EXHIBIT 10.26

             DESCRIPTION OF NISOURCE INC. 2003 ANNUAL INCENTIVE PLAN

NiSource's annual incentive plan for the year 2003 covered most NiSource
employees, including all NiSource executive officers. The Annual Incentive Plan
established a trigger amount of financial performance (below which no annual
incentive may be paid) and a maximum level (above which no additional annual
incentive may be paid). Additionally, a profit sharing contribution of between
0.5% and 1.5% of an employee's eligible earnings may be made to the
participant's account in the Company's 401(k) Savings Plan on behalf of all
eligible employees, including the executive officers.

In 2003, the trigger was based on income from continuing operations (after
accounting for the cost of the incentive plan). For 2003, the Company exceeded
the trigger amount of income from continuing operations resulting in payments
under the Annual Incentive Plan to most of the Company's employees and to the
executive officers. In February and March 2004, the incentive payments were made
amounting to approximately 118% of the aggregate trigger amounts for all
employees and profit sharing contributions to the 401(k) Savings Plan accounts
at slightly above the trigger level of 0.5%.

Each employee that participated in the plan was given an individual incentive
opportunity that ranged from a "trigger" to "maximum" percentage. Annual
incentives awarded to certain executive officers were based purely on overall
corporate performance, rather than the individual performance of the executive.
For the remainder of the employees who participated in the plan, the payment had
two components. The first component was based on a formula and was equal to
two-thirds of the amount the employee was entitled to receive based on the
attainment of corporate financial measures in relation to his or her trigger
percentage. The second component of the payment was left to the discretion of
management. For non-exempt employees the second component was based on the
performance of their respective business unit or corporate function and not on
their individual performance. For exempt employees, NiSource senior management
calculated the total pool owed to all exempt employees based on NiSource's
income from continuing operations and subtracted the amount owed to employees
under the formula portion of the plan. The remaining pool of money was allocated
by senior management to the various business units and corporate functions based
on senior management's assessment of the performance by that business unit or
corporate function. The management of each business unit and corporate function
was then allowed to distribute the money allocated to him or her based on an
assessment of each individual employee's performance during the year.