exercise any voting discretion over the shares held in its accounts. If you fail to vote by returning a completed proxy card, or by telephone or through the Internet, your shares held through Fidelity will not be voted.

If you plan to attend the Annual Meeting, please so indicate when you vote, so that the Company may send you an admission ticket and make the necessary arrangements. Stockholders who plan to attend the meeting must present an identification picturepicture-id along with an admission ticket or evidence of current beneficial ownership.

You also may come to the Annual Meeting and vote your shares in person by obtaining and submitting a ballot that will be provided at the meeting. However, if your shares are held by a broker, bank or other nominee in street name, including Fidelity Investments as administrator of the Company’s 401(k) plan, then in order to be able to vote at the meeting, you must obtain a proxy, executed in your favor, from the institution that is the holder of record for your shares, indicating that you were the beneficial owner of the shares on March 13, 2007,17, 2008, the record date for voting, and that the record holder is giving you the proxy to vote the shares.

A proxy may be revoked by the stockholder at any time before a vote is taken or the authority granted is otherwise exercised. To revoke a proxy, you may send to the Company’s Vice President, Administration and Corporate Secretary a letter indicating that you want to revoke your proxy or you can supersede your initial proxy by (i) delivering to the Vice President, Administration and Corporate Secretary a duly executed proxy bearing a later date, (ii) voting by telephone or through the Internet on a later date, or (iii) attending the meeting and voting in person. Attending the Annual Meeting will not in and of itself revoke a proxy.

A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of the outstanding shares of common stock, present in person or represented by proxy, will constitute a quorum at the Annual Meeting. The inspectors of election appointed for the Annual Meeting will determine whether or not a quorum is present. The inspectors of election will treat abstentions and broker non-votes as present and entitled to vote for purposes of determining the presence of a quorum. A broker non-vote occurs when a broker holding shares for a beneficial owner does not have authority to vote the shares and has not received instructions from the beneficial owner as to how the beneficial owner would like the shares to be voted. It is not anticipated there will be any broker non-votes, as brokers have discretion for both proposals.

In order for a director to be elected, he or she must receive more votes in favor of his or her election than against his or her election. Ratification of Deloitte & Touche LLP as the Company’s independent registered public accountants for 20072008 requires the affirmative vote of the majority of the shares present in person or represented by proxy at the meeting and entitled to vote. Approval of the Charter Amendment Proposal requires the affirmative vote of eighty percent (80%) of the outstanding shares of common stock of the Company.

Votes cast in person or represented by proxy at the meeting will be tabulated by the inspectors of election. Abstentions will be counted as a vote against the ratification of Deloitte & Touche LLP as the Company’s independent registered public accountants for 2007. It is not anticipated there will be any broker non-votes, as brokers have discretion for both proposals.2008, and against the Charter Amendment Proposal.

Stockholders holding shares of stock through the Company’s 401(k) Plan with Fidelity will need to vote their shares by one of the methods discussed in this proxy statement in order to have their votes counted.

The Company’s board of directors is currently composedconsists of eleven directors. On November 28, 2006, Mr. Gary L. Neale informedHowever, on February 7, 2008, Steven McCracken passed away creating a vacancy on the board of directors of his decision not to stand for reelection to the board at the 2007 Annual Meeting and on January 24, 2007, Mr. Robert J. Welsh also informed the board of directors of his decision not to stand for reelection.

On November 28, 2006,July 23, 2007, Peter McCausland resigned from the board of directors, atdirectors. At the recommendation of the Corporate Governance Committee, amended the By-Laws of the Company to require that in any election of directors in which only the holders of common stock are entitled to vote and in which the only nominees are those recommended by the board of directors elected Deborah S. Coleman to fill the vacancy of Mr. McCausland on August 28, 2007. Ms. Coleman was identified by Russell Reynolds Associates, Inc., a nominee may only be elected if the votes cast in favor of the nominee exceed the votes cast against the nominee. On this same date, the board of directors also approved a recommendation from the Corporate Governance Committee to amend the Corporate Governance Guidelines to require that in any election in which the only nominees are those recommendedthird-party search firm engaged by the board for the specific purpose of directors, a director who is recommendedidentifying highly qualified candidates for reelection will execute a conditional resignation, effective only if both (a) the votes against his or her election exceed the votes in favor of his or her election and (b) such resignation is subsequently accepted bypotential nomination to the board. The board of directors will make the final determination on any resignation and publicly disclose its decision within 90 days after the election. All of the directors who are nominees for reelection have executed a conditional resignation.

