COLUMBIA GAS SYSTEM INC, U-1, 1996-10-03

COLUMBIA GAS SYSTEM INC
U-1, 1996-10-03
NATURAL GAS TRANSMISISON & DISTRIBUTION

Previous: CLARCOR INC, SC 13D, 1996-10-03

Next: DAYTON HUDSON CORP, 305B2, 1996-10-03

<PAGE> 1

File No. 70-_____
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1

JOINT APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

THE COLUMBIA GAS SYSTEM, INC.
COLUMBIA GAS SYSTEM SERVICE CORPORATION
COLUMBIA LNG CORPORATION
COLUMBIA ATLANTIC TRADING CORPORATION
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458

TRISTAR VENTURES CORPORATION
TRISTAR CAPITAL CORPORATION
TRISTAR PEDRICK LIMITED CORPORATION
TRISTAR PEDRICK GENERAL CORPORATION
TRISTAR BINGHAMTON LIMITED CORPORATION
TRISTAR BINGHAMTON GENERAL CORPORATION
TRISTAR VINELAND LIMITED CORPORATION
TRISTAR VINELAND GENERAL CORPORATION
TRISTAR RUMFORD LIMITED CORPORATION
TRISTAR GEORGETOWN GENERAL CORPORATION
TRISTAR GEORGETOWN LIMITED CORPORATION
TRISTAR FUEL CELLS CORPORATION
TVC NINE CORPORATION
TVC TEN CORPORATION
TRISTAR SYSTEM, INC.
205 Van Buren
Herndon, VA 22070

COLUMBIA NATURAL RESOURCES, INC
900 Pennsylvania Avenue
Charleston, WV 25302

COLUMBIA ENERGY SERVICES CORPORATION
COLUMBIA ENERGY MARKETING CORPORATION
COLUMBIA SERVICE PARTNERS, INC.
121 Hill Pointe Drive
Suite 100
Canonsburg, PA 15317

COLUMBIA GULF TRANSMISSION COMPANY
COLUMBIA GAS TRANSMISSION CORPORATION
1700 MacCorkle Avenue, S.E.
Charleston, WV 25314

COLUMBIA NETWORK SERVICES CORPORATION
1600 Dublin Road
Columbus, OH 43215-1082

COMMONWEALTH PROPANE, INC.
COLUMBIA PROPANE CORPORATION
9200 Arboretum Parkway, Ste 140
Richmond, VA 23236

COLUMBIA GAS OF KENTUCKY, INC.
COLUMBIA GAS OF OHIO, INC.
COLUMBIA GAS OF MARYLAND, INC.
COLUMBIA GAS OF PENNSYLVANIA, INC.
COMMONWEALTH GAS SERVICES, INC.
200 Civic Center Drive
Columbus, OH 43215

- --------------------------------------------------------------------------------
(Names of company or companies filing this statement
and addresses of principal executive offices)

THE COLUMBIA GAS SYSTEM, INC.
- --------------------------------------------------------------------------------
(Name of top registered holding company parent of
each applicant or declarant)

J. W. Trost, Vice President
COLUMBIA GAS SYSTEM SERVICE CORPORATION
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458
(Name and address of agent for service)(Other Agents for Service are Listed on
the Reverse Side of the Front Cover)
<PAGE> 2
Names and Addresses of Subsidiary Company Agents for Service:

M. A. CHANDLER, Treasurer
Columbia Natural Resources, Inc.
900 Pennsylvania Avenue
Charleston, WV 25302

D. DETAR, Treasurer
TriStar Ventures Corporation
TriStar Pedrick Limited Corporation
TriStar Pedrick General Corporation
TriStar Binghamton Limited Corporation
TriStar Binghamton General Corporation
TriStar Vineland Limited Corporation
TriStar Vineland General Corporation
TriStar Rumford Limited Corporation
TriStar Georgetown Limited Corporation
TriStar Georgetown General Corporation
TriStar Fuel Cells Corporation
TVC Nine Corporation
TVC Ten Corporation
TriStar System, Inc.
205 Van Buren
Herndon, VA 22070

S. T. MACQUEEN, Treasurer
Columbia LNG Corporation
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458

J. W. TROST, Vice President
Columbia Gas System Service Corporation
12355 Sunrise Valley Drive, Suite 300
Reston, VA 20191-3420

J. W. GROSSMAN, Treasurer
TriStar Capital Corporation
Columbia Atlantic Trading Corporation
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458

S. M. NORDIN, Treasurer
Commonwealth Propane, Inc.
Columbia Propane Corporation
9200 Arboretum Parkway, Ste 140
Richmond, VA 23236

