EXHIBIT 99.1
                                                             ------------

                                               RESPONDENT'S EXHIBIT PRL-1
                                              ---------------------------

                              STATE OF INDIANA

                    INDIANA UTILITY REGULATORY COMMISSION


   IN THE MATTER OF THE PETITION OF    )
                                       )
   THE CITY OF GARY, INDIANA           )
   REQUESTING THE INDIANA              )
   UTILITYREGULATORY COMMISSION        )
   ESTABLISH THE TERMS AND             )
   CONDITIONS OF THE SALE OF CERTAIN   )      Cause No. 42643
   PROPERTY OF NORTHERN INDIANA        )
   PUBLIC SERVICE COMPANY TO THE       )
   CITY OF GARY AND FOR A              )
   DETERMINATION OF THE VALUE OF       )
   SUCH PROPERTY UNDER INDIANA         )
   CODE SECTIONS 8-1-2-92 AND 8-1-2-93 )
   RESPONDENT: NORTHERN INDIANA        )
   PUBLIC SERVICE COMPANY.             )



            =====================================================

                        PREPARED DIRECT TESTIMONY OF
                         PIERRE R.H. "PETE" LANDRIEU
            ON BEHALF OF NORTHERN INDIANA PUBLIC SERVICE COMPANY

            =====================================================





                                 Daniel W. McGill, Atty No. 9489-49
                                 Claudia J. Earls, Atty No. 8468-49
                                 Barnes & Thornburg LLP
                                 11 S. Meridian St.
                                 Indianapolis, IN 46204
                                 Telephone: (317) 231-7229
                                 Fax: (317) 231-7433
                                 Email: dmcgill@btlaw.com

                                 Attorneys for Respondent
   July 9, 2004                  NORTHERN INDIANA
                                 PUBLIC SERVICE COMPANY



          PREPARED DIRECT TESTIMONY OF PIERRE R.H. "PETE" LANDRIEU
          --------------------------------------------------------

   I.   INTRODUCTION

   Q:   PLEASE STATE YOUR NAME, OCCUPATION, AND BUSINESS ADDRESS.

   A:   My name is Pierre R.H. "Pete" Landrieu. I am President of PLP3, a

        consultancy specializing in electric power generation,

        transmission, wholesale electric markets, Independent System

        Operators ("ISOs"), Regional Transmission Organizations ("RTOs")

        and associated regulatory policies.  My business address is 10

        Sentinel Drive, Basking Ridge, N.J.  07920.



   Q:   WHAT IS YOUR EDUCATIONAL BACKGROUND?

   A:   I graduated from Lehigh University with a Bachelor of Science

        degree in Electrical Engineering.



   Q:   PLEASE DESCRIBE YOUR EMPLOYMENT EXPERIENCE.

   A:   In 1963, I began a 40 year career at Public Service Electric and

        Gas Company ("PSE&G"), a large combination electric and gas

        utility in New Jersey, where I performed transmission and

        distribution system planning and engineering studies and

        contributed to the construction and operation of fossil and

        nuclear generating facilities.  I was Project Manager for the

        building of the Hope Creek Nuclear Generating Station during the

        early 1980s.  I became Vice-President of Engineering and

        Construction in 1986; Vice-President of Fossil Generation in

        1989; Vice-President of Electric Transmission in 1995 and Vice-


                                     2




        President of Federal Regulatory Policy in early 2003.  I retired

        from PSE&G in August 2003.

             I have experience managing a variety of business components

        of the electric industry, including generation and transmission

        assets, industry restructuring activities, wholesale electric

        markets, PJM and system reliability.

             For six years I was the executive in charge of PSE&G's

        fossil-fueled Generation Business, during which time I installed

        environmental upgrades on three coal generating stations,

        converted a former coal station to combined cycle operation and

        converted simple cycle gas turbines to combined cycle operation.