At the recommendation of the Corporate Governance Committee, the board of directors has nominated the persons listed in the chart below to serve as directors for the term beginning at the annual meeting on May 8, 2007. All of13, 2008 and each will serve until the nominees other than Messrs. Kittrell and Nutter currently serve on the board of directors. Messrs. Kittrell and Nutter were initially identified by Russell Reynolds Associates, Inc. a third party search firm engaged by the board of directors for the specific purpose of identifying highly qualified candidates for potential nomination to the board.2009 Annual Meeting. The nominees for election of directors at the annual meeting include ten independent directors, as defined in the applicable rules for companies that trade on the New York Stock Exchange (“NYSE”), and the President and Chief Executive Officer of the Company. The board of directors does not anticipate that any of the nominees will be unable to serve, but if any nominee is unable to serve, the proxies will be voted in accordance with the judgment of the person or persons acting thereunder.

The following chart gives information about all nominees (each of whom has consented to being named in the proxy statement and to serving if elected). The dates shown for service as a director include service as a director of our corporate predecessors NiSource Inc. (incorporated in Indiana) and Northern Indiana Public Service Company.

At the 2007 Annual Meeting, inIn order to be elected, all nominees must receive more votes cast in favor of such nominee than votes cast against such nominee.

For many years, a substantial majority of the Company’s board of directors has been comprised of “independent” directors. In order to assist the board in making its determination of director independence, the board has adopted categorical standards of independence consistent with the standards contained in Section 303A.02(b) of the NYSE Corporate Governance Listing Standards. The Company’s categorical standards of independence are set forth on Exhibit A to this proxy statement and are listed in the Company’s Corporate Governance Guidelines, a copy of which can be found on the Company’s website athttp://ir.nisource.comir.nisource.com..

The board of directors has affirmatively determined that all of the members of the board (except Messrs. Neale andMr. Skaggs) and all nominees (except for Mr. Skaggs) are “independent directors” as defined in Section 303A.02(b) of the NYSE Listing Standards and meet the standards for independence set by the board.

The non-management members of the board met separateseparately from management threetwo times in 2006.2007. Mr. Ian M. Rolland serves as lead, or presiding director at the executive sessions of the non-management directors. All of thenon-management members (except for Mr. Neale) are “independent” directors. The independent directors met two times in 2006 in executive session.

Stockholders and other interested persons may communicate any concerns they may have regarding the Company as follows:

The board of directors of the Company has adopted a Code of Ethics (the “Code”) to promote (i) ethical behavior including the ethical handling of conflicts of interest, (ii) full, fair, accurate, timely and understandable disclosure, (iii) compliance with applicable laws, rules and regulations, (iv) accountability for adherence to the Code and (v) prompt internal reporting of violations of the Code. The Code satisfies applicable Securities and Exchange Commission and NYSE requirements and applies to all directors, officers (including the Company’s principal executive officer, principal financial officer, and principal accounting officer and controller) and

The board of directors adopted Corporate Governance Guidelines on March 23, 2004, which were amended and restated on November 28, 2006. The Corporate Governance Committee is responsible for reviewing and reassessing the Corporate Governance Guidelines periodically and will submit any recommended changes to the board of directors for its approval. A copy of the Corporate Governance Guidelines can be found on the Company’s website athttp://ir.nisource.comand will be provided by the Company to any stockholder who requests it in writing from the Company’s Vice President, Administration and Corporate Secretary.

The board of directors of the Company met 10seven times during 2006.2007. In May 2007, the Corporate Governance Committee recommended to the board the restructuring of its standing committees. The board approved the creation of the Finance Committee to assist the board in the review of the Company’s financial plans and recommended the elimination of the Executive Committee and the Public Affairs and Career Development and Executive Committee. The responsibilities of the Public Affairs and Career Development Committee were divided between the Corporate Governance Committee and the Officer Nomination and Compensation Committee. The board now has the following sixfive standing committees:

During 2006,2007, each director attended at least 80%77% of the combined total number of the Company’s board meetings and the meetings of the committees on which he or she was a member.member except for Mr. McCracken who passed away on February 7, 2008. Pursuant to the Company’s Corporate Governance Guidelines, all directors are expected to attend the annual meeting of the Company’s stockholders. All incumbent directors (except Dr. Beering)Messrs. McCausland and McCracken) who were on the board in May 20062007, attended the 20062007 Annual Meeting of Stockholders.

