As filed with the Securities and Exchange Commission on April 20, 1999.

Registration No. 333 -
======================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-----------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------------------

NISOURCE INC.
(Exact name of registrant as specified in its charter)

INDIANA 35-1719974
(State or other jurisdiction of (I.R.S employer
incorporation or organization) identification number)

801 EAST 86TH AVENUE
MERRILLVILLE, INDIANA 46410
(219) 853-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

STEPHEN P. ADIK
NISOURCE INC.
801 EAST 86TH AVENUE
MERRILLVILLE, INDIANA 46410
(219) 647-6012
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

With a copy to:

Lauralyn G. Bengel
Susan J. Lynch
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606-6473
(312) 258-5500

--------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration

statement number of the earlier effective registration statement for
the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE
-------------------------------

PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
------------------------------ ---------- ------------- ------------------ ----------------

Common Shares, without par value 273,000 $27.03 $7,379,190 $2,052
(including associated preferred share
purchase rights)

(1) Estimated solely for the purpose of calculating the registration
fee on the basis of the average of the high and low sales prices
of the Common Shares reported on the New York Stock Exchange on
April 14, 1999 pursuant to Rule 457(c) of the Securities Act of
1933, as amended.

The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement will thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
this registration statement shall become effective on such date as the
Commission acting pursuant to said Section 8(a) may determine.

SUBJECT TO COMPLETION - Dated April 20, 1999

PROSPECTUS

NISOURCE INC.

273,000 Shares
Common Shares, Without Par Value

BAY STATE GAS COMPANY EMPLOYEE SAVINGS PLAN

This Prospectus relates to up to 273,000 Common Shares, without
par value (including associated preferred share purchase rights), of
NiSource Inc., formerly NIPSCO Industries, Inc. (hereinafter referred
to as "NIPSCO"), which may be offered and sold pursuant to
participants in the Bay State Gas Company Employee Savings Plan.

The Common Shares are traded on the New York Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange under the symbol
"NI." On April 14, 1999 the closing sale price of the Common Shares
on the NYSE was $26 7/8 per share. Each purchase or sale of Common
Shares under the Plan will be made at the market price for the Common
Shares on the NYSE at time of such purchase or sale.

This Prospectus should be retained for future reference.

-------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-------------------------

The date of this Prospectus is April ___, 1999

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE AS OF THE DATES ON THESE DOCUMENTS, AND YOU SHOULD NOT
ASSUME THAT IT IS ACCURATE AS OF ANY OTHER DATE.

TABLE OF CONTENTS
PAGE

NIPSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 2

THE BAY STATE GAS COMPANY EMPLOYEE SAVINGS PLAN . . . . . . . . . 3

General . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . 3

Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 4

Your Contributions . . . . . . . . . . . . . . . . . . . . . 5

Company Contributions . . . . . . . . . . . . . . . . . . . 6

Annual Contributions and Compensation Maximums . . . . . . . 8

Investment Funds and Investment Instructions . . . . . . . . 9

Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Participant Loans . . . . . . . . . . . . . . . . . . . . . 13

Withdrawals While You Are an Employee . . . . . . . . . . . 16

Distributions After You Terminate Employment with the
Company or After You Attain Age 70-1/2 . . . . . . . . . . . 18

Death Benefits . . . . . . . . . . . . . . . . . . . . . . . 20

Reemployment with the Company . . . . . . . . . . . . . . . 21

Federal Tax Consequences of Participation in the Plan . . . 21

Income Tax Withholding . . . . . . . . . . . . . . . . . . . 22

Future of the Plan . . . . . . . . . . . . . . . . . . . . . 23

Plan Administration Issues . . . . . . . . . . . . . . . . . 24

Other Things You Should Know . . . . . . . . . . . . . . . . 25

Plan Directory . . . . . . . . . . . . . . . . . . . . . . . 29

Instruction at a Glance . . . . . . . . . . . . . . . . . . 30

AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . 31

INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . 32

LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . 32

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 33

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 33

DESCRIPTION OF COMMON SHARES . . . . . . . . . . . . . . . . . . 33

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 33

iii

NIPSCO

NIPSCO is an energy and utility-based holding company that
provides natural gas, electricity, water and related services for
residential, commercial and industrial uses through a number of
wholly-owned regulated and non-regulated subsidiaries. NIPSCO
operates primarily in Indiana and, with the acquisition of Bay State
Gas Company ("Bay State"), New England.

NIPSCO distributes natural gas to approximately 739,000 customers
in Northern Indiana through three wholly-owned utility subsidiaries:
Northern Indiana Public Service Company ("Northern Indiana"), Kokomo
Gas and Fuel Company ("Kokomo Gas") and Northern Indiana Fuel and
Light Company, Inc. ("NIFL"). Northern Indiana, Kokomo Gas and NIFL
operate in 41 counties across Northern Indiana, serving an area of
about 13,865 square miles with a population of approximately 2.4
million. Bay State distributes natural gas to more than 300,000
customers in the areas of Brockton, Lawrence and Springfield,
Massachusetts, Lewiston and Portland, Maine and Portsmouth, New
Hampshire. Bay State operates in 12 counties in New England, serving
an area of about 2,152 square miles with a population of approximately
1.8 million. Based on total throughput, NIPSCO is the tenth largest
local gas distribution company in the United States.

NIPSCO's wholly-owned subsidiary, Crossroads Pipeline Company
("Crossroads" and, together with Northern Indiana, Kokomo Gas and
NIFL, the "Energy Utilities"), owns and operates an interstate
pipeline extending from the northwestern corner of Indiana (near the
border with Chicago) eastward into Ohio. In addition, NIPSCO and Bay
State collectively own a 19% share of Portland Natural Gas
Transmission System ("PNGTS"), a 292-mile pipeline being built to
bring Canadian gas from New Brunswick into Maine, New Hampshire and
Massachusetts in order to increase the gas supply to the region.

NIPSCO generates and distributes electricity to the public
primarily through its largest subsidiary, Northern Indiana. Through
its Primary Energy, Inc. ("Primary Energy") subsidiary, NIPSCO also is
active in developing unregulated power projects. Northern Indiana
provides electric services in 30 counties in the northern part of
Indiana, with an area of approximately 12,000 square miles and a
population of approximately 2.2 million. At September 30, 1998,
Northern Indiana provided approximately 419,000 customers with
electricity. For the twelve months ended September 30, 1998,
industrial customers accounted for approximately 42% of Northern
Indiana's electric energy revenues, with residential customers
providing approximately 30% and commercial customers contributing
approximately 28%.

NIPSCO operates the sixth largest investor-owned water utility
business in the United States, serving approximately 252,200 customers
through the utility subsidiaries of IWC Resources Corporation
("IWCR"). These companies supply water for residential, commercial
and industrial uses and for fire protection services in Indianapolis

and the surrounding areas. The territory served by the water
utilities covers an area of approximately 309 square miles in six
counties of central Indiana. IWCR also manages the municipal water
system for Lawrence, Indiana, and participates in partnerships that
operate municipal wastewater treatment facilities in Indianapolis and
Gary, Indiana.

In addition to the activities of Primary Energy described above,
NIPSCO provides non-regulated energy services through its wholly-owned
subsidiaries, NI Energy Services, Inc. ("NESI") and Energy USA, Inc.
NESI provides a variety of energy-related services, including gas
marketing, power generation, gas transmission, supply and storage and
energy efficiency design services. EnergyUSA markets products and
services, such as propane, energy advisory services and home security
services, to customers of local utilities in 22 states. These
products and services are branded and operated either under the local
utility's label or with the EnergyUSA name.

NIPSCO also provides non-regulated utility-related services,
including installation, repair and maintenance of underground
pipelines used in gas, water and sewer transmission and distribution
systems and underground utility locating and marking services.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this
Prospectus. It is not a complete summary of all the information
contained in this Prospectus. Participants should therefore read this
Prospectus in its entirety.

PURPOSE OF THE PLAN

The Plan is for the benefit of eligible employees and former
employees of Bay State and affiliated companies and their
beneficiaries. The purpose of the Plan is to provide such eligible
employees a profit-sharing and 401(k) plan designed to help accumulate
savings for retirement and achieve future financial goals.

The Plan offers these advantages:

* Participants choose how much to save, up to 15% of
their eligible pay, through convenient payroll
deduction.
* Participant contributions, or a portion thereof, are
matched by the Company.
* Participants may save on current taxes, since
contributions and earnings are not subject to current
federal and, in most cases, state income taxes.

The Plan offers flexibility:

* Participants choose how to invest their Accounts among
the investment funds offered.

* Participants may borrow or withdraw from their Accounts
(subject to certain conditions and terms).
* Participants have easy access to Account information by
telephone.