        The environmental upgrades I directed included installation of

        low NOx burners with over-fire air, electrostatic precipitators,

        selective catalytic reduction technology, waste water treatment

        facilities, cooling towers and pond liners.  In the course of my

        career I have participated in the operation, design, construction

        and start-up of over forty electric generation units including

        combustion turbines ("CTs"), combined cycle, hydro, coal-fired

        steam units and nuclear units.

             For five years I served on the Board of Directors of Clean

        Air Action, a business venture formed in the early 1990s to

        promote and profit from trading and banking of air emissions.

             I have been involved with the PJM Mid-Atlantic power pool

        and ISO for over thirty five years and participated in its

        restructuring as PJM evolved from a tight power pool into an ISO

        and subsequently into a RTO.  I participated in PJM task forces

                                     3




        in the 1960s and 1970s which culminated in papers published by

        the Institute of Electrical and Electronic Engineers.  During the

        1990s, I served as Chairman of the PJM Management Committee, the

        owners committee charged with directing the activities of PJM.

        In 1995, after the Federal Energy Regulatory Commission ("FERC")

        issued an "open access" Notice of Proposed Rulemaking that

        accelerated the restructuring of the electric industry, I chaired

        the PJM Market Issues Resolution Group that developed and planned

        the design for PJM's conversion from a tight power pool to an ISO

        and electricity market.  In December 1995, I testified at FERC

        regarding the planned design features of the PJM ISO.  I

        participated in the preparation of filings at FERC that led to

        the approval of PJM as an ISO in 1996.

             I have participated for the last eight years in various PJM

        committees and testified at U.S. Senate hearings regarding PJM

        and workable wholesale electricity markets.  In 2003, I testified

        at FERC regarding transmission-generator interconnections on

        behalf of the Edison Electric Institute, the industry association

        of investor owned utilities in the United States.

             For eight years during the period of electric industry

        unbundling and restructuring, I led PSE&G's Transmission Business

        Unit.  During that time, I was involved in three separate

        initiatives to develop independent stand-alone transmission

        companies.  In that connection I worked extensively with the

        financial community regarding the valuation and financing of

        transmission companies.

                                     4




             I have made presentations to FERC, the Harvard Electric

        Policy Group, congressional representatives and numerous industry

        forums regarding the business propositions and issues surrounding

        transmission, generation and wholesale market issues.

             For the past six years I served as Chairman of the Mid-

        Atlantic Area Council ("MAAC"), the Regional Council with

        oversight of reliability in the PJM region.  I represented MAAC

        in the Fact Finding investigation by the Department of Energy

        ("DOE"), FERC and the North American Electric Reliability Council

        ("NERC") into the August 14, 2003 electric blackout in the

        Northeast.

             In August 2003 I retired from PSE&G and established a

        consultancy specializing in electric power issues and policy.



   Q:   HAVE YOU PREVIOUSLY TESTIFIED BEFORE OTHER REGULATORY COMMISSIONS

        AND COMMITTEES?

   A:   In addition to the aforementioned FERC testimony, I have

        testified before the New Jersey Board of Public Utilities and the

        Senate Committee on Energy and Natural Resources.



   Q:   WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?

   A:   I was retained by Northern Indiana Public Service Company

        ("NIPSCO") to review and express an opinion on the advisability

        of starting up NIPSCO's Dean H. Mitchell Generating Station

        ("Mitchell"), giving consideration to NIPSCO's load profile,



                                     5




        current and impending operating and regulatory requirements and

        the evolving electric energy marketplace.



   Q:   PLEASE DESCRIBE THE INVESTIGATION YOU MADE AND THE INFORMATION

        YOU REVIEWED IN PERFORMING THIS ANALYSIS AND IN DEVELOPING YOUR

        OPINION.

   A:   I reviewed the testimony of NIPSCO's witnesses in this proceeding

        and discussed the issues with them and other representatives of

        the Company.  I have reviewed NIPSCO's FERC Form One and other

        documents relating to the issues.  I have also reviewed documents

        provided by PJM regarding the planned PJM/MISO joint and common

        market.