D. L. GELBAUGH, Vice President
Columbia Gas of Ohio, Inc.
Columbia Gas of Kentucky, Inc.
Commonwealth Gas Services, Inc.
Columbia Gas of Pennsylvania, Inc.
Columbia Gas of Maryland, Inc.
200 Civic Center Drive
Columbus, OH 43215

N. C. Zola, Treasurer
Columbia Gas Transmission Corporation
Columbia Gulf Transmission Company
1700 MacCorkle Avenue,. S. E.
Charleston, WV 25314

D. FURLANO, Treasurer
Columbia Network Services
1600 Dublin Road
Columbus, OH 43215-1082

ROBERT GUSTAFSON, Controller
Columbia Energy Services Corporation
Columbia Energy Marketing Corporation
Columbia Service Partners, Inc.
121 Hill Pointe Drive
Suite 100
Canonsburg, PA 15317
- --------------------------------------------------------------------------------
(Names and Addresses of Other Agents for Service)
<PAGE> 3
Page 1

ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION

(a) Furnish a reasonably detailed and precise description of
the proposed transaction, including a statement of the reasons why it is
desired to consummate the transaction and the anticipated effect thereof. If
the transaction is part of a general program, describe the program and its
relation to the proposed transaction.

The Columbia Gas System, Inc. ("Columbia"), a Delaware
Corporation, and a holding company registered with the U. S. Securities and
Exchange Commission ("Commission") under the Public Utility Holding Company Act
of 1935 ("the Act"), and the following wholly-owned subsidiary companies, are
Joint Applicants-Declarants:

Distribution Subsidiaries -
Columbia Gas of Pennsylvania, Inc. ("Columbia Pennsylvania")
Columbia Gas of Ohio, Inc. ("Columbia Ohio")
Columbia Gas of Maryland, Inc. ("Columbia Maryland")
Columbia Gas of Kentucky, Inc. ("Columbia Kentucky")
Commonwealth Gas Services, Inc. ("Commonwealth Services")

Transmission Subsidiaries -
Columbia Gas Transmission Corporation ("Columbia Transmission")
Columbia Gulf Transmission Company ("Columbia Gulf")

Exploration and Production Subsidiary -
Columbia Natural Resources, Inc. ("Columbia Natural")

Other Subsidiaries -
Columbia Energy Services Corporation ("Energy Services")
Columbia Energy Marketing Corporation ("Energy Marketing")
Columbia Service Partners, Inc. ("Service Partners")
Columbia Gas System Service Corporation ("Service")
<PAGE> 4
Page 2

Columbia Propane Corporation ("Columbia Propane")
Commonwealth Propane, Inc. ("Commonwealth Propane")
TriStar Ventures Corporation ("TriStar Ventures")
TriStar Pedrick Limited Corporation ("Pedrick Limited")
TriStar Pedrick General Corporation ("Pedrick General")
TriStar Binghamton Limited Corporation ("Binghamton Limited")
TriStar Binghamton General Corporation ("Binghamton General")
TriStar Vineland Limited Corporation ("Vineland Limited")
TriStar Vineland General Corporation ("Vineland General")
TriStar Rumford Limited Corporation ("Rumford Limited")
TriStar Georgetown Limited Corporation ("Georgetown Limited")
TriStar Georgetown General Corporation ("Georgetown General")
TriStar Fuel Cells Corporation ("Fuel Cells")
TVC Nine Corporation ("TVC Nine")
TVC Ten Corporation ("TVC Ten")
TriStar System, Inc. ("TriStar System")
TriStar Capital Corporation ("TriStar Capital")
Columbia Atlantic Trading Corporation ("Columbia Atlantic")
Columbia LNG Corporation ("Columbia LNG")
Columbia Network Services Corporation ("Columbia Network Services")

The foregoing named subsidiaries are principally engaged in one or
more phases of the natural gas business or a related energy business. Columbia
Pennsylvania, Columbia Ohio, Columbia Maryland, Columbia Kentucky and
Commonwealth Services comprise the "Utility
<PAGE> 5
Page 3

Subsidiaries". All subsidiary companies excluding the Utility Subsidiaries
comprise the "Nonutility Subsidiaries". All subsidiary companies listed above
are hereinafter referred to collectively as "the Subsidiaries." Columbia and
the Subsidiaries are sometimes hereinafter collectively referred to as the
"System".

The System is seeking, as more fully described hereinafter, Commission
authorization for:

I. External financing by The Columbia Gas System, Inc., including
requests for A) short-term financing in the form of borrowings under a
revolving credit agreement, commercial paper and bid notes, B) long-term
financing, C) authorization to hedge the interest risk associated with existing
and to be issued fixed and floating rate debt from time to time, D) equity
financing, and E) other securities.