ELIGIBILITY FOR THE PLAN

All employees of the Company and its affiliated companies, if
any, who are classified as "Administrative, Professional and
Supervisory" ("APS") or "Clerical/Technical" ("C/T") are eligible to
participate in the Plan, except employees who are employed by one of
the Company's affiliated companies, if any, which does not participate
in the Plan or who are covered by a collective bargaining agreement
which does not specifically call for his or her participation in the
Plan.

THE BAY STATE GAS COMPANY EMPLOYEE SAVINGS PLAN

General
-------

The following is a description of the Plan. It is intended to
constitute a "summary plan description" pursuant to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). This
description summarizes certain material provisions of the Plan, and as
such, it does not purport to be complete and is qualified in its
entirety by reference to the Plan. Terms used herein and not
otherwise defined shall have the respective meanings set forth in the
Plan.

Introduction
------------

Effective January 1, 1979, Bay State Gas Company (the "Company")
established the Bay State Gas Company Employee Savings Plan (the
"Plan"). The Bay State Gas Company Employee Stock Ownership Plan was
merged into this Plan effective July 1, 1987.

Effective as of February 12, 1999, the Company was merged into NIPSCO
Industries, Inc. and became a wholly owned subsidiary of NIPSCO.
Effective as of April 15, 1999, NIPSCO Industries, Inc. changed its
name to NiSource Inc. (hereinafter referred to as "NIPSCO").
As a result of the merger, all of the shares of common stock
of Bay State have been converted into the right to receive cash or
shares of common stock of NIPSCO (the "Common Shares") and amounts
held under the Plan that are subsequently transferred into or
contributed to the Common Stock Fund will be invested in Common
Shares. Notwithstanding the corporate merger, the Plan continues to
be maintained by the Company.

The Plan is governed by the official text of the Plan and Trust
Agreement. The purpose of this Summary Plan Description is to provide
a simplified description of how the Plan works. If the meaning of the
Plan and Trust Agreement differs from that of the Summary Plan

Description in any way, the official text of the Plan and Trust
Agreement will govern in administering the Plan.

References to the Company generally mean Bay State Gas Company, and,
if applicable, its affiliated companies participating in the Plan as
the context requires, except, that with regard to issues related to
service credit, termination of employment or reemployment, references
to Bay State shall also include any affiliated companies not
participating in the Plan. With regard to primarily administrative
matters, however, references to Bay State mean Bay State Gas Company,
the Plan Sponsor and Plan Administrator.

Eligibility
-----------

WHO IS ELIGIBLE?

All employees of the Company who are classified as
"Administrative, Professional and Supervisory" ("APS") or
"Clerical/Technical" ("C/T") are eligible except any employee who
is covered by a collective bargaining agreement which does not
specifically call for his or her participation in this Plan.

WHEN DOES PARTICIPATION BEGIN?

For purposes of Employee Pre-Tax contributions, you will be
eligible to participate on the first day of the next month after
you have completed 60 days of service.

For purposes of Employer Match contributions, your participation
will begin on the first day of the next month after completion of
a 12-month eligibility period in which you are credited with at
least 1,000 hours of service during that period. Your initial
eligibility period begins on your date of hire. Subsequent
eligibility periods begin with the start of the next Plan Year
(the calendar year) beginning after your date of hire.

HOURS OF SERVICE

Hours of service are used in determining your eligibility to
participate. You earn one hour of service for each hour you are
paid by the Company (including any back pay you may be awarded).
This includes hours when you do not actually work but receive pay
(such as vacation, holiday, jury duty, sickness or incapacity,
such as disability). You receive credit for non-paid Company
time, such as a Company-approved leave of absence, military duty
or a temporary layoff.

Service earned while you are not actively at work is based on
your normally scheduled weekly hours. If you are a salaried
employee, or there are no accurate records of your working hours,
you will be credited with a set number of hours for each pay
period in which you are paid for at least one hour. The rates of

hours credited for each pay period are: 45 hours per weekly pay
period, 90 hours per biweekly pay period, 95 hours per semi-
monthly pay period and 190 hours per monthly pay period.

To enroll, refer to Section entitled INSTRUCTIONS AT A GLANCE.

Your Contributions
------------------

You may elect to contribute regularly through payroll deductions once
you are eligible to participate. Your contributions are based on your
eligible pay. Eligible pay for this purpose is straight time wages,
exclusive of all daily or weekly overtime, bonuses, supplementary
compensation payments, retirement benefits and other forms of non-
recurring compensation, but inclusive of shift differentials,
Saturday/Sunday premiums, compensation paid at an alternative rate
(not including compensation paid at an alternative rate if you are a
salesperson) and seventy-five percent of sales commissions paid to you
by the Company while you are a participant in the Plan. Your eligible
pay includes pre-tax contributions you make to this Plan and other
plans sponsored by the Company.

To elect to contribute, refer to Section entitled INSTRUCTIONS AT A
GLANCE.

EMPLOYEE PRE-TAX CONTRIBUTIONS

You may choose to save pre-tax dollars by electing in writing to
contribute any percentage, up to 15%, of your eligible pay,
subject to an annual contribution maximum. Refer to item (a) of
Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS.
If you are a highly compensated employee, as defined by the
Internal Revenue Code and related regulations, you may be limited
to a percentage that is less than 15%. Refer to item (b) of
Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS.
If you are limited to a percentage that is less than 15%, you
will be notified.

Your Employee Pre-Tax contributions are deposited into your
Employee Pre-Tax Account.<1>

CHANGING, DISCONTINUING OR RESUMING YOUR CONTRIBUTIONS

You may change your contribution percentage election as of the
first day of any month. Your payroll deductions will change the

____________________

<1>If you are a former participant in the Bay State Gas Company
Savings Plan for Operating Employees, your Employee Pre-Tax Account
may include amounts transferred on your behalf from the Bay State Gas
Company Savings Plan for Operating Employees designated as "Employee
Pre-Tax Account" amounts under that plan.

first time you are paid after your written request has been
processed.

You may discontinue contributions at any time. Your payroll
deductions will stop the first time you are paid after your
written request has been processed. You may resume contributions
as of the first day of any month. Your payroll deductions will
resume the first time you are paid after your written request has
been processed. If you discontinue contributions more than once
in a twelve month period, the Plan Administrator reserves the
right to require a longer waiting period before you can resume
contributions.

To change your contribution percentage election or to discontinue
or resume contributions, refer to Section entitled INSTRUCTIONS
AT A GLANCE.

ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN

If you receive a distribution eligible for rollover from another
employer's qualified plan (or a qualified plan of the Company) or
if you have a "rollover IRA," you may "roll over" all or part of
that amount into this Plan if you are an eligible employee, even
if you have not yet met the Plan's eligibility requirements. By
making a Rollover contribution, you defer the tax liability on
your distribution and take advantage of the investments offered
in this Plan.

Your Rollover contributions are deposited into your Rollover
Account.<2>

To make a Rollover contribution, refer to Section entitled
INSTRUCTIONS AT A GLANCE.

SEPARATE ACCOUNTS

Separate Accounts will be maintained for your contributions as
described above and which may also include a Prior Company
Account for contributions made under former Plan provisions.

Company Contributions
---------------------

You will be eligible for Company contributions as described below,
once you are eligible to participate for this purpose as described in
Section entitled ELIGIBILITY.

____________________

<2> If you are a former participant of the Bay State Gas Company
Savings Plan for Operating Employees, your Rollover Account may
include amounts transferred on your behalf from the Bay State Gas
Company Savings Plan for Operating Employees designated as "Rollover
Account" amounts under that plan.

EMPLOYER MATCH CONTRIBUTIONS

One of the benefits of contributing on a pre-tax basis under the
Plan is that the Company matches a portion of such contributions
under one of the following two formulas.

FORMULA # 1:

For each pre-tax dollar you contribute, the Company will
contribute as follows:

EMPLOYEE PRE-TAX
CONTRIBUTION AS A
PERCENTAGE OF EMPLOYER MATCH
ELIGIBLE PAY PERCENTAGE
------------ ---------

First 5% 50%

FORMULA # 2:

If you: (i) were an employee prior to September 1, 1990 and under
age forty-five on January 1, 1992, or (ii) became an employee on
or after September 1, 1990, or (iii) were an employee prior to
September 1, 1990, at least age forty-five on January 1, 1992 and
irrevocably elected to waive eligibility for post-retiree medical
coverage no later than September 1, 1992, for each pre-tax dollar
you contribute, the Company will contribute as follows:

EMPLOYEE PRE-TAX
CONTRIBUTIONS AS A
PERCENTAGE OF EMPLOYER MATCH
ELIGIBLE PAY PERCENTAGE
------------ ----------
First 2 1/2% 100%

Next 5% 50%

Employer Match contributions are deposited to your Account as
soon as administratively feasible following each of your
contributions.

