| February, 2004 |
| FORWARD-LOOKING STATEMENTS "Safe Harbor" Statement This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include statements regarding the intent, belief or current expectations of the Company and its management. Although NiSource Inc. believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Readers are cautioned that the forward-looking statements in this presentation are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: weather, fluctuations in supply and demand for energy commodities, growth opportunities for NiSource's businesses, increased competition in deregulated energy markets, dealings with third parties over whom NiSource has no control, actual operating experience of acquired assets, the regulatory process, regulatory and legislative changes, changes in general economic, capital and commodity market conditions, and counter-party credit risk. February, 2004 |
| A SUPER REGIONAL INTEGRATED GAS COMPANY Virginia West Virginia Tennessee Gulf of Mexico Mississippi Louisiana Texas Kentucky Ohio Pennsylvania Maryland New Jersey New York Maine Indiana Mass ..N.H. Strategic Location 30% Population / 40% of U.S. Energy Consumption Third Largest Gas Distribution Company in the U.S. 3.3 Million Customers - 9 States Fourth Largest Gas Pipeline Company in the U.S. Over 16,000 Miles Interstate Pipelines One of the Largest Gas Storage Networks in the U.S. Over 646 Bcf (Market Area) Mid Size Regional Electric Business Over 440,000 Customers 3,392 MW Generating Capacity 100% of Operating Income from Regulated Operations |
| NISOURCE 2003 CHALLENGES AND RESULTS Actions Focus on Regulatory Opportunities Standardize Utility/Pipeline Operations Reduce O&M Expenses Control Capital Spending Equity Offering - Fall 2002 Trim Dividend 20% - Nov. 2003 Target Payout at 55% Range Reduce Debt Sale of Non-Core Assets Reduce Interest Expense Challenges Grow Earnings Strengthen Balance Sheet Adequate Liquidity Credit Ratings Results Rating Agencies' Affirmation of Investment Grade Credit Ratings Reduced Business Risk Profile Solid 2003 Performance |
| Columbia LNG Columbia Retail Columbia Electric Market Hub Partners Miller Pipeline Columbia Propane Columbia Petroleum Portland Natural Gas Transmission SM&P/UTI - Locating Business IWC Resources - Water Utility TPC - Gas Trading Energy USA Propane Columbia Energy Resources - E&P Business Primary Energy - Steel Mill Cogeneration Facilities Over $2.3 Billion in Non-Core Asset Sales EXITING NON-CORE ACTIVITIES BUSINESSES SOLD PRE-MERGER TO THE PRESENT |
| 2003 Operating Income BALANCING OUR RISK 100% Of Operating Income From Regulated Businesses Gas Distribution Gas Transmission Electric Operations 43 34 23 Gas Transmission 34%. Gas Distribution 43% Electric Operations 23% |
| 1999 2000 2001 2002 2003 11920 10084 9783 8734 8471 IMPROVING OUR PRODUCTIVITY Staffing at our Core Businesses Core businesses reflect gas distribution, electric operations, gas transmission and corporate. |
| DEMONSTRATING CAPITAL DISCIPLINE 1995 1996 1997 1998 1999 0.46 0.53 0.59 0.49 0.62 1999 2000 2001* 2002* 2003* 2004E 613.5 554 531 527.5 569.9 519 Pre-merger Post-merger ($ in millions) Capital Expenditures* Capital Expenditures Post-Merger Do Not Include Capex for Discontinued Operations |
| 2004E Capital Expenditures $519 Million $113 Million Growth Capex 2004E 73% Gas Distribution 5% Gas Transmission 19% Electric Operations 3% Other WHILE PROVIDING FOR GROWTH FROM INTERNAL SOURCES Gas Distribution Gas Transmission Electric Operations Other 40 27 28 5 |
| DIVIDEND PAYOUT RATIO 1998 1999 2000 2001 2002 2003* 2004E** NISOURCE 0.6 0.791 0.964 1.1 0.65 0.67 0.55 * 2003 Based on EPS from continuing operations ** Target Future Payout at 55% Range |