The Audit Committee met eight times in 2006.2007.  The Audit Committee is responsible for monitoring:

The Environmental, Health and Safety Committee met twice during 2006.2007. This committeeCommittee reviews the status of environmental compliance of the Company and considers environmental public policy issues as well as health and safety issues affecting the Company. The Company adopted a charter for this committeeCommittee in 2001.2001, a copy of which can be found on the Company’s website athttp://ir.nisource.comand will be provided by the Company to any stockholder who requests it in writing from the Company’s Vice President, Administration and Corporate Secretary. Dr. Woo was elected as Chair of the Committee on May 8, 2007 replacing Mr. Welsh was Chairman andwho retired from the board on May 8, 2007. Messrs. McCracken Thompson and Young were members of the Environmental, Health and Safety Committee throughout 2006. Mr. McCausland2007. Ms. Coleman has served on the Committee since his electionher appointment to the board on August 28, 2007, and Dr. Beering and Mr. Nutter have served on the Committee since being elected to the Committee on March 28, 2006.May 8, 2007.

The Public Affairs and Career Developmentboard of directors created the Finance Committee on May 8, 2007. The Committee met twice in 2006.three times during 2007. This committee reviewsis responsible for monitoring the activitiesfinancial plans of the Company with regard to charitablecompany, capital structure and other contributions, employment policies, and stockholder proposals concerning matters relating tofinancial risk. The board of directors adopted a written charter for the Committee on May 8, 2007, a copy of which can be found on the Company’s responsibilitieswebsite athttp://ir.nisource.comand will be provided by the Company to any stockholder who requests it in writing from the Company’s Vice President, Administration and Corporate Secretary. Mr. Thompson was elected as a corporate citizen. Dr. Woo was Chair of the Committee and Dr. Beeringcommittee on May 8, 2007 and Messrs. Foster, Kittrell, McCracken, and Rolland were members ofNutter have served on the Public Affairs and Career Development Committee in 2006.committee since it was created.

The Officer Nomination and Compensation Committee met four times in 2006.2007. The board of directors adopted the current charter for the Officer Nomination and Compensation Committee on January 23, 2004, which was amended on May 8, 2007, a copy of which can be found on the Company’s website athttp://ir.nisource.comand will be provided by the Company to any stockholder who requests it in writing from the Company’s Vice President, Administration and Corporate Secretary. Pursuant to the charter, this committee advises the board with respect to nomination, evaluation, compensation and benefits of the Company’s executives. In that regard, the committee:

The Officer Nomination and Compensation Committee was increased from threefour directors to fourfive in 2006.2007. All of the directors serving on the Committee are (i) independent as defined under the applicable NYSE rules and meet the additional independence standard set forth in the Corporate Governance Guidelines, (ii) “non-employee directors” as defined under theRule 16b-3 of the Securities Exchange Act of 1934, and (iii) “outside directors” as

The table below sets forth all compensation earned by NiSource’s non-employee directors in 2006.2007. Mr. Skaggs is the Company’s only employee director and does not receive any separate compensation for his service on the board. Messrs. Neale and Welsh did not stand for election to the board in May 2007, Mr. McCausland resigned from the board on July 23, 2007, and Ms. Coleman was appointed to the board on August 28, 2007.

The following table contains information about the beneficial ownership of the Company’s common stock as of March 1, 2007,3, 2008 for each of the directors, nominees and named executive officers, and for all directors and executive officers as a group.

The Company’s executive compensation program is designed to attract and retain highly qualified executives and provide compensation in a manner that is aligned with the Company’s strategic plan to create additional stockholder value. Our compensation policy is designed to relate total compensation to corporate performance, while remaining competitive with the compensation practices of competitors in the energy industry and, to a lesser extent, general industry. Accordingly, the Committee’s philosophy is to provide a competitive total compensation program based on the approximate 50th percentile of the range of compensation paid by similar energy companies, taking into account the Company’s performance and individual performance.