Employer Match contributions made on your behalf are deposited
into your Employer Match Account.<3>

SEPARATE ACCOUNTS

Separate Accounts will be maintained for your Company
contributions as described above and which may also include a
Prior Company Account for contributions made under former Plan
provisions.

ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS

The Internal Revenue Code and related regulations require that a
number of limitations be applied to the Plan. These include (1)
maximum amounts which may be contributed by you or on your behalf in
any year and (2) a maximum amount of your eligible pay that may be
taken into account for purposes of contributions. These limitations
are briefly described below:

(a) MAXIMUM PRE-TAX CONTRIBUTION DOLLAR LIMIT.
Your maximum pre-tax contribution dollar limit (including
any pre-tax contributions you may make to any other 401(k)
plan maintained by any other employer) is $10,000 per
calendar year, and may be adjusted periodically as announced
by the Internal Revenue Service.

If you make pre-tax contributions to more than one 401(k)
plan during the calendar year and the combination of your
pre-tax contributions to the plans exceeds the maximum pre-
tax contribution dollar limit, you should notify the Plan
Administrator of this Plan or the plan administrator of the
other plan that an excess has occurred and request that the
excess amount be returned to you no later than April 15 of
the following year. If the excess amount is not returned to
you by April 15 of the following year, the excess amount
will be taxable to you in the year the amount was
contributed and the year the amount is distributed.

(b) MAXIMUM ALLOWABLE CONTRIBUTION PERCENTAGE LIMIT.
If you are a highly compensated employee, your maximum
Employee Pre-Tax contribution percentage may be limited to a
percentage that is less than the percentage described in
Section entitled YOUR CONTRIBUTIONS, as determined by a
factor based on the average Employee Pre-Tax contribution
amount for non-highly compensated employees. Highly
compensated employees generally include employees who earn
____________________

<3>If you are a former participant of the Bay State Gas Company
Savings Plan for Operating Employees, your Employer Match Account may
include amounts transferred on your behalf from the Bay State Gas
Company Savings Plan for Operating Employees designated as "Employer
Account" amounts under that plan.

more than $80,000 per year, and may be adjusted periodically
as announced by the Internal Revenue Service.

If you are a highly compensated employee and you exceed this
limit at any time, you will be notified and your future
Employee Pre-Tax contributions may be reduced or stopped,
and any excess may be refunded to you.

(c) MAXIMUM ANNUAL ADDITION LIMIT.
The maximum amount that may be contributed by you (excluding
rollover contributions) or on your behalf to this Plan or
any other qualified defined contribution plan sponsored by
the Company is the lesser of (1) 25 % of your W-2 taxable
income or (2) $30,000. The $30,000 amount may be adjusted
periodically as announced by the Internal Revenue Service.

(d) MAXIMUM ELIGIBLE PAY LIMIT.
The maximum amount of your eligible pay that may be taken
into account per Plan Year for purposes of contributions is
$150,000, and may be adjusted periodically as announced by
the Internal Revenue Service ($160,000 for the Plan Year
ending December 31, 1999). The $150,000 threshold was set
in 1994.

Investment Funds and Investment Instructions
--------------------------------------------

WHO MAKES THE INVESTMENT DECISIONS?

You make your own investment decisions. When you enroll in the
Plan you may elect the percentage of your Account you want
invested in each investment fund. The Company has selected a
variety of daily valued investment funds with different risk and
return characteristics. Investment fund information sheets and
prospectuses provide information about the investment options.
If you have not received this information or would like updated
information, you may obtain this information by telephoning 1-
800-776-4015 and speaking with a participant services
representative (or if you are hearing impaired, telephone 1-800-
772-6009). If you need additional information regarding the
investment alternatives, or if you have any questions about your
ERISA rights, you may contact: Bay State Gas Company, Benefits
Committee, 300 Friberg Parkway, Westborough, Massachusetts 01581.

Each of the investment funds has specific investment objectives
for both risk and expected return. The specific investment funds
available to you may be changed from time to time.

You should make your investment choices based on your investment
goals and your willingness to assume investment risk in order to
realize potentially higher returns. Investment risk is defined
as a measure of how much the investment returns can vary from
period to period.

If you do not specify an investment fund or funds for the
investment of your contributions, your contributions will be
invested in a default investment fund specified by the
Administrator. The Administrator may change the designation of
the default investment fund from time to time.

The Plan is intended to be a participant directed individual
account plan as described in Section 404(c) of ERISA and the
regulations found in 29 C.F.R. Section 2550.404c-1. Accordingly,
fiduciaries of the Plan may be relieved of liability for any
losses which are the direct and necessary result of investment
instructions given by a participant or beneficiary.

INVESTMENT IN COMPANY STOCK FUND

The investment funds include a Company Stock Fund, which invests
in NIPSCO Common Shares. Previous investments in Bay State Gas
Company common stock prior to the merger of Bay State Gas Company
into a wholly-owned subsidiary of NIPSCO have been converted into
Common Shares. For liquidity purposes, a portion of the Company
Stock Fund will also be invested in money market type assets.

INVESTMENT FUNDS

The value of Accounts invested in an investment fund other than
the Common Stock Fund will be net of any investment manager fees
that may be charged with respect to that particular fund. The
prospectus for each fund describes the fees and expenses
associated with investing in that fund. You will not be charged
any fees or expenses with respect to investments in the Common
Stock Fund.

Purchases of Common Shares will normally be made as soon as
practicable after the receipt by the Trustee of contributions
which are to be invested in the Common Stock Fund. Purchases or
sales of Common Shares will also normally be made as soon as
practicable after the receipt of an election by you to transfer
amounts to or from the Common Stock Fund. Each such purchase or
sale will be made at the market price for Common Shares on the
New York Stock Exchange at the time of such purchase or sale.

You may upon request obtain additional information about each
Investment Fund (e.g., each Fund's operating expenses, the
prospectus and financial statements of each Fund and a list of
assets comprising each Fund). If you need additional information
regarding the investment alternatives, or if you have any
questions about your ERISA rights, you may contact: Bay State Gas
Company, Benefits Committee, 300 Friberg Parkway, Westborough,
Massachusetts 01581.

PERFORMANCE OF INVESTMENT FUNDS

TOTAL RETURN PERFORMANCE BASED ON NET ASSET VALUE
(NET OF ALL FEES AND EXPENSES) WITH ALL DISTRIBUTIONS

Name of Fund 1997 1996 1995
------------ ---- ---- ----

Stable Value Fund 6.19 % 5.80 % 6.65 %

Masterworks S&P 500 33.07 % 22.62 % 37.15 %

AIM Constellation Fund 18.86 % 11.26 % 33.43 %

Templeton Foreign Fund 6.65 % 18.00 % 11.15 %

Masterworks Life Path 2000 Fund 10.71 % 6.33 % 17.38 %

Masterworks Life Path 2010 Fund 16.60 % 10.74 % 23.98 %

Masterworks Life Path 2020 Fund 21.20 % 13.57 % 27.51 %

Masterworks Life Path 2030 Fund 24.50 % 15.62 % 31.15 %

Masterworks Life Path 2040 Fund 26.85 % 18.65 % 32.54 %

The following table provides information concerning the performance of
the Common Shares in the preceding fiscal years. Participants are
advised that past performance is not necessarily indicative of the
future performance of Common Shares. In addition, NIPSCO Industries,
Inc. conducted a 2-for-1 stock split in February, 1998. Therefore,
the stock prices for dates prior to 1998 in the following table are
provided prior to the stock split. The returns provided below include
the dividend granted in each year, if any.

NIPSCO Industries, Inc.
COMMON SHARES PERFORMANCE

Stock Price 12/30/94 $29.750
Stock Price 12/29/95 $38.250

RETURN 1995 33.8 %

Stock Price 12/29/95 $38.250
Stock Price 12/31/96 $39.625

RETURN 1996 8.0 %

Stock Price 12/31/96 $39.625
Stock Price 12/31/97 $49.438

RETURN 1997 29.3 %

Stock Price 12/31/97 $49.438
Stock Price 12/31/98 $30.438*

RETURN 1998 27.0 %

* Reflects stock split

HOW MAY I OBTAIN INVESTMENT FUND PERFORMANCE INFORMATION?

You may obtain recent investment fund performance information by
telephoning 1-800-776-4015 (or if you are hearing impaired,
telephone 1-800-772-6009).

HOW MAY I CHANGE MY INVESTMENT INSTRUCTIONS AND WHEN DO MY NEW
INVESTMENT INSTRUCTIONS TAKE EFFECT?

You may change your investment instructions for future
contributions to your Account, for all or any portion of your
existing Account balance, or for both, at any time. You may make
10 investment changes each year at no charge. Your Account will
be charged a fee for each additional change. Currently, this fee
is $10.00 and may be changed from time to time. You will see
these fees on your quarterly statement.