| Earnings from Continuing Operations: Income from Continuing Operations Were $425.7 Million or $1.64 Cents Per Share Compared to $398.1 Million or $1.89 Cents Per Share in 2002 Colder than Normal Winter Weather Increased Deliveries of Natural Gas Offset by Lower Electric Sales as a Result of Mild Summer Weather Baseline O&M Costs were Essentially Flat Compared to 2002 Reduced Interest Expense of Approx. $52 Million Per Share Results Diluted by Issuance of 54.5 Million Shares of Common Stock Non-Core Assets Sold During 2003: Gas Exploration & Production, Primary Energy Steel Mill Cogeneration Facilities, and Columbia Service Partners Assets Sold Asset Sales Generated Approx. $305 Million in After-Tax Proceeds and Approx. $274 Million of Debt Assumed by Buyers STRONG 2003 FINANCIAL PERFORMANCE |
| STRENGTHENING OUR GAS DISTRIBUTION Industry-Leading Scale Operating as One Distribution Business Diversification of Customers and States Favorable Overall Regulatory Environment Customer Choice Bad Debt Tracker-Ohio Strong Regulatory Relationships Incentive Opportunities Vertical Integration With Transmission / Storage |
| INTEGRATING OUR TRANSMISSION / STORAGE One of the Largest Integrated Systems in U.S. Over 646 Bcf of Storage (Market Area) Majority of Capacity Sold to LDCs Competitive Cost Structure Vs. Other Pipeline Systems in the Mid-Atlantic Region Unique Web-like Network Benefits from Integrated Storage and Access to Supply Proposed Millennium Pipeline Project to Supply Gas to New York / New England Markets Proposed Millennium Pipeline |
| CAPITALIZING ON OUR ELECTRIC GATEWAY Michigan Market ComEd Hub Cinergy Hub SERC NPCC ECAR MAAC MAIN MAPP SPP NIPSCO Vertically Integrated Utility Near-Term Deregulation Unlikely Low-Cost Portfolio of Coal-Fired Generation (3,059 MW) Interconnect With Five Surrounding Control Areas Ability to Market Excess Energy Rate Settlement in Place Until 2006 Environmental Tracker Approved to Recover NOx Expense |
| POSITIONING NISOURCE FOR SOLID 2004 EARNINGS Net Income From Continuing Operations ($ in millions) EPS $1.89 $1.64 Assumes Normal Weather $0.93 $1.65 $1.70 E* |
| WITH AN IMPROVING CAPITAL STRUCTURE |
| 2000 2001 2002 2003 8585 8330 6988 6797 AND A STRONGER BALANCE SHEET TOTAL DEBT IN MILLIONS |
| Stable Base of Regulated Earnings 100% of Operating Income Generated by Low-risk Regulated Businesses Regulated Energy Delivery Service to Nearly 3.7 million Customers Across 9 States Continue Savings Initiatives Centralized Functions Standardizing Operations Reducing Span of Control Improved Liquidity and Credit Profile Stable Investment Grade Credit Ratings Further Strengthen Balance Sheet WITH SOLID FUNDAMENTALS |
| Centralize Regulatory Strategy - Focused On Growth Create Regulatory Opportunities Around Assets that Benefit Customers and Shareholders Collaborative Efforts within Each State Rate Trackers ... Environmental, Operational, Bad Debt, Bare Steel, Pipeline Expansion Standardize All Operations - Reducing O&M Costs Operate as One Distribution Company - Across Nine States Standardize Engineering, Purchasing and Operating Procedures Move to Best-in-Class Processes - Cost Per Customer - in Conjunction with Customer Service Quality AND A MANAGEMENT TEAM FOCUSED ON THE FUTURE |
| THE NISOURCE MARKET Virginia West Virginia Tennessee Gulf of Mexico Mississippi Louisiana Texas Kentucky Ohio Pennsylvania Maryland New Jersey New York Maine Indiana Mass ..N.H. Strong Assets Located in Growth Markets Low Business Risk Profile - 100% Regulated - 3.7 Million Distribution Customers Stronger/De-levered Balance Sheet Stable Investment Grade Credit Improved Liquidity Position |