The Committee generally determines all elements of compensation on an annual basis, currently in January. On occasion, the Committee will consider compensation at other times of the year — for example, when new executives are being considered for employment by the Company or when the Committee deems it appropriate to consider an adjustment to a particular executive’s compensation.

The Committee engaged the services of Hewitt Associates (“Hewitt”), an independent executive compensation consulting firm, to advise it with respect to compensation design, comparative compensation practices, and other compensation matters. Under separate agreements, Hewitt also provides other services to the Company, including benefits administration, actuarial services, and health and welfare consulting. The Committee’s decision to engage Hewitt to provide consulting services to the Committee is independent of the Company’s engagement of Hewitt for these other services. The Committee has instructed Hewitt that itits executive compensation consultant is to act independently of management with respect to the executive compensation services Hewitt provides to the Committee. The same executive compensation consultant has worked with the Committee for several years. He does not receive any incremental compensation from Hewitt for Hewitt’s provision of any other services to the Company and he does not receive any individual incentives for cross-selling other Hewitt services. He does not manage the overall relationship with NiSource, and the Committee reasonably believes that his judgments are not in any way influenced by the other work Hewitt performs. The Committee meets with Hewittthe executive compensation consultant in executive session without management present at various times throughoutpresent.

For its 2007 compensation considerations, the year.Committee engaged Hewitt to provide the Committee survey information for (1) a group of energy companies, including gas, electric, combination utility, and natural gas transmission companies and (2) a diversified group of companies representing general industry. The Committee primarily considers the survey information for the energy companies. The Committee considers, to a lesser extent, general industry information for those executive positions where the Company would compete among general industry firms for executive talent. For its 2007 considerations, the Committee approved the following executive compensation comparative groups:

In making its recommendations concerning the various components of executive compensation, the Committee takes into account various factors, including:

In making its compensation decisions for the CEO, the Committee considers the Corporate Governance Committee’s evaluation of the CEO’s performance. Under our governance structure, the Corporate Governance Committee has the responsibility to evaluate the CEO’s performance. The Corporate Governance Committee also meets with the CEO and the Senior Vice President, Human Resources to review the performance of the other senior executives, including all ofexecutives. In this meeting, the named executive officers (other than Mr. Grossman). This meetingCorporate Governance Committee also includes a review ofreviews the Company’s succession plans.plans for senior executives. Because all of the members of the Committee are also members of the Corporate Governance Committee, each member of the Committee participates in this performance review discussion.

TheFor 2007, the Committee considersconsidered the performance reviews of senior executives including all of the named executive officers (other than Mr. Grossman), in making their compensation recommendations.recommendations to the board. The Committee recommends adjustments to compensation based upon the individual’s contributions to the Company, the achievement of

With respect to Mr. Campbell, joined NiSource in 2005. Because they were new to their positions, the Committee determined that an increase in base compensation in 20062007 was not warranted.warranted because Mr. Campbell’s base compensation was near the 50th percentile for similar positions within the Energy Company Comparative Groups and because Mr. Campbell would receive a guaranteed bonus payment for 2007 pursuant to his employment agreement with the Company.

During 2006, theThe Committee recommended to the Board that Mr. O’Donnell’s base salary be increased to $440,000.$450,000 effective March 1, 2007 (the Company generally makes base salary adjustments for exempt employees effective March 1 of each calendar year). The Committee’s reasons for this recommendation were:were that Mr. O’Donnell’s base salaryO’Donnell had beenperformed effectively as Chief Financial Officer and that the same since 2001; his individual performance and contribution to the Company warranted an increase; and the newproposed base salary was near the 50th percentile for similar positions within the Energy Company Comparative Group.

Messrs. Skaggs, O’Donnell, and Campbell determined that Mr. Grossman’s base salary should be increased from $235,000$245,000 to $245,000$252,500 effective March 1, 2007 because Mr. Grossman had made significant contributionscontinued to effectively oversee the Company in

Mr. Skaggs requested that he not receive an incentive payout duefor 2007. Although the Company accomplished the financial performance for a payout under the 2007 incentive plan, the market price of the Company stock declined during 2007. Further, as described below, Mr. Skaggs, like other recipients of the 2007 LTIP grant, received an increase in the number of shares awarded to him as a result of the Company’s 2007 financial performance. Mr. Skaggs explained to the Committee that in light of the Company’s failure to achievestock price and his receipt of additional shares under the initial $1.50 trigger.2007 LTIP grant he did not believe that an incentive payout was warranted. The Committee and the Boardboard agreed to this request.