If you telephone on a business day before the close of the New
York Stock Exchange (4 p.m. Eastern time), your investment
change will be processed that day. Otherwise it will be
processed the next business day. For this purpose, a business
day is a day on which the stock markets are open for trading. A
written confirmation of your investment instruction change will
be sent within five business days after you make the change by
telephone.

To change your investment instructions, refer to Section entitled
INSTRUCTIONS AT A GLANCE.

INFORMATION REGARDING VOTING AND TENDERING COMPANY SHARES

You will be entitled to instruct the Plan Trustee as to the
voting or tendering of any whole and fractional shares of Company
Shares held on your behalf in the Company Stock Fund. The
Company will be responsible for the timely distribution of proxy
solicitation or other material to you in connection with any
shareholder vote or tender decision, including a form for you to
complete to instruct the Trustee with regard to voting or
tendering.

The Trustee is responsible for tabulating and complying with the
voting or tendering instructions it receives from participants.
The Trustee will hold your instructions in confidence and will
not divulge or release specific information regarding such
instructions, on an individual basis, to any person, including

officers or employees of the Company, except to the extent
required by law.

If you do not instruct the Trustee with regard to a shareholder
vote or tender decision, your Common Shares will be voted or
tendered as instructed by the Committee for the Plan.

Vesting
-------

Vesting is a term used to describe the portion of your Account
which you own. Your balance in each of your Accounts is fully
vested at all times.

Participant Loans
-----------------

MAY I BORROW FROM MY ACCOUNT?

You may borrow from all of your Accounts. You may have two loans
outstanding at a time.

HOW MUCH MAY I BORROW?

The minimum loan amount is $1,000.

The maximum you may borrow is 50% of your vested Account balance
or, if less, $50,000. The $50,000 amount is reduced by your
highest outstanding balance on all loans during the preceding 12
months. For purposes of this paragraph, all of the Company's
qualified plans are considered as part of this Plan to the extent
the maximum loan amount would be decreased.

You may obtain information about the amount you may borrow or do
"modeling" to help you decide on the terms of the loan by
telephoning 1-800-776-4015 (or if you are hearing impaired,
telephone 1-800-772-6009).

WHAT IS THE LOAN INTEREST RATE?

The interest rate is fixed at the time you borrow and shall be a
reasonable rate of interest, determined by the Plan Administra-
tor, which provides the Plan with a return commensurate with the
prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar circum-
stances.

The interest rate may be changed from time to time. You may
obtain information about the current interest rate by telephoning
1-800-776-4015 (or if you are hearing impaired, telephone 1-800-
772-6009).

WHAT IS THE LOAN REPAYMENT TERM?

The loan repayment term may be for a period not to exceed five
years.

HOW DO I MAKE LOAN PAYMENTS AND HOW ARE THE PAYMENTS INVESTED?

Loan payments, consisting of principal and interest, are made
through convenient payroll deduction (or by check during any
period you are temporarily ineligible for payroll deduction), and
each payment is credited to your Account. You may make
additional loan payments at any time by check or pay off the
remaining balance of your loan at any time by cashier's check,
certified check or money order. You may obtain your loan payoff
amount by telephoning 1-800-776-4015 (or if you are hearing
impaired, telephone 1-800-772-6009).

Loan payments credited to your Account are invested in accordance
with your current investment instructions for future contribu-
tions to your Account at the time the loan payment is deposited
into your Account.

WHAT HAPPENS IF MY EMPLOYMENT TERMINATES?

Your outstanding loan balance is due should your employment with
the Company terminate for any reason. Your outstanding loan
balance is due upon the earlier of the date you request a
distribution from your Account or 90 days after you terminate
employment with the Company. If you do not repay your loan
balance before you request a distribution from your Account or
within 90 days from your termination of employment, the
Administrator will send you a written notice of default and a
demand for past due amounts. You have 30 days from receipt of
the written notice of default in which to repay the remaining
loan balance before the default becomes final. Upon default, the
unpaid balance will become a taxable distribution to you, except
to the extent any portion of the unpaid balance represents a
return of after-tax contributions.

HOW IS MY LOAN SECURED?

Your loan will be evidenced by a promissory note, secured by the
portion of your Account from which the loan is made. The Plan
shall have a lien on this portion of your Account.

A suspension of loan payments may be authorized for up to 12
months if you are on leave of absence without pay. During the
suspension period interest on your outstanding loan balance will
continue to accrue. All past due amounts will be due at the end
of the suspension period unless otherwise authorized by the Plan
Committee.

A loan is treated as in default if scheduled loan payments are
more than 90 days late. You will have 30 days from the time you
receive written notice of a default and demand for past due
amounts to correct the default before it becomes final. In the
event the default becomes final, the default will be treated as a
taxable distribution to you, except to the extent any portion of
the unpaid balance represents a return of after-tax
contributions. However, your promissory note will not be
distributed and interest will continue to accrue on your
outstanding loan balance, until such time as you are otherwise
eligible for an in-service withdrawal or a distribution from your
Account.

WHAT HAPPENS TO MY LOAN IF I FILE FOR BANKRUPTCY?

Under federal law, the Plan is generally not allowed to accept
your loan repayments while you are in bankruptcy. Once your
bankruptcy is discharged, if your loan is not in default you may
restart you loan payments. A loan is treated as in default if
scheduled loan payments are not made for more than 90 days. You
will have 30 days from the time you receive written notice of a
default and demand for past due amounts to correct the default
before it becomes final. If your bankruptcy is not discharged
within this period of time, your loan will be in default. The
default will be treated as a taxable distribution to you, except
to the extent any portion of the unpaid balance represents a
return of after-tax contributions. However, your promissory note
will not be distributed and interest will continue to accrue on
your outstanding loan balance, until such time as you are
otherwise eligible for an in-service withdrawal or a distribution
from your Account.

ARE THERE ANY LOAN FEES?

A loan maintenance fee of $3.50 will be assessed to your Account
for each month your Account has a loan balance. The fee will be
charged quarterly to your Account. You will see these fees on
your quarterly statement.

WHAT HAPPENS WHEN I REQUEST A LOAN?

Upon processing of your request, your investments will be
redeemed as needed to fund your loan. Within each Account used
for funding your loan, amounts will be redeemed from your
investment funds in direct proportion to the value of your
interest in each investment fund as of the date the loan is
processed. As the Plan's investment funds are daily valued
investment funds, your investments are redeemed based on the
value of each such investment on the day your loan is processed.
Your check and loan documents are generally issued within three
business days thereafter.

To request a loan, refer to Section entitled INSTRUCTIONS AT A
GLANCE.

Withdrawals While You Are an Employee
-------------------------------------

UNDER WHAT CIRCUMSTANCES MAY I MAKE A WITHDRAWAL FROM THE PLAN
WHILE I AM AN EMPLOYEE?

Withdrawals while you are an employee are permitted as described
below and after attainment of age 70-1/2 (refer to Section
entitled DISTRIBUTIONS AFTER YOU TERMINATE EMPLOYMENT WITH THE
COMPANY OR AFTER YOU ATTAIN AGE 70-1/2). These withdrawals are
referred to as in-service withdrawals.

There is no minimum amount for any type of in-service withdrawal.

* HARDSHIP WITHDRAWAL

You may make an in-service withdrawal in certain cases of
financial hardship. You may withdraw from all of your
Accounts, except for any earnings credited to your Employee
Pre-Tax Account after the start of the first Plan Year
beginning after December 31, 1988.

The amount you may withdraw may be no greater than the
amount necessary to satisfy your financial need including
amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
withdrawal.

For this purpose, hardship is a financial need to:

* Purchase your principal residence.

* Pay unreimbursable medical expenses incurred or to be
incurred by you, your spouse or dependents.

* Pay unreimbursable tuition, related educational fees
and room and board for up to the next 12 months of
post-secondary education for you, your spouse or
dependents.

* Pay amounts necessary to prevent losing your principal
residence through eviction or foreclosure on your
mortgage.

You may qualify for a Hardship Withdrawal by first borrowing
and withdrawing all other available amounts from this Plan
(and from any other plan maintained by the Company), other
than hardship withdrawals. You will be ineligible to
contribute to the Plan for 12 months from the date of your
Hardship Withdrawal. A special limitation may reduce the

maximum amount of Employee Pre-Tax contributions you may
contribute in the calendar year following the calendar year
of your Hardship Withdrawal.

* Prior After-Tax Account Withdrawal

You may make a Prior After-Tax Account Withdrawal once in
any 12-month period.

* ROLLOVER ACCOUNT WITHDRAWAL

You may make a Rollover Account Withdrawal once in any 12-
month period.