   Q:   HOW DOES THE STATE OF THE PJM WHOLESALE ENERGY MARKET COMPARE TO

        MISO'S MIDWEST MARKET INITIATIVE?

   A:   The PJM energy market started in 1997 and was modified in 1998.

        It has continued to grow in size with the addition of PJM West,

        the recent addition of Commonwealth Edison and the pending

        additions of AEP, Duquesne and Dominion.  The PJM energy market

        has also continued to become more sophisticated with the

        development of features such as a regulation market, capacity

        market, and the auction of financial transmission rights.  PJM is

        about eight years ahead of MISO with respect to operating

        wholesale energy markets.  In my opinion, the PJM experience is

        relevant to evaluating how the MISO energy market will develop.



                                     6




   Q:   PLEASE SUMMARIZE THE MATTERS COVERED IN YOUR DIRECT TESTIMONY.

   A:   My Direct Testimony will discuss my opinion that the regulatory,

        environmental and market uncertainties in the electric industry

        as well as the unique load profile of NIPSCO's electric customers

        make Mitchell's return to service unwise.  In the course of my

        testimony, I will explain that:

             (a)  NIPSCO's unique load profile presents challenges to

        which the Mitchell plant is ill suited, particularly given new

        standards, enforcement, audits, disclosure policy and penalties

        of NERC;

             (b)  the environmental and associated financial risks which

        attend return to service of a 1950s era coal plant are large and

        unquantifiable at present;

             (c)  the competitive wholesale markets for electricity which

        MISO is endeavoring to establish are problematic for a base load

        coal plant like Mitchell;

             (d)  the timing of MISO energy markets becoming established

        is uncertain and why this increases the risk of investment in a

        startup of Mitchell;

             (e)  the rules and regulations in the electric industry are

        in the midst of significant change in several regulatory venues

        as the industry restructures; and that resolution of the many

        issues in play is not close at hand nor are the outcomes

        predictable; and

             (f)  the restructuring and regulatory initiatives in

        Congress, FERC, NERC, and DOE, are wildcards that could bear

                                     7




        heavily on the viability of Mitchell and these initiatives do not

        yet promise near-term predictable outcomes.

             Because of the above substantial financial and regulatory

        risks that would attend a startup of Mitchell, a very certain and

        very high benefit would be required to justify startup; I see no

        such certain, high benefit.



   II.  NIPSCO LOAD PROFILE AND SUPPLY
        ------------------------------

   Q:   WHAT IS UNIQUE ABOUT NIPSCO'S LOAD PROFILE AND HOW DOES THIS BEAR

        ON THE STARTUP OF MITCHELL?

   A:   As discussed by Mr. Frank A. Venhuizen in his direct testimony

        and as shown by his exhibits, it is apparent that NIPSCO's

        customer load profile is unique with regard to its regulation

        needs.

             Coal base load plants such as Mitchell are poorly suited to

        provide the type of regulation that this severe load profile

        demands.  NIPSCO is already fine-tuning the automatic generation

        control ("AGC") capabilities of its plants and has plans to

        provide the best load following capability inherent in the

        equipment.

             As Mr. Venhuizen explains, NERC's Control Performance

        Standards (CPS1 and CPS2) require a Control Area operator to

        readjust generator outputs to match changes in load.  Another

        NERC standard, Disturbance Control Standard (DCS) requires a

        Control Area operator to readjust generator outputs after a


                                     8




        disturbance on the system in order to reestablish system security

        and prevent overloads from any subsequent disturbance.  The

        August 14, 2003 blackout resulted when these NERC standards were

        violated and generators were not adjusted in a timely fashion to

        prevent transmission overloads.