WithMr. Skaggs made recommendations to the Committee with respect to the award of incentive payouts to senior executives, including all of the named executive officers, for 2006, the2007. The Committee considered Mr. Skaggs’ recommendations, as well as overall corporate performance, the contributions of the individual executives, the individual executive’s incentive range and the funding level of the incentive pool at the reduced “trigger” level approved by the board. The Committee, in turn, made its recommendation to the board. The board in November.accepted all of the Committee’s recommendation for incentive payouts.

The Committee recommendedaccepted Mr. Skaggs’ recommendation that Mr. O’Donnell receive an incentive payout of $154,000$185,000 based upon his performance and his individual contributions to the Company’s performance. TheseHis contributions included accomplishing a decreasethe refinancing of $800 million in interest expense in 2006,Company debt on favorable terms, maintaining investment grade credit ratings, enhancingand the ongoing enhancement of the Company’s risk management and capital expense programs, and overseeing the amendment of the agreement between the Company’s Whiting Clean Energy unit and BP.program.

The Committee recommendedaccepted Mr. Skaggs’ recommendation that Mr. Helms receive an incentive payout of $160,000$225,000 based upon his performance and his individual contributions to the Company’s performance. TheseHis contributions included the developmentdelivery of key growth projects, the attainment of key revenue metrics, the divestiture of certain non-core assets, and implementationthe reorganization of a growth strategy in our Gas Transmission and Storage segment. In 2006, that

The 2007 contingent stock award iswas contingent both upon the Company’s performance in 2007 and a service requirement of two years thereafter. In order for participants to receive an award of shares, the Company must achievehave achieved performance in 2007 of at least $1.35 of basic earnings per share from net operating earnings (after accounting for the cost of the incentive plan). If that threshold level of performance iswas reached, the individual executive willwould earn 100% of the grant designated by the board.Committee. If that threshold level of performance iswas exceeded, the executive cancould earn up to a maximum of 150% of the grant designated by the Committee. In order for an executive to receive 150% of the grant, the Company must achieveThe Company’s performance in 2007 of at least $1.40 of basic$1.37 net operating earnings per share from net operating earnings (after accounting forresulted in the costparticipants receiving 120% of the incentive plan).number of shares awarded. In addition to the performance restriction, the shares are also subject to a service restriction of two years. Generally, the earned shares wouldwill vest on December 31, 2009, provided the executive remains employed by the Company through December 31, 2009.

The Committee believes that the 2007 contingent stock award grants:

Benefits:  The Company provides a variety of health and welfare benefits to its employees, including a number of health care plans, vision, dental, long-term disability and life insurance. The named executive officers are eligible to participate in these plans as employees of the Company. The Company also has the following plans.

Defined Contribution Plans.  Under the NiSource Inc. Retirement Savings Plan, the Company’s 401(k) plan that covers most of the Company’s non-union employees (including the named executive officers), named executive officers can defer a portion of their base salary and receive employer matching contributions that vary according to the terms of the respective pension plans in which they participate. In addition, the Company sponsors the Savings Restoration Plan for NiSource Inc. and Affiliates. The Savings Restoration Plan provides for a supplemental benefit equal to the difference between (i) the benefit an employee would have received under the NiSource Inc. Retirement Savings Plan had such benefit not been limited by sections 415 (a limitation on annual contributions under a defined contribution plan of $44,000)$45,000) and 401(a)(17) (a limitation on annual compensation of $220,000)$225,000) of the Internal Revenue Code, reduced by his or her deferrals into the Company’s Executive Deferred Compensation Plan, minus (ii) the actual benefit he received under the Retirement Savings Plan. All of the named executive officers are eligible to participate in the Savings Restoration Plan.