* OVER AGE 59 1/2 WITHDRAWAL

Once you have attained age 59 1/2, you may make an Over Age
59 1/2 Withdrawal once in any 12-month period. You may
withdraw from all of your Accounts. If you have a Prior
After Tax Account, you will need to designate whether you
want to withdraw from this Account first as part of your
Over Age 59 1/2 Withdrawal.

* PRIOR COMPANY ACCOUNT PLUS WITHDRAWAL

You may make a Prior Company Account Plus Withdrawal once in
any 12- month period. You may withdraw from your Prior
After-Tax, Rollover and Prior Company Accounts.

WHAT ARE MY IN-SERVICE WITHDRAWAL PAYMENT OPTIONS?

Your in-service withdrawal will be paid in a single lump sum, in
cash.

WHAT ARE MY IN-SERVICE WITHDRAWAL METHODS?

You may choose to have all or a portion of your in-service
withdrawal that is eligible for rollover be made payable directly
to an IRA, another employer's qualified plan or to you. The
portion of your in-service withdrawal representing a return of
after-tax contributions is not eligible for rollover and will be
made payable to you. Regarding the portion of your in-service
withdrawal that is eligible for rollover and that is made payable
to you, the law requires that, except for hardship withdrawals,
20% of that amount be withheld for federal taxes. Your actual
tax liability may be more or less depending on your personal tax
situation.

WHAT HAPPENS WHEN I REQUEST AN IN-SERVICE WITHDRAWAL?

An IRS Tax Notice is required to be provided to you no more than
90 days before your in-service withdrawal is made. The IRS Tax

Notice summarizes the rules related to rollovers, income tax and
penalties that may apply to your in-service withdrawal. You
should review the IRS Tax Notice prior to requesting an in-
service withdrawal.

Upon processing of your request, your investments will be
redeemed as needed to fund your in-service withdrawal. Within
each Account used for funding your in- service withdrawal,
amounts will be redeemed from your investment funds in direct
proportion to the value of your interest in each investment fund
as of the date the in-service withdrawal is processed. As the
Plan's investment funds are daily valued investment funds, your
investments are redeemed based on the value of each such
investment on the day your in-service withdrawal is processed.
Your check is generally issued within three business days
thereafter.

To request an in-service withdrawal, refer to Section entitled
INSTRUCTIONS AT A GLANCE

DISTRIBUTIONS AFTER YOU TERMINATE EMPLOYMENT WITH THE COMPANY OR AFTER
YOU ATTAIN AGE 70-1/2

WHAT ARE MY DISTRIBUTION PAYMENT OPTIONS?

If your vested Account balance is $5,000 or less, and if your
vested Account balance at the time of any prior in-service
withdrawal or distribution did not exceed $5,000, your
distribution payment options are limited to a single lump sum.
Otherwise, you may choose to have your vested Account balance
distributed as follows:

* paid in a single lump sum,

* a portion paid in a lump sum, and the remainder paid later,
or

* paid in periodic installments over a period not to exceed
the life expectancy of you and your beneficiary.

Your distribution will be paid in cash, except to the extent of
the distribution of your outstanding loan balance, if any, and
except (if your Account is distributed in a lump sum) to the
extent you choose to receive the portion of your distribution
attributable to your Account balance invested in the Company
Stock Fund in the form of whole shares of Company Shares and cash
in lieu of fractional shares.

WHAT ARE MY DISTRIBUTION METHODS?

You may choose to have all or a portion of your distribution that
is eligible for rollover be made payable directly to an IRA,
another employer's qualified plan or to you. The portion of your

distribution representing a return of after-tax contributions is
not eligible for rollover and will be made payable to you. If
your vested Account balance is $5,000 or less, and if your vested
Account balance at the time of any prior in-service withdrawal or
distribution did not exceed $5,000, if you do not request a
distribution, your vested Account balance may be distributed to
you without your consent in a check made payable to you.

Regarding the portion of your distribution that is eligible for
rollover and that is made payable to you, the law requires that
20% of that amount be withheld for federal taxes. Your actual
tax liability may be more or less depending on your personal tax
situation.

If you elect distribution in periodic installments, your Account
will be charged a fee for each installment payment. You will see
these fees on your quarterly statement. Currently, this fee is
$3.00 per check and may be changed from time to time.

WHEN ARE DISTRIBUTIONS MADE?

You may generally choose when to take a distribution of your
vested Account balance at any time following your termination of
employment with the Company on or before age 65. However, if
your vested Account balance is $5,000 or less, and if at the time
of any prior in-service withdrawal or distribution your vested
Account balance did not exceed $5,000, you should request a
distribution of your vested Account balance at the time you
terminate employment with the Company or shortly thereafter. If
you do not request a distribution, your vested Account balance
may be distributed to you without your consent in a check made
payable to you. Mandatory 20% federal tax withholding will apply
as described above.

The law requires that you start taking distributions from your
Account by April 1 of the calendar year following the later of
either: (1) the calendar year in which you reach age 70-1/2, or
(2) the calendar year in which you retire. As a result, you are
not required to start taking distributions by April 1 of the
calendar year in which you reach age 70-1/2 if you are still
working for the Company at that time.

If you are eligible and choose to defer distribution of your
Account after you terminate employment with the Company, an
administrative fee will continue to be assessed to your Account
each month and charged quarterly to your Account as described in
Section entitled OTHER THINGS YOU SHOULD KNOW.

Your Account will continue to be invested as you direct until it
is distributed to you.

WHAT HAPPENS WHEN I REQUEST A DISTRIBUTION AFTER I TERMINATE OR
AFTER I ATTAIN AGE 70-1/2?

An IRS Tax Notice is required to be provided to you no more than
90 days before your distribution is made. The IRS Tax Notice
summarizes the rules related to rollovers, income tax and
penalties that may apply to your distribution. You should review
the IRS Tax Notice prior to requesting a distribution.

Upon processing of your request, your investments will be
redeemed as needed to fund your distribution. Within each
Account used for funding your distribution, amounts will be
redeemed from your investment funds in direct proportion to the
value of your interest in each investment fund as of the date the
distribution is processed. As the Plan's investment funds are
daily valued investment funds, your investments are redeemed
based on the value of each such investment on the day your
distribution is processed. Your check is generally issued within
three business days thereafter. If you choose to receive the
portion of your distribution attributable to your Account balance
in the Company Stock Fund in the form of whole shares of Company
Shares and cash in lieu of fractional shares, your stock
certificate will be issued within a few weeks thereafter.

To request a distribution upon termination of employment with the
Company or a distribution after attainment of age 70-1/2, refer
to Section entitled INSTRUCTIONS AT A GLANCE.

WHAT ARE THE TAX TREATMENTS, TAXES AND PENALTIES FOR
DISTRIBUTIONS?

The IRS Tax Notice summarizes the rules related to rollovers, tax
treatments, income tax and penalties that may apply to your
distribution.

Death Benefits
--------------

WHAT HAPPENS TO MY PLAN BENEFIT IF I DIE?

Upon your death, your Account becomes payable to your bene-
ficiary(ies). If you die while an employee, your Account will
become fully vested, if not otherwise fully vested. In general,
your beneficiary has the same options as you do regarding when
and how to receive payment, except that a distribution to your
beneficiary may only be eligible for rollover if your beneficiary
is your spouse. Your beneficiary should contact Culture Develop-
ment for further instructions.

HOW MAY I DESIGNATE MY BENEFICIARY?

When you become eligible to participate in the Plan or, if
earlier, at the time you make a Rollover Contribution, complete

and file a Beneficiary Designation Form stating who is to receive
your Account balance if you die. You may change your
beneficiary(ies) at any time by completing and filing a new
Beneficiary Designation Form. The change takes effect on the
date your new completed Beneficiary Designation Form is on file
with Culture Development.

If you are married, your spouse is automatically your sole
primary beneficiary. To designate someone in addition to or
other than your spouse as a primary beneficiary, you must obtain
your spouse's written consent to your designation and your
spouse's signature must be witnessed by a Plan representative or
Notary Public. If you complete and file a Beneficiary
Designation Form and later become married or remarry, your
earlier Beneficiary Designation Form will not be valid. You will
need to complete and file a new Beneficiary Designation Form.

If you fail to complete and file a Beneficiary Designation Form
before you die, your benefit upon death will be paid to the
individual(s) in the first of the following categories in which
there is at least one survivor: your spouse; your children, (in
equal shares) by right of representation; or your estate.

Reemployment with the Company
-----------------------------

WHEN CAN I RESUME MY PARTICIPATION?

If you were a Plan participant before your employment with the
Company terminated and you are rehired by the Company, you may
resume participation on the date of your rehire as an eligible
employee. If you were not a participant when your employment
with the Company terminated, or were not eligible for Employer
Match contributions, you will enter the Plan or become eligible
for Employer Match contributions as described in Section entitled
ELIGIBILITY, but no earlier than the date you would have entered
the Plan or became eligible for Employer Match contributions if
you had not terminated your employment with the Company.