II. Intrasystem financing of Subsidiaries, including A) long-term
debt, B) short-term debt (including continuation of the Money Pool), C)
guarantees, D) paying dividends to the extent permitted by Delaware law from
additional capital surplus, which arose from a reverse stock split, for certain
subsidiaries incorporated in Delaware, and E) reincorporation of Columbia
Natural in Delaware.

III. External financing by nonutility subsidiaries and the formation of
financing entities. It is Columbia's belief that precedent was established for
all authorizations requested herein by order of the Commission In Re
Consolidated Natural Gas Company, HCAR No. 26500 (March 28, 1996).

IV. Financing for Exempt Wholesale Generators (EWGs) and Foreign
Utility Companys (FUCOs). Columbia requests Commission authorization to finance
the acquisition of EWGs and FUCOs in compliance with the standards set forth
in Holding Company Act Rule 53. It is Columbia's belief that precedent was
established for the authorization requested herein by order of the Commission
In Re TriStar Ventures Corporation HCAR No. 35-29209.

<PAGE> 6
Page 4

I. EXTERNAL FINANCING

Columbia currently obtains funds externally through short-term debt
financing under the $1 billion Credit Agreement dated as of November 28, 1995,
between Columbia and a group of banks with Citibank, N.A. as Agent (the "Credit
Facility"). The Credit Facility was authorized pursuant to the Order of the
Commission dated August 25, 1995 (HCAR No. 26361; 70-8627).

Columbia is herewith requesting authorization to issue from time to
time prior to December 31, 2001, long-term securities aggregating not more than
$5 billion and short-term debt aggregating no more than $1 billion outstanding
at any one time. The securities that can be issued are any combination of
debentures (which may be in the form of medium term notes), common stock,
preferred stock, or other equity and debt securities as the case may be. Such
securities may be issued and sold pursuant to underwriting agreements of a
type generally standard in the industry. Public
<PAGE> 7
Page 5

distributions can be pursuant to private negotiation with underwriters, dealers
or agents, or effected through competitive bidding among underwriters. In
addition, such securities may be issued and sold through private placements or
other non-public offerings to one or more persons or distribution by dividend
or otherwise to existing shareholders. All such debentures and stock sales
will be at rates or prices and under conditions negotiated, or based upon, or
otherwise determined by, competitive capital markets.

Previously, Columbia registered $1 billion dollars of securities under
a shelf registration statement filed pursuant to the Securities Act of 1933
(the "Securities Act"). That became effective under the Commission's order
dated March 11, 1996. In March 1996, Columbia issued and sold $247,250,000 of
common stock pursuant to the shelf registration. Such issuance and sale were
authorized under the Act pursuant to the Orders of the Commission dated August
25, 1995 (HCAR No. 26361; 70-8627) and March 15, 1996 (HCAR No. 26494;
70-8627). The shelf registration statement remains effective for the issue of
up to $752,750,000 of additional securities subject to the approval of the
Commission on an offering-by-offering basis.

Parameters for Authorization

The Application makes requests for authority, without any additional
prior Commission approvals, to engage in future financing transactions for
which the specific terms and conditions are not at this time known.
Accordingly, it is appropriate that certain conditions concerning the financial
status of Columbia exist at the time of engaging in such activities. The
general conditions for doing such financing activities without further prior
approval are given directly below.

1. Columbia Debt of Investment Grade and Maintenance of Equity Ratio

Columbia would be authorized to engage in the long-term
financing activities described herein as long as: (i) its long-term debt
rating is of investment grade as established by a nationally recognized
statistical rating organization as that term is used in Rule 15c3-
1(c)(2)(vi)(F) under the Securities Exchange Act of 1934 (the "Exchange Act"),
and (ii) its common equity (as reflected in its most recent Form 10-K or Form
10-Q, as the case may be) does not fall below 30% of its consolidated
capitalization. The issuance of any long-term debt financing would occur over
such a period of time and in a combination with equity such that it would not
cause Columbia's common equity to fall below 30% of consolidated
capitalization.

2. Effective Cost of Money on Borrowings
<PAGE> 8
Page 6

The effective cost of money on debt borrowings occurring
pursuant to the authorizations granted under the application will not exceed
300 basis points over comparable term U.S. Treasury securities.

3. Effective Cost of Money on Other Approved Securities

The effective cost of money on preferred stock and other fixed
income oriented securities will not exceed 500 basis points over 30-year term
U.S. Treasury securities.

4. Maturity of Debt

The maturity of indebtedness will not exceed 50 years.
<PAGE> 9
Page 7

5. Issuance Expenses

The underwriting fees, commissions, or other similar
remuneration paid in connection with the non-competitive bid issue, sale or
distribution of a security pursuant to the Application will not exceed 5% of
the principal or total amount of the financing.