             Inability to meet NERC standards is an increasingly serious

        concern.  Prompted in part by the August 14, 2003 blackout, and

        in part by the failure of Congress to pass electric reliability

        language, NERC, with support from FERC and DOE, has moved to

        conduct readiness audits of all Control Area operators and

        security coordinators at least once every three years, as well as

        require Control Area operators, security coordinators and regions

        to report all violations of NERC standards to NERC. In the past,

        the identity of those violating NERC standards has been

        confidential and not disclosed. Until present, not even the NERC

        Board has known the identity of violators; these were deemed

        confidential by the utilities.  However, at the June 15, 2003

        meeting of the NERC Board of Trustees, NERC determined that in

        the future it will disclose publicly all reported violations and

        audit results.  In my mind this is a far more serious penalty

        than the monetary penalties that are envisioned in pending

        federal legislation.

             A volatile load profile could also impact a generator's

        profitability in MISO's future real time energy market.  I

        discuss this future market later in my testimony.  This market

        will set Locational Marginal Prices ("LMPs") every 5 minutes and

                                     9




        the volatility of NIPSCO's load will be reflected in volatility

        of the LMPs.  The LMPs are the prices the market pays to

        generators in the real time energy market.  A generator earns

        money when the LMP at its bus location is higher than its

        marginal cost to generate, and loses money when the LMP at its

        location is lower than its marginal cost to generate.  A

        generator therefore needs to be able to produce at maximum output

        when it is profitable to do so, and minimum or zero output when

        the LMP falls below its marginal cost to generate.  Experience of

        generators in the PJM real time energy market have demonstrated

        that a plant such as Mitchell is poorly-suited to be profitable

        in a volatile LMP market.

             As Mr. Venhuizen has also explained, MISO also plans to

        establish a regulation market for which Mitchell is ill-suited.



   Q:   IS IT POSSIBLE THAT THIS SITUATION WILL IMPROVE OVER TIME?

   A:   Yes.  With sufficient interconnection capacity, NIPSCO's load

        could be supplied by other generators in the regulation market.

        But the timing for establishing a regulation market in MISO is

        uncertain.  MISO and PJM have announced plans to develop a joint

        and common market that eventually will produce very large

        regional energy and regulation markets and a security constrained

        dispatch equivalent to that of a much larger control area.  As

        discussed later, the timing of this initiative has slipped and is

        uncertain.  However, these same market forces that potentially

        will improve NIPSCO's ability to meet these volatile demand

                                     10




        characteristics through additional intertie capacity could

        negatively affect the value of the Mitchell plant as discussed in

        Mr. Venhuizen's testimony.



   Q:   IS THERE A NEED FOR ADDITIONAL BASE LOAD CAPACITY IN THE REGION?

   A:   No.  There is a surplus of low cost base load generation.

        Startup of Mitchell would exacerbate the surplus and the

        inefficiency of the oversupply condition by increasing overall

        fixed costs for supplying load while not decreasing the variable

        costs.



   III. ENVIRONMENTAL ISSUES
        --------------------

   Q:   PLEASE DESCRIBE THE ENVIRONMENTAL ISSUES ATTENDING A STARTUP OF

        MITCHELL.

   A:   Mitchell is a 1950s era coal fired plant.  Environmental concerns

        have grown greatly since that era.  Today's air and water

        regulations are far more stringent than those the plant was

        designed to meet, and tighter environmental regulations are on

        the horizon.  Although upgrades have been made over the time the

        plant was in operation, a startup initiative would invite new

        scrutiny of the plant's environmental profile.  As Mr. Arthur E.

        Smith, Jr. explains, the extent of upgrades that might be

        required by environmental regulators will be affected by the

        structure of future emission standards and whether an allowance

        trading program is included in the regulations.  If applications


                                     11




        and fees for a startup were put forward, the determination of

        required upgrades would probably not be forthcoming for at least

        a year.  In my experience, the engineering and cost estimates to

        perform the upgrades would require another year.  My experience

        has also shown that actual final costs can escalate by as much as

        100% over early cost estimates due to the unpleasant surprises

        that opening up a 50 year old boiler entails, as well as due to

        regulatory creep and scope increases.  The financial risks

        imposed by the environmental risk issues are very large.