Federal Tax Consequences of Participation in the Plan
-----------------------------------------------------

The Plan is operated as a qualified plan under Sections 401(a) and
401(k) of the Internal Revenue Code. As a result, the amount of your
pay which you elect to defer under the Plan through Employee Pre-Tax
contributions and your Rollover contributions and Employer Match
contributions and any earnings on, or appreciation of, your Account
balance are not subject to Federal income taxes until such amounts are
withdrawn or distributed to you or your beneficiary. The amount of
your Employee Pre-Tax contributions will, however, be included in your
income in the year in which such amounts are earned for purposes of
Social Security taxes. Distributions and withdrawals generally become
taxable in the year in which you receive them.

A distribution or withdrawal may be rolled over to a qualified
retirement plan of another employer or to an individual retirement
account or individual retirement annuity ("IRA") if the distribution
is an "eligible rollover distribution" as defined in the Internal
Revenue Code. In such event, the amount rolled over and earnings
thereon are not subject to income tax until subsequently distributed
to you or your beneficiary. Any amount of an "eligible rollover
distribution" that is not rolled over may be subject to a mandatory
20% withholding requirement (see "Income Tax Withholding" below).

If a lump sum distribution includes Common Shares, the excess, if any,
of the fair market value of such Common Shares over the cost of the
Common Shares to the Trustee is not subject to federal income tax at
the time of distribution but generally will be subject to federal
income tax when such Common Shares are subsequently sold. To the
extent provided by the Internal Revenue Code, you may elect not to
defer the tax on net unrealized appreciation in Common Shares until
the year of disposition of such Common Shares, thus subjecting the
entire distribution to federal income tax at the time of distribution.

An additional 10% excise tax will be imposed on any distribution or
withdrawal received by you before you reach age 59 1/2 unless such
distribution or withdrawal is (i) rolled over to another qualified
plan or an IRA, (ii) made to a beneficiary after your death, (iii)
made on account of your retirement due to disability (as defined in
the Plan), (iv) made after separation from service after attainment of
age 55, (v) made to you for payment of medical expenses that could be
deducted on your tax return or (vi) made to an alternate payee
pursuant to a qualified domestic relations order.

Amounts that are included in taxable income may qualify for 5-year
forward averaging tax treatment if you receive the amount in a lump
sum distribution prior to January 1, 2000 but after you reach age 59
1/2 and you actively participated in the Plan for at least five years
prior to the year in which the lump sum is distributed to you. Under
a transitional rule, if you reached age 50 before January 1, 1986, you
may make one election, without regard to the age 59 1/2 requirement,
to use either 5-year forward averaging (using current tax rates) or
10-year forward averaging (using the 1986 tax rates) with respect to
the lump sum distribution, if otherwise eligible. Five year forward
averaging will not be available for distributions received on or after
January 1, 2000.

Employee Pre-Tax and Employer Match contributions made to the Plan by
the Company on your behalf are deductible by the Company in the year
in which the contributions are made.

The rules governing the Federal income taxation of a distribution are
complex and are subject to change. Accordingly, you should seek the
advice of a personal tax advisor in connection with a distribution.

Income Tax Withholding
----------------------

Most Plan distributions and withdrawals are subject to mandatory
federal income tax withholding. The Trustee is required to withhold
20% of any "eligible rollover distribution", unless you elect to have
the Trustee make a direct rollover of such distribution into another
employer's qualified retirement plan that accepts rollovers or to an
individual retirement account or an individual retirement annuity. A
distribution or withdrawal is not an "eligible rollover distribution",
and thus may not be rolled over, if it is (i) a series of
substantially equal periodic installments over more than ten years, or
over your life expectancy or the joint life expectancies of you and
your beneficiary, (ii) a distribution of after-tax contributions,
(iii) a required distribution due to attaining age 70-1/2 (or if
later, due to retiring) or (iv) a distribution made to a nonspousal
beneficiary. If you request a distribution from the Common Stock Fund
in the form of Common Shares rather than cash, the portion of your
Account in the Common Stock Fund will not be liquidated to pay the
withholding tax; however, the applicable taxes will be withheld from
any cash portion of the distribution.

A distribution or withdrawal that is not an "eligible rollover
distribution" is subject to voluntary federal income tax withholding,
which means that you can request that no withholding tax be deducted
from your distribution.

Future of the Plan
------------------

The Company intends for the Plan to be a permanent part of your total
benefits program. However, the Company reserves the right to
terminate the Plan at any time. If the Plan is terminated all
Accounts will become fully vested, if not otherwise fully vested, and
payable as determined by the Plan Administrator.

The Company reserves the right to amend the Plan at any time if it
becomes desirable or necessary. You will be notified within 210 days
after the end of the Plan Year of any relevant Plan amendment. The
Plan (including any amendments) is subject to approval by the IRS.
From time to time, changes in the details of the Plan may be required
by the IRS. However, no Plan amendment may take away any benefits you
have earned.

As the Plan benefits are provided by fully funded individual
participant Accounts, benefits under this Plan are not insured by the
Pension Benefit Guaranty Corporation (PBGC). PBGC insurance does not
apply to this type of plan.

Plan Administration Issues
--------------------------

ACCOUNT STATEMENTS AND ACCOUNT INFORMATION

You will receive statements four times each year. They will
normally be sent to you within three weeks after the end of each
quarter of the Plan Year.

You have easy access to information regarding your Account at any
time.

To obtain information regarding your Account, refer to Section
entitled INSTRUCTIONS AT A GLANCE.

PLAN ADMINISTRATOR

The Company is the Plan Administrator. The Company may appoint
an administrative committee and delegate to it all or part of its
duties to oversee the Plan's operations. As a Plan fiduciary,
the Company acts on your behalf to see that the Plan is
administered fairly according to standards outlined in the law
and the terms of the Plan and Trust Agreement.

Plan records are maintained on a Plan Year basis. The Plan Year
ends on December 31.

AGENT FOR SERVICE OF LEGAL PROCESS

Service of legal process may be made upon the Company, as Plan
Administrator, or Plan Trustee at the address listed in Section
entitled PLAN DIRECTORY.

TYPE OF PLAN

This Plan is a profit sharing plan with a pre-tax salary deferral
(401(k)) feature.

TOP HEAVY CONTRIBUTION PROVISIONS

The Plan includes provisions which apply only if the Plan is "top
heavy." A plan is top heavy if more than 60% of the total plan
assets belong to "key employees." Key employees include certain
officers, shareholders and owners. If the plan is top heavy,
contributions may not be made by or on behalf of key employees,
other than a Rollover contribution, unless the Company makes a
minimum contribution to all eligible employees.

Other Things You Should Know
----------------------------

TRUST FUND

All of the Plan's assets are held in a trust fund which is the
sole source of all benefit payments. The trust fund is a
separate and distinct legal entity, and is not part of the
Company. The assets of the trust fund are not commingled with
Company assets. Generally, no part of the trust fund can be
attached by creditors of any Plan participant or of the Company.
Assets of the trust fund are held exclusively to pay Plan
benefits and expenses, and cannot revert to or be paid to the
Company, except under certain limited circumstances permitted by
law.

The Plan Trustee holds the Plan's assets, executes all of the
investments, maintains the financial records relating to the
trust, and makes all benefit payments as directed by the Plan
Administrator.

PLAN FEES AND EXPENSES

An administrative fee will be assessed to your Account each month
and charged quarterly to your Account, except that no fee may
reduce your Account balance below zero. The administrative fee
may be changed from time to time. You will see these fees on
your quarterly statement. You may obtain information about the
current administrative fee by telephoning 1-800-776-4015 and
speaking with a participant services representative (or if you
are hearing impaired, telephone 1-800-772-6009).

You will also pay any special fees related to your own Account,
such as loan fees, fees for installment payments and fees for
change of your investment instructions more than 10 times per
year. You will see these fees on your quarterly statement.

CLAIM REVIEW PROCEDURES

As the Plan Administrator, the Company is responsible for
determining and informing you of your entitlement to a benefit
and of any amounts payable to you. If you disagree with a
decision, you or your authorized representative may ask for a
review by submitting a written request to Culture Development.
Your request should include the issues and comments you feel are
important. You also have the right to review pertinent
documents.

The review process sets the following limits on the amount of
time you may take to make your request and for the Company to
respond:

DAYS TO RESPOND
ACTION FROM PRIOR ACTION
------ -----------------

Company sends you a benefit statement . . . . . . . . --
You request an initial review . . . . . . . . . 60 days
Company sends you its initial decision . . . . . . . 90 days
You request a final review . . . . . . . . . . . . . 60 days
Company sends you its final decision . . . . . . . . 60 days

The Company will either approve your claim or explain why your
claim is being denied (by referring to specific Plan provisions)
and how applications are reviewed. In special circumstances, the
Company may notify you and take up to an additional 90 days for
its initial review and 60 days for its final review.