Executive Deferred Compensation Plan.  The Company sponsors the Executive Deferred Compensation Plan whereby employees at certain job levels and other key employees designated by the Committee, including the named executive officers, are eligible to participate. Participants who elect to participate may elect to defer and invest between 5% and 80% of their compensation and between 5% and 100% of their incentive payment on a pre-tax basis. Employees designate how their contributions will be invested; the investment options generally are the same as those available under the Company’s 401(k) plan except that there are additional investment options for former Bay State Gas Company Plan participants and transferred Columbia Energy Group Plan accounts. Employee contributions and any earnings thereon are 100% vested.

Pension Plans.  The Company and its affiliates sponsor several qualified pension plans for their respective employees. The plan in which an employee participates, including each of the named executive officers, differs depending upon the affiliate into which the employee was hired. The pensions are payable out of a trust fund, which consists of contributions made by the Company and the earnings of the fund. Over a period of years the contributions are intended to result in overall actuarial solvency of the trust fund. The pension plans of the Company have been determined by the Internal Revenue Service to be qualified under Section 401 of the Internal Revenue Code.

MessrsMessrs. Skaggs, O’Donnell and Grossman participate in the Retirement Plan of Columbia Energy Group Companies, becauseas they were participants in this plan at the time of the acquisition of Columbia Energy Group by NiSource. Messrs. Campbell and Helms participate in the NiSource Pension Plan because they were hired into NiSource Corporate Services Company.

Both the Retirement Plan of Columbia Energy Group Companies and the NiSource Pension Plan provide for a “final average pay” benefit. Both plans also adopted a cash balance feature, whereby an executive will have a benefit consisting of his or her opening account balance plus annual pay and interest credits to his or her cash balance account. Pay credits equal a percentage of compensation based on the participant’s combined age and service. Interest is credited to his or her account based on the interest rate on30-year Treasury securities, as determined by the Internal Revenue Service, for the September immediately proceeding the first day of each year, but not less than 4%. At the time the plans added this cash balance benefit, then current employees were provided a choice between receiving the final average pay benefit or receiving the cash balance benefit.

Both Pension Plans were amended and restated effective January 1, 2006 to add a new cash balance feature, for exempt employees only. Participants in the plans prior to October 1, 2005 were entitled to elect to remain in the “final average pay feature” or the original cash balance feature, or to begin participating in the new cash balance feature. Participants hired into exempt employee positions on or after October 1, 2005 and prior to January 1, 2006 automatically participated in the original cash balance feature until January 1, 2006, when they automatically began participating in the new cash balance feature. Participants hired into exempt employee positions on or after January 1, 2006 automatically participate in the new cash balance feature. The difference between the original cash balance feature and the new cash balance feature is that the pay credits provided under the new cash balance feature are a lower percentage of compensation based upon a participant’s combined age and service. Participants in the new cash balance feature receive an enhanced matching contribution under the Retirement Savings Plan. As of January 1, 2011, all participants who are exempt employees will participate in the new cash balance feature and will receive the enhanced matching contribution under the Retirement Savings Plan.

Messrs. Skaggs and Grossman elected to continue to receive the final average pay benefit under the Retirement Plan of Columbia Energy Group Companies. The formula for a retiree’s monthly retirement benefit at age 65 under the Retirement Plan of Columbia Energy Group is (i) 1.15% of the retiree’s final average compensation that does not exceed 1/2 of the taxable Social Security wage base times years of service up to 30, plus (ii) 1.5% of the retiree’s final average compensation in excess of 1/2 of the taxable Social Security wage base times years of service up to 30, plus (iii) 0.5% of the retiree’s final average compensation times years of service between 30 and 40.

Messrs. O’Donnell, Helms, and Campbell elected to receive the new cash balance benefit.

The Company also sponsors the Pension Restoration Plan for NiSource Inc. and Affiliates. The Pension Restoration Plan is a nonqualified defined benefit plan. The plan includes all employees of the Company and its affiliates (including all of the named executive officers) whose benefits under the applicable tax-qualified pension