             Several of the upgrades currently available and well known

        to environmental regulators entail injection of chemicals or

        other processes that raise the cost of generation, so that what

        once seemed low fuel cost incremental power is no longer as low

        cost after the costs of required upgrades chemicals injected are

        factored in.

             However there are even larger environmental risks in the

        future.  As Mr. Mr. Smith explains, at present, in both the EPA

        and Congress, decisions are pending that will affect the costs

        and viability of coal fired plants everywhere.  These include

        decisions on three vs. four pollutant standards, mercury in coal,

        particulates, fly ash disposal, fresh waters, etc.  These could

        render a startup decision based on today's standards

        inappropriate.

             Initiatives are underway at both the federal and state

        levels to promote integrated coal gasification combined cycle as

        a clean coal alternative that would also better fit unique load

                                     12




        profiles such as NIPSCO's.  These initiatives could hasten

        retirement of existing base load coal plants.

             I believe that the risks created by the environmental

        upgrade cost overhangs I have described are very large, and it

        would require very large proven long term benefits to justify the

        taking of such risks.



   IV.  MISO RTO AND MARKETS
        --------------------

   Q:   DOES THE TIMING OF MISO'S MARKET IMPLEMENTATION AFFECT STARTUP OF

        MITCHELL?

   A:   Yes, but the impact is unclear.  I expect that MISO's wholesale

        energy marketplace will evolve much as PJM, becoming more

        sophisticated and complete over a period of years.  When MISO's

        wholesale electricity marketplace is fully developed, there will

        be a common economic least-cost security constrained dispatch

        involving many more generators over a much larger region.  The

        dispatch patterns are certain to differ from current patterns,

        and some generators will benefit at others' expense.  Generators

        will be paid at the locational marginal prices at their bus.

        These prices will be high where there is a shortage of supply and

        low where there is an excess of supply, so that generators in an

        area of oversupply will have a more difficult time covering fixed

        costs and variable costs and achieving a profit.  For load

        serving entities that want to self-schedule or contract bi-

        laterally with specific generators, hedging instruments will


                                     13




        provide a mechanism to protect the contract parties from varying

        locational prices and provide delivered price certainty.  These

        hedging instruments will be tradable or saleable but only some

        will be desirable and so valued; others may be undesirable to own

        and have little or negative value.  A market for regulation

        service will exist so that those whose generation cannot follow

        load variations can procure that service from those who can in

        the wider market.  Obviously, the financial outlook for a

        generator can be very different in this post-market world than it

        was in the pre-market world.



   Q:   YOU HAVE SAID THAT STARTUP OF MITCHELL IS UNWISE DUE TO INABILITY

        TO FOLLOW NIPSCO'S UNIQUE LOAD PROFILE AND THE UNCERTAINTY OF

        ENVIRONMENTAL COST OVERHANG; WILL THIS CHANGE IN THE MISO POST-

        MARKET ENVIRONMENT?

   A:   It would almost certainly be different due to the larger market,

        more generators in the dispatch, locational pricing, hedging

        instruments and a market for regulation services.  Older less

        efficient units such as Mitchell are likely to have a difficult

        time competing in a fully developed marketplace.  However,

        whether the post-market environment would be beneficial or

        harmful to Mitchell's financial viability is unknown to me at

        this time.  While modeling studies might be able to forecast an

        outcome, such studies are time-consuming and expensive to perform

        and have proven to be prone to inaccurate projections.  This is

        due to the numerous assumptions they require and the low

                                     14




        probability that all the assumed inputs will occur as forecast,

        especially when moving from the more controlled economic state

        currently to a more complex and dynamic market state in the

        future.  The economy can change; load forecasts change; new

        generators come on line; old generators retire; market policies

        and protocols change due to stakeholder input; fuel prices

        change; new transmission may be built; etc.  The very timing of

        the MISO market implementation is uncertain; there is no reason

        to assume that the slippages which have occurred to date in MISO

        markets, are not to be followed by more slippages.