NO ASSIGNMENT OF YOUR ACCOUNT IS PERMITTED

Under this Plan, you may not assign, sell, transfer or use your
Account as collateral, other than for a loan from your Account as
described in Section entitled PARTICIPANT LOANS. In addition,
creditors may not attach your Account as a means of collecting
debts. However, the Plan Administrator will comply with a
"qualified domestic relations order" (QDRO). This is an order or
judgment from a state court directing that a participant's
Account, or portion thereof, be paid to an Alternate Payee
(spouse, former spouse, child or other dependent of the
participant) as child support, alimony or part of a division of
marital property rights, provided that the order meets certain
requirements of federal law.

NO EMPLOYMENT RIGHTS

Your participation in the Plan does not give you any employment
rights with the Company.

YOUR RIGHTS UNDER FEDERAL LAW

As a participant of this Plan you are entitled to certain rights
and protection under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). ERISA provides that all Plan
participants shall be entitled to:

* Examine, without charge, at the Plan Administrator's office,
all Plan documents and copies of all documents filed by the
Plan with the U.S. Department of Labor, such as annual
reports;

* Obtain copies of all Plan documents and information upon
written request to the Plan Administrator. The Plan
Administrator may make a reasonable charge for the copies;

* Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each
participant with a copy of this summary annual report; and

* Obtain a statement telling you the amount of your Account
balance, the portion of your Account balance you currently
have a right to and when you will have the right to receive
payment. If you do not have a right to a benefit, the
statement will tell you how many years you have to work to
get this right. This statement must be requested in writing
and is not required to be given more than once a year. The
Plan Administrator must provide the statement free of
charge.

In addition to creating rights for Plan participants, ERISA
imposes duties upon the people who are responsible for the
operation of the Plan. The people who operate your Plan, called
"fiduciaries" of the Plan, have a duty to do so prudently and in
the interest of you and other Plan participants and
beneficiaries.

No one, including your employer or any other person, may
terminate you or otherwise discriminate against you in any way to
prevent you from obtaining a benefit or exercising your rights
under ERISA.

If your claim for a benefit is denied in whole or in part, you
must receive a written explanation of the reason for the denial.
You have the right to have the Plan Administrator review and
reconsider your claim.

Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request written materials from the
Plan Administrator and do not receive them within 30 days, you
may file suit in federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay
you up to $100 a day until you receive the materials, unless the
materials were not sent because of reasons beyond the control of
the Plan Administrator.

If you have a claim for a benefit which is denied or ignored, in
whole or in part, you may file suit in a state or federal court.
If it should happen that Plan fiduciaries misuse the Plan's
money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. The court will
decide who should pay court costs and legal fees. If you are
successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay
the costs and fees if, for example, it finds your claim is
frivolous.

If you have any questions about your Plan, you should contact
Culture Development. If you have any questions about this
statement of your rights under ERISA, you should contact the
nearest Area Office of the Pension and Welfare Benefits
Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and
Inquiries, Pension and Welfare Benefits Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington
D.C. 20210.

PLAN DIRECTORY

* OFFICIAL PLAN NAME--
Bay State Gas Company Employee Savings Plan

* EMPLOYER AND PLAN NUMBER--
Employer's Identification Number (EIN) is 04-2548120
Plan Identification Number (PIN) is 009

* OTHER PARTICIPATING COMPANIES--
Northern Utilities, Inc.
Granite State Gas Transmission, Inc.
Energy USA

* PLAN YEAR--
January 1 through December 31

* PLAN SPONSOR--
Bay State Gas Company
300 Friberg Parkway
Westborough, Massachusetts 01581
(508) 836-7114

* INITIAL EFFECTIVE DATE--
January 1, 1979

* NAME OF PLAN ADMINISTRATIVE COMMITTEE--
Benefits Committee Bay State Gas Company

* PLAN TRUSTEE--
Merrill Lynch
Group Employee Services
P.O. Box 6610
9603 Meridian Boulevard
B3-GES-CS
Englewood, CO 80155-6610
(800) 776-4015

INSTRUCTIONS AT A GLANCE

IF YOU WANT TO . . . YOU NEED TO DO THE FOLLOWING . . .

Enroll In the Plan And Elect To
Make Contributions: Complete a Plan Enrollment Form and Beneficiary Designation Form.
Return the forms to Culture Development for processing. Your
Enrollment Form will be forwarded to Merrill Lynch for processing of
your Investment Fund instructions. You will receive a Personal
Identification Number (PIN) for the Bay State Gas Company Employee
Savings Plan in a secured envelope as a separate mailing.

Make A Rollover Contribution: Request a Rollover Contribution Form from Culture Development. Complete
and return the form to Culture Development for approval and forwarding
to Merrill Lynch for processing.
Change Your Contribution
Percentage Election Or
Discontinue Or Resume
Your Contributions: Request a Contribution Change Form from Culture Development. Complete
and return the form to Culture Development for processing.

Change Your
Investment Instructions: Telephone* Merrill Lynch at 1-800-776-4015 (or if you are hearing
impaired telephone 1-800-772-6009).

Request A
Participant Loan: Telephone* Merrill Lynch at 1-800-776-4015 (or if you are hearing
impaired telephone 1-800-772-6009).
Request An
In-Service Withdrawal: Telephone* Merrill Lynch at 1-800-776-4015 (or if you are hearing
impaired telephone 1-800-772-6009). If you have not already received an
IRS Tax Notice within the last 90 days, an IRS Tax Notice will be
provided to you.

If you are requesting a Hardship Withdrawal, Merrill Lynch will send
you a Hardship Withdrawal Request Form. Upon completion, return the
form to Culture Development for approval and forwarding to Merrill
Lynch for processing.

Request A Distribution
Upon Termination: Telephone* Merrill Lynch at 1-800-776-4015 (or if you are hearing
impaired telephone 1-800-772-6009). If you have not already received an
IRS Tax Notice within the last 90 days, an IRS Tax Notice will be
provided to you.

Request An Age 70-1/2 Or Over
Distribution Required By Law: Request an Age 70-1/2 Distribution Packet from Culture Development. The
packet will include instructions for processing and an IRS Tax Notice

IF YOU WANT TO . . . YOU NEED TO DO THE FOLLOWING . . .

Obtain Information Regarding Your
Account, Investment Fund Prices,
Loan Interest Rate Etc.: Telephone* Merrill Lynch at 1-800-776-4015
(or if you are hearing impaired telephone
1-800-772-6009).

-------------------
*All or a portion of the calls are tape recorded for your
protection.

The EVA operates 24 hours a day, 7 days a week. If the information you
need or the transaction you want to perform is not available through
EVA, or if you prefer to speak to a participant services
representative, press "0" as soon as EVA answers. If you have a rotary
phone, simply stay on the line. PARTICIPANT SERVICES REPRESENTATIVES
ARE AVAILABLE ON ANY BUSINESS DAY BETWEEN 8 A.M. AND 8 P.M. (EASTERN
TIME).

AVAILABLE INFORMATION

NIPSCO files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission") You may read and
copy any of these reports, proxy statements and other information at
the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation
of the Public Reference Room by calling the Commission at 1-800-SEC-
0030. The Commission also maintains a site on the World Wide Web that
contains reports, proxy statements and other information regarding
NIPSCO. The address of the Commission's Web site is
http://www.sec.gov. Information about NIPSCO is also available at
http://www.NIPSCO.COM; that information, however, it not a part of
this Prospectus except to the extent it is specifically incorporated
by reference in this Prospectus.

NIPSCO has filed with the Commission a Registration Statement on
Form S-3 (including any amendments thereto, the "Registration
Statement") under the Securities Act of 1933 (the "Securities Act")
with respect to the securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement. For
further information about NIPSCO and the Common Shares offered hereby,
reference is made to the Registration Statement and the exhibits
thereto, which may be inspected at the Commission's Public Reference
Room or through the Commission's Web site.

INFORMATION INCORPORATED BY REFERENCE

The following documents previously filed by NIPSCO with the
Commission are incorporated by reference into this Prospectus:

(1) NIPSCO's Annual Report on Form 10-K and Form 10-KA for
the year ended December 31, 1998;
(2) NIPSCO's Current Report on Form 8-K dated February 8, 1999
and filed February 9, 1999;
(3) The description of NIPSCO's Common Shares contained in
NIPSCO's Registration Statement on Form 8-B filed with the
Commission on November 25, 1987; and
(4) Bay State's Annual Report on Form 10-K for the year ended
September 30, 1998.

