Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.

A "safe  harbor" for  forwarding-looking  statements  is provided by the Private
Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of
1995 was adopted to encourage such forward-looking statements without the threat
of litigation,  provided those statements are identified as forward-looking  and
are  accompanied  by  meaningful  cautionary  statements  identifying  important
factors  that could  cause the actual  results to differ  materially  from those
projected in the statement.  Forward  looking  statements  have been and will be
made in written  documents and oral  presentations  of Southern  Indiana Gas and
Electric Company.  Such statements are based on management's beliefs, as well as
assumptions made by and information currently available to management. When used
in Southern Indiana Gas and Electric Company's  documents or oral presentations,
the   words   "believe,"   "anticipate,"   "endeavor,"   "estimate,"   "expect,"
"objective,"  "projection,"  "forecast,"  "goal,"  and similar  expressions  are
intended to identify forward-looking  statements. In addition to any assumptions
and  other  factors   referred  to   specifically   in   connection   with  such
forward-looking  statements,  factors that could cause Southern  Indiana Gas and
Electric  Company's actual results to differ materially from those  contemplated
in any forward-looking statements included, among others, the following:

Factors  affecting  utility  operations  such  as  unusual  weather  conditions;
catastrophic   weather-related   damage;   unusual   maintenance   or   repairs;
unanticipated changes to fossil fuel costs;  unanticipated changes to gas supply
costs, or availability due to higher demand, shortages,  transportation problems
or other  developments;  environmental  or pipeline  incidents;  transmission or
distribution  incidents;  unanticipated changes to electric energy supply costs,
or  availability  due to  demand,  shortages,  transmission  problems  or  other
developments; or electric transmission or gas pipeline system constraints.

Increased  competition in the energy  environment  including effects of industry
restructuring and unbundling.

Regulatory  factors such as  unanticipated  changes in rate setting  policies or
procedures, recovery of investments and costs made under traditional regulation,
and the frequency and timing of rate increases.

Financial  or  regulatory  accounting  principles  or  policies  imposed  by the
Financial  Accounting  Standards Board,  the Securities and Exchange  Commission
(Commission),  the Federal Energy  Regulatory  Commission,  state public utility
commissions,  state entities which regulate natural gas transmission,  gathering
and processing, and similar entities with regulatory oversight.

Economic conditions including inflation rates and monetary fluctuations.

Changing  market  conditions  and a variety  of other  factors  associated  with
physical energy and financial trading activities including,  but not limited to,
price,  basis,  credit,  liquidity,  volatility,  capacity,  interest  rate, and
warranty risks.

Availability or cost of capital,  resulting from changes in Southern Indiana Gas
and  Electric  Company,   interest  rates,  and  securities  ratings  or  market
perceptions of the utility industry and energy-related industries.

Employee  workforce  factors  including  changes in key  executives,  collective
bargaining agreements with union employees, or work stoppages.

Legal  and  regulatory  delays  and other  obstacles  associated  with  mergers,
acquisitions, and investments in joint ventures.

Costs and other effects of legal and  administrative  proceedings,  settlements,
investigations,  claims, and other matters, including, but not limited to, those
described in periodic  filings made with the Commission by Southern  Indiana Gas
and Electric Company.

Changes in federal, state or local legislature requirements,  such as changes in
tax laws or rates, environmental laws and regulations.

Southern Indiana Gas and Electric  Company  undertakes no obligation to publicly
update or revise any forward-looking statements,  whether as a result of changes
in  actual  results,  changes  in  assumptions,  other  factors  affecting  such
statements.