   V.   REGULATORY UNCERTAINTY IN THE ELECTRIC UTILITY INDUSTRY

   Q:   WHAT IS THE STATE OF THE ELECTRIC INDUSTRY AND THE REGULATORY

        UNCERTAINTIES THAT INFLUENCE INVESTMENT DECISIONS SUCH AS THE

        STARTUP OF THE MITCHELL COAL PLANT?

   A:   For almost past two decades the electric industry enjoyed a lack

        of the energy price volatility that followed the Arab oil embargo

        of the 1970s.  However, more recently there have been structural

        changes resulting from deregulation initiatives.  The National

        Energy Policy Act of 1992 greatly increased prospective

        competition for the production and sale of power at the wholesale

        level.  FERC Orders 888 and 2000 mandated open access to the

        transmission systems of jurisdictional electric utilities.  In

        1996, following issuance of FERC Order 888, Merrill Lynch stated

        that "the industry is in a monumental transition state  The risk



                                     15




        profile of the electric utility industry is clearly reaching

        higher levels than in the past and will further increase."<F1>

             Since FERC issued its Open Access NOPR in 1995 (and

        subsequent Orders 888 and 2000), ISOs and RTOs have been emerging

        across much of the United States.  Understandably, due to the

        pre-existence of tight power pools, ISO/RTOs emerged in the

        Northeast earlier than in many other parts of the nation.



   Q:   WHY HAVE ISO/RTOS DEVELOPED ALONG SUCH DIFFERENT TIME LINES?

   A:   This is because of regional histories and cultural differences,

        political forces and industry crisis:

             (a)  The transmission owners in the Northeast enjoyed a

        longstanding cultural realization that sharing of transmission

        and generation resources brings about both economic and

        reliability benefits and thereby lower operational and financial

        risk.  PJM Power Pool was formed in 1927 by three utilities, grew

        to ten utilities by the 1970s and is still growing to the west

        and south.  NEPOOL was formed in 1971 and has a 33 year history

        of success.  NY Power Pool was also formed in the early 1970s.

             (b)  The tight power pools, having existed in the Northeast

        for many years, already had many of the features, infrastructure,

        staffing, policies and practices that an ISO requires, so the

        transition from tight power pool to ISO was a small, easy and

        relatively inexpensive, low-risk step.  In parts of the United


  ___________________
  <FN>
  <F1>  Merrill Lynch, ELECTRIC UTILITY INDUSTRY REPORT, p. 3 (June 24,
  1966).

                                     16




        States where ISOs/RTOs are less mature than in the Northeast,

        such as MISO, the timing of achieving the establishment of

        competitive markets is uncertain.  This is because the

        difficulties and costs of creating the infrastructure, staff,

        markets, and protocols with no pre-existing infrastructure are

        significantly greater than in the Northeast where a foundation

        already existed with the tight power pools.

             (c)  In places where there is not a cultural heritage of

        tightly pooled operation, as there was in PJM, important issues

        regarding ISO/RTO design and structure tend to be resolved

        through compromise and politics rather than based on the physics

        of the grid.

             (d)  There is greater risk of getting something wrong when

        trying to build an ISO/RTO from scratch rather than in converting

        from an existing tight power pool.

             (e)  The California energy crisis and Enron disaster in 2000

        caused many to pause and reevaluate.<F2>

             (f)  Inexperienced system operators in a nascent ISO/RTO are

        more prone to operational errors than those where there is an

        experienced staff available from a tight power pool.  This was a

        contributing factor to the August 14, 2003 blackout which

        originated in MISO, a nascent RTO.


   ____________________

   <FN>
   <F2> Platts ELECTRIC UTILITY WEEK (July 9, 2001) noted that the "crisis
   saps investor confidence" and that fallout from the financial deteriora-
   tion of California's utilities had spread beyond the state as "investors
   have turned away, spooked by the political and regulatory climate."