All documents filed by NIPSCO with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Prospectus and prior to the termination of the offering of the Common
Shares under the Plan, shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently
filed document, which is also deemed to be incorporated by reference
modifies or replaces such statement.

NIPSCO WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED
BY REFERENCE HEREIN (OTHER THAN EXHIBITS NOT SPECIFICALLY INCORPORATED
BY REFERENCE INTO THE TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH
DOCUMENTS SHOULD BE DIRECTED TO SHAREHOLDER SERVICES, NISOURCE
INC., 5265 HOHMAN AVENUE, HAMMOND, INDIANA 46320
(TELEPHONE: 1-800-348-6466).

LIMITATION OF LIABILITY

Neither NIPSCO, Bay State, nor any of its agents (including Bay
State or NIPSCO if it is acting as such) in administering the Plan
shall be liable for any act done in good faith or for the good faith
omission to act in connection with the Plan. However, nothing
contained herein shall affect a Participant's right to bring a cause
of action based on alleged violations of federal securities laws.

USE OF PROCEEDS

Because the Plan is maintained in accordance with Section 401 ET
SEQ. of the Internal Revenue Code of 1986, as amended, and the
Employee Retirement Income Security Act of 1974, as amended, and
because it is intended that all purchases of Common Shares will be
made on the open market by the Trustee for the Plan, NIPSCO does not
intend to have any net proceeds from the sale of the Common Shares
offered under the terms of the Plan.

PLAN OF DISTRIBUTION

The Common Shares being offered are offered pursuant to the Plan,
the terms of which provide for the purchase of Common Shares.

DESCRIPTION OF COMMON SHARES

NIPSCO's certificate of incorporation authorizes the issuance of
400,000,000 Common Shares, without par value, of which 117,525,257
were issued and outstanding on October 31, 1998. The description of
the Common Shares is incorporated by reference into this Prospectus.
See "Incorporation of Information by Reference" for information on how
to obtain a copy of this description.

EXPERTS

The consolidated financial statements and schedules of NIPSCO and
its subsidiaries incorporated by reference in this Prospectus from
NIPSCO's Annual Report on Form 10-K for the year ended December 31,
1998 and the Current Report on Form 8-K dated February 8, 1999
have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto,
and are incorporated herein in reliance upon the authority of such firm
as experts in giving said reports.

The consolidated financial statements and schedule of Bay State
and subsidiaries as of September 30, 1998 and 1997, and for each of
the years in the three-year period ended September 30, 1998, have been
incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

The reports of KPMG Peat Marwick LLP covering the September 30,
1998 financial statements contains an explanatory paragraph that
states that Bay State changed its method of accounting for
postretirement benefit plans during the year ended September 30, 1998.

LEGAL MATTERS

Certain legal matters in connection with the Common Shares
offered hereby have been passed upon for NIPSCO by Schiff Hardin &
Waite, Chicago, Illinois.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the offering are as follows:

Registration fee under the Securities Act . . . . $ 2,052
Legal fees and expenses . . . . . . . . . . . . . 25,000
Accounting fees and expenses . . . . . . . . . . . 15,000
Miscellaneous . . . . . . . . . . . . . . . . . . 7,500
------
Total . . . . . . . . . . $49,552

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The By-Laws of NIPSCO provide for indemnification by NIPSCO of
each of its directors and officers to the fullest extent permitted by
law for liability of such director or officer arising by reason of his
or her status as a director or officer of NIPSCO or its subsidiaries.
Under NIPSCO's By-Laws as well as the Indiana Business Corporation Law
(the "Indiana BCL"), NIPSCO is required to indemnify its directors and
officers against expenses, judgments, decrees, fines, penalties and
settlements actually and reasonably incurred by such person in
connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which such person is a
party by reason of his or her connection with NIPSCO, provided that
such person acted in good faith and in a manner he or she reasonably
believed to be in the best interest of NIPSCO, or, with respect to a
criminal proceeding, has no reasonable cause to believe that his or
her conduct was unlawful.

The By-Laws of NIPSCO provide that, except where a director or
officer is substantially and finally successful on the merits, NIPSCO
may not indemnify a director or officer (unless ordered by a court)
until after a determination has been made that indemnification of the
director or officer is permissible because he or she met the
applicable standards of conduct. NIPSCO also may not advance expenses
prior to the disposition of an action, suit or proceeding until: (a)
the director or officer provides NIPSCO with a written affirmation of
his or her good faith belief that he or she has met the applicable
standards of conduct and an undertaking to repay the advance if it is
ultimately determined that he or she did not meet the applicable
standards of conduct, and (b) a determination has been made, that,
based on the facts then known to those making the determination, the
director or officer met the applicable standards of conduct. The
determination that a director or officer has met the applicable
standards of conduct may be made by a majority vote of a quorum
consisting of disinterested directors, a majority vote of a committee
designated by the board of directors consisting of two or more

II-1

disinterested directors (only if a quorum of the board cannot be
obtained), special legal counsel or a majority vote of disinterested
shareholders.

As authorized under NIPSCO's By-Laws and the Indiana BCL, NIPSCO
and its subsidiaries have insurance which insures directors and
officers for acts committed as such directors or officers which are
determined not to be indemnifiable under NIPSCO's indemnity
provisions.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of NIPSCO pursuant to the foregoing provisions, or
otherwise, NIPSCO has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by NIPSCO of expenses
incurred or paid by a director, officer or controlling person of
NIPSCO in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, NIPSCO will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 16. EXHIBITS.

The Exhibits filed herewith are set forth on the Exhibit Index
filed as part of this Registration Statement.

ITEM 17. UNDERTAKINGS.

(a) NIPSCO hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or

II-2

high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 242(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and

(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to
such information in this Registration Statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii)
of this section do not apply if the registration statement
is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with
or furnished to the Commission by NIPSCO pursuant to Section
13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.

(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.

(b) NIPSCO hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of
NIPSCO's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of NIPSCO pursuant to the foregoing provisions, or otherwise,
NIPSCO has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by NIPSCO of expenses incurred or paid by a director, officer
or controlling person of NIPSCO in the successful defense of any

II-3

action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
NIPSCO will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Merrillville,
State of Indiana, on December 1, 1998.

NIPSCO INDUSTRIES, INC.
(Registrant)

By: /s/ Gary L. Neale
------------------------------
Gary L. Neale
Chairman and President

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoints Stephen P. Adik the true and lawful attorney-in-fact and
agent of the undersigned, with full power of substitution and
resubstitution, for and in the name, place and stead of the under-
signed, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission,
and hereby grants to such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done, fully to all intents and purposes as the under-
signed might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or his substitute or substi-
tutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Gary L. Neale Chairman, President and Director December 1, 1998
------------------------------ (Principal Executive Officer)
Gary L. Neale

/s/ Stephen P. Adik Executive Vice President (Principal December 1, 1998
------------------------------ Financial Officer and Principal
Stephen P. Adik Accounting Officer)

Signature Title Date
--------- ----- ----

/s/ Steven C. Beering Director December 1, 1998
------------------------------
Steven C. Beering

/s/ Arthur J. Decio Director December 1, 1998
------------------------------
Arthur J. Decio

/s/ James T. Morris Director December 1, 1998
------------------------------
James T. Morris

/s/ Denis E. Ribordy Director December 1, 1998
------------------------------
Denis E. Ribordy

/s/ Ian M. Rolland Director December 1, 1998
-----------------------------
Ian M. Rolland

/s/ John W. Thompson Director December 1, 1998
------------------------------
John W. Thompson

/s/ Robert J. Welsh Director December 1, 1998
------------------------------
Robert J. Welsh

/s/ Carolyn Y. Woo Director December 1, 1998
------------------------------
Carolyn Y. Woo

Director
------------------------------
Roger A. Young

II-6

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------ -----------

4.1 Form of Bay State Gas Company Employee Savings Plan.

4.2* Amended and Restated Agreement and Plan of Merger dated as
of December 18, 1997, and amended and restated as of March
4, 1998, and further amended as of November 16, 1998, among
NIPSCO Industries, Inc., Bay State Gas Company and
Acquisition Gas Company, Inc. contained in Bay State's Current
Report on Form 8-K filed with the Commission on November 25,
1998.

4.3* The description of NIPSCO's Common Shares contained in
NIPSCO's Registration Statement on Form 8-B filed with the
Commission on November 25, 1987.

5 Opinion of Schiff Hardin & Waite.

23.1 Consent of Arthur Andersen LLP.

23.2 Consent of KPMG Peat Marwick LLP.

23.3 Consent of Schiff Hardin & Waite (included in its opinion
filed as Exhibit 5).

24 Powers of Attorney (as set forth in the signature pages
hereto).

----------------------------
* Incorporated by reference.