NiSource to remove some of the layers in its management structure

MERRILLVILLE, Ind., Aug. 29, 2002 — NiSource Inc. Thursday said it would be taking some of the layers out of its organization structure.

The company hoped the streamlining will move executive management closer to customers and promote efficiency while lowering costs in response to a rapidly changing energy industry.

Four executives are retiring or leaving the organization by early 2003. Patrick J. Mulchay, group president, Indiana energy group, is retiring with 40 years of service, and Jeffrey W. Yundt, group president, energy distribution, is retiring with 23 years of service.

Leaving the corporation are Catherine G. Abbott, group president, pipeline and production, and Stephen P. Smith, president, business services. These executives led the business units formed when NiSource merged with Columbia Energy Group in November 2000.

“These executives are accomplished leaders,” stated Gary L. Neale, NiSource chairman, president and chief executive officer. “Their collective years of achievements have had a significant impact on our company and our industry, and on behalf of the NiSource Board of Directors and all NiSource employees, I offer our thanks and appreciation for their individual and collective efforts and contributions.

“As with all such decisions, Thursday’s actions, while painful in announcing the departure from the company of trusted and loyal colleagues, reflect our commitment to make the changes necessary to adapt to an evolving energy industry. Agile companies review their management structure in response to business efficiency needs and changing market conditions,” continued Neale.

“The management structure that evolved from our merger with Columbia Energy Group was designed to support an organization with a broader strategy that included a merchant function. Current conditions dictate a focus on our core regulated businesses, and streamlining our management structure to reflect that change is the right move.”

This management restructuring does not alter NiSource’s existing business structure and operating companies. Executives currently in leadership roles will lead NiSource’s operating companies.

They are: Barrett Hatches, president and chief executive officer of Northern Indiana Public Service Company, Northern Indiana Fuel and Light Company, Inc., and Kokomo Gas and Fuel Company; Glen L. Kettering, president of Columbia Gas Transmission Corporation, Inc. and Columbia Gulf Transmission Company; Robert C. Skaggs, Jr., president and chief executive officer of Columbia Gas of Ohio, Columbia Gas of Kentucky, Columbia Gas of Maryland, Columbia Gas of Pennsylvania, Bay State Gas Company and Northern Utilities, Inc.; Stephen M. Warnick, president, Columbia Natural Resources, Inc.; and Mark D. Wyckoff, president, Energy Technologies, and president and chief operating officer of Primary Energy, Inc.

These operating executives report to Samuel W. Miller, who earlier this week was named NiSource’s executive vice president and chief operating officer, as will the functional leaders of NiSource’s business services on an interim basis.

Continuing in their current roles are NiSource Vice Chairman Stephen P. Adik; Michael W. O’Donnell, executive vice president and chief financial officer; S. LaNette Zimmerman, executive vice president, human resources and communications; and Peter V. Fazio, Jr., executive vice president and general counsel.

“This process of looking at ourselves and ensuring that we are organized and staffed efficiently and effectively is ongoing,” Neale stated. “Work that we began last fall indicated a necessary reduction in management layers to efficiently support our current focused business strategy. By reducing these layers, we can operate closer to our customers and better integrate our businesses while achieving greater levels of efficiency and effectiveness.”

The organizational review is looking at management and supervisory levels and spans of control in operational and support functions throughout the company. There should be no further impact on current direct field and customer contact positions that already have been realigned.

“Today’s announcement reflects our commitment to continually improve our ability to deliver safe, reliable and cost-effective services that our customers value,” Neale said.

NiSource Inc. is a holding company with headquarters in Merrillville, Ind., whose operating companies engage in nearly all phases of the natural gas business from exploration and production to transmission, storage and distribution, as well as electric generation, transmission and distribution. Its operating companies provide service to 3.7 million customers located within the high-demand energy corridor stretching from the Gulf Coast through the Midwest to New England. Information about NiSource and its subsidiaries is available via the Internet at www.nisource.com .

Source: NiSource Inc.