                                     17





   Q:   DESCRIBE THE VARIOUS REGULATORY UNCERTAINTIES THAT EXIST GOING

        FORWARD.

   A:   I will briefly summarize several of them.

             FERC:  FERC followed Orders 888 and 2000 with its Standard

        Market Design ("SMD") that went farther than the two orders in

        detailing new markets.  The criticism of the SMD was intense and

        caused Congress to modify the electricity bill provisions to

        prevent FERC from proceeding.  FERC retreated by issuing a

        whitepaper that softened many of the SMD provisions; however,

        there has been no subsequent rulemaking.  FERC in its whitepaper

        championed Regional State Committees that would have input on

        several regional matters, but it is too early for me to draw

        conclusions about the impact these committees will have in the

        future.  FERC is also unclear about its market power screen.

             NERC:  NERC has been seeking congressional legislation to

        give it the authority to enforce compliance with mandatory

        reliability standards.  The legislative language NERC has pushed

        for over four years is tied up in a comprehensive energy bill

        that has included issues far removed from electricity, such as

        Alaskan drilling, ethanol and liability for gasoline additives.

        Congress so far has been unwilling to remove the NERC provisions

        and move them as stand alone legislation.  Meanwhile the blackout

        of August 14, 2003 called a time out on regulatory policy

        initiatives as fact finding and analysis occurred.



                                     18




             CONGRESS:  As described above, Congress continues to be

        stalled on passing its energy bill, and unless another blackout

        pushes it into action, expectations for passage are gloomy for

        the near term.

             DOE:  Having just established and staffed an electric

        transmission and distribution office in the past year, DOE is

        busy trying to define its role in the electric industry.  So far

        it has spoken enthusiastically regarding new technologies and a

        HVDC super-grid, neither of which assist in making investment

        decisions in the short term.



   Q:   WHAT IMPACTS OCCURRED TO GENERATORS WITHIN PJM AS A RESULT OF

        RESTRUCTURING AND THE ESTABLISHMENT OF MARKETS?

   A:   After PJM's wholesale electric markets were in place, generators

        reacted in several ways:

             (a)  Generators invested to lower startup cost, lower

        minimum load operating capability, improve ramp rates, and reduce

        forced and scheduled maintenance outages; generators also

        invested to improve their ability to sell into ancillary markets

        such as the regulation, black start and capacity markets;

             (b)  generators were shut down or mothballed in areas of

        oversupply;

             (c)  generators were built aggressively in areas of

        undersupply to capture the higher locational marginal prices;

             (d)  FTRs, the congestion hedging instruments in PJM's LMP

        marketplace, became an important component of increasingly

                                     19




        sophisticated portfolio sales contracts between suppliers and

        load serving entities.



        These interdependencies and complexities, along with the fact

        that generation tends to be capital intensive and subject to

        multiple regulators, make generation the most difficult of the

        industry components - generation, transmission, and distribution

        - to manage well.



   VI.  CONCLUSION
        ----------

   Q:   WHAT IS YOUR OVERALL CONCLUSION REGARDING STARTUP OF MITCHELL?

   A:   Startup would likely increase NIPSCO's capital costs, its

        generation fixed and variable costs, and its exposure to very

        large and uncertain environmental expenditures.  Startup would

        not resolve the problems associated with NIPSCO's unique and

        unfavorable load profile.  The timing and end-state of MISO's

        market initiative is unknown as is its effect on Mitchell's

        financial viability.  Startup would fly in the face of regulatory

        uncertainties at the federal level that neither NIPSCO nor the

        State of Indiana are in a position to resolve.  I conclude that

        for the reasons put forth in the foregoing testimony the startup

        of Mitchell would be a very costly and risky investment that does

        not entail commensurate benefits.






                                     20




   Q:   DOES THAT CONCLUDE YOUR PREPARED DIRECT TESTIMONY?

   A:   Yes, it does.

















































                                     21