Supplemental Executive Retirement Plan.  The Company also has a Supplemental Executive Retirement Plan which applies to those officers and other employees selected by the board of directors to participate in the plan. Benefits from this plan are to be paid from the general assets of the Company. For each officer and employee who first participated in the Supplemental Executive Retirement Plan prior to January 23, 2004, the Supplemental Executive Retirement Plan provides a retirement benefit at age 62, or age 60 and the completion of at least 25 years of service of the greater of (i) 60% of final average pay (prorated for less than 20 years of service) and an additional 0.5% of final average pay per year between 20 and 30 years of service, less 5% of Primary Social Security Benefits (prorated for less than 20 years of service) or (ii) the benefit formula under the NiSource qualified pension plan. Final average pay is determined by dividing the participant’s total compensation during the 60 consecutive months within the last 120 months of service that produce the highest result, by the number of months for which such compensation was received. For purposes of the Plan, total compensation is compensation as defined in the NiSource Pension Plan (but disregarding the limitations required by Code Section 401(a)(17) and the 50% limitation applicable to bonuses). In either case, the benefit is reduced by the actual pension payable from the qualified pension plan covering the officer or employee and benefits earned under the Pension Restoration Plan for NiSource Inc. and Affiliates. In addition, the Supplemental Executive Retirement Plan provides certain early retirement and disability benefits and pre-retirement death benefits for the spouse of a participant. Mr. O’Donnell is the only named executive officer who participates in the Supplemental Executive Retirement Plan and his participation is based on his service and compensation with the Company and its affiliates from and after November 1, 2000.

Perquisites:  Perquisites are not a principal element of the Company’s executive compensation program. The Company’s perquisites are limited in number and modest in dollar value in comparison to its principal elements of compensation. They are intended to assist executive officers in the performance of their duties on behalf of the Company or otherwise to provide benefits that have a combined personal and business purpose.

The Committee annually reviews the types and costs of perquisites provided by the Company to its executive officers to be sure that the perquisites are in line with the Company’s compensation philosophy. The Company provided the following perquisites to certain of its executive officers in 2006:2007:

The Company reimburses the named executive officers for the payment of personal income taxes in connection with the relocation services and related expenses and travel expenses. Although the Company has determined to discontinue providing annual physical examinations and the leasing of automobiles for its named executive officers, the Company has decided not to discontinue these perquisites for those executives who currently receive them under prior practice.

Disclosure of the dollar value of each perquisite provided to the named executive officers in 20062007 is set forth in the table in footnote 7 to the Summary Compensation Table presented elsewhere in this proxy statement.

Effective March 1, 2007, the Company established stock ownership guidelines for its senior executives. The ownership requirement for our CEO is five times his annual base salary. At the end of 2006,2007, Mr. Skaggs held stock and stock equivalent units with a value of $4,703,353, thereby exceedingthat exceeds his ownership guideline. The other senior executives have a stock ownership guideline of three times their respective annual base salary. At the end of 2006,2007, Mr. O’Donnell held stock and stock equivalent units that exceeded this guideline. The Committee expects senior executives to attain their ownership guideline within five years of becoming subject to the stock ownership guidelines policy.

Section 162(m) of the Internal Revenue Code provides that annual compensation in excess of $1,000,000 paid to the chief executive officer or any of the three other most highly compensated named executive officers (excluding the chief financial officer), other than compensation meeting the definition of “performance based compensation,” will not be deductible by a corporation for federal income tax purposes. The Committee does not anticipate that the limits of Section 162(m) will materially affect the deductibility of compensation paid by the Company in 2006.2007. However, the Committee will continue to review the deductibility of compensation under Section 162(m) and related regulations.regulations published by the IRS. The Committee retains the discretion to amend or not amend any compensation arrangement to comply with Section 162(m)’s requirements for deductibility in accordance with the terms of such arrangements and what it believes is the best interest of the Company.

The Company intends to continue to compensate our executives in accordance with performance. As noted above, both the 2007 annual incentive opportunity and the 2007 long-term incentive opportunity for senior executives iswas based upon the Company attaining pre-established goals. The Committee believes that its overall executive compensation program has been, and will continue to be, successful in providing competitive compensation sufficient to attract and retain highly qualified executives, while at the same time encouraging the executive officers to strive toward the creation of additional stockholder value.

The Officer Nomination and Compensation Committee of the Board of Directors has furnished the following report to the stockholders of the Company in accordance with rules adopted by the Securities and Exchange Commission.

Summary.  The following table summarizes compensation for services to NiSource and its subsidiaries for 20062007 awarded to, earned by or paid to the CEO, Chief Financial Officer and three other most highly compensated executive officers as of December 31, 20062007 (collectively these individuals constitute the “Named Officers”).