6. Aggregate Dollar Limit

The aggregate amount of external, long-term debt and equity
financing issued by Columbia during the approximate five-year period will not
exceed $5 billion of long-term debt and equity financing or more than $1
billion of short-term borrowings outstanding at any one time.

The proceeds from the sale of securities by Columbia in external
financing transactions will be added to Columbia's treasury and used for
general and corporate purposes including (i) the financing, in part, capital
expenditures of Columbia and its Subsidiaries, (ii) the financing (in the case
of short-term debt) gas storage inventories, other working capital requirements
and capital spending of the System, and/or (iii) the acquiration, retirement, or
redemption of securities of which Columbia is an issuer without the need for
prior Commission approval pursuant to Rule 42 or a successor rule.

On June 20, 1995, the Commission issued HCAR No. 26313 in which it
published and solicited public comments on a proposed Rule 58 under the Act.
This proposed rule would permit registered holding companies and their
subsidiaries to acquire securities of companies engaged in specified nonutility
activities without prior Commission approval. Accordingly, the proceeds of the
financings proposed in this proceeding could also be used for these additional
purposes to the extent provided for by the proposed Rule 58. To the
<PAGE> 10
Page 8

extent the use of financing proceeds requested in the application are not
covered under the proposed Rule 58, Columbia would seek Commission approval.

The authorizations requested herein to engage in external or
intrasystem financing without additional Commission approval do not apply in
the case of any financing (other than through the use of internally generated
funds and / or consolidated retained earnings) for the purpose of investing in
either an EWG or a FUCO as defined in Sections 32 and 33 of the Act,
respectively unless, such investment is in compliance with Rule 53 and Rule 54
(as described below).

A. SHORT-TERM FINANCING

To provide financing for general, corporate purposes, including
financing gas storage inventories, other working capital requirements and
construction spending until long-term financing can be obtained, Columbia
requests authorization to have outstanding at any one time through December 31,
2001, up to $1 billion of short-term debt consisting of borrowings under the
Credit Facility, the issuance of commercial paper, the sale of bid notes (as
described below) and other forms of short-term financing generally available to
borrowers with investment grade credit ratings.

In order to consolidate all orders authorizing financings under one
file, Columbia requests that the authorization for the Credit Facility (Order
dated August 25, 1995, HCAR No-26361 be withdrawn and superseded by the order
of the Commission sought herein. Columbia further requests authorization to
amend the Credit Facility without further Commission authorization provided
that the maturity date does
<PAGE> 11
Page 9

not go beyond December 31, 2001, and the principal amount and borrowing margins
do not increase.

1. Commercial Paper

Commercial paper would be sold, from time to time, in established
domestic or European commercial paper markets to dealers at the prevailing
discount rate per annum, or at the prevailing coupon rate per annum, at the
date of issuance for commercial paper of comparable quality and maturities sold
to commercial paper dealers generally. It is expected that the dealers
acquiring commercial paper from Columbia will re-offer such paper at a discount
to corporate, institutional and, with respect to European commercial paper, to
individual investors. It is anticipated that Columbia's commercial paper will
be re-offered to investors such as commercial banks, insurance companies,
pension funds, investment trusts, foundations, colleges and universities,
finance companies and nonfinancial corporations.

Backup bank lines of credit for 100% of the outstanding amount of
commercial paper are generally required by credit rating agencies. The Credit
Facility will serve as backup for Columbia's commercial paper program, thus
negating the need for additional lines of credit.

2. Bid Notes Agreements

Columbia requests approval to enter into individual agreements ("Bid
Note Agreements") with one or more commercial banks which are lenders under the
Credit Facility. The Bid Note Agreements would permit Columbia to negotiate
with one or more banks ("Bid Note Lender[s]") on any given day for such Bid
Note Lender, or any affiliate or subsidiary of such lender, to purchase
promissory notes ("Bid Notes") directly from
<PAGE> 12
Page 10

Columbia. Such notes would bear interest rates comparable to, or lower than,
those available through other forms of short-term borrowing with similar terms
requested in this Application. The maturity of the Bid Notes would not exceed
270 days, and the total amount of Bid Notes outstanding at any time, when added
to the aggregate amounts of short-term borrowing outstanding under other forms
of short-term borrowing contemplated in this Application, would not exceed the
total amount of short-term debt for which authorization is requested. A form
of the proposed Bid Note is attached hereto as Exhibit A-5; however, the exact
form of the security will be negotiated separately with each of the Bid Note
Lenders.

3. Other Securities

Columbia may engage in other types of short-term financing as it may
deem appropriate in light of its needs and market conditions at the time of
issuance. Such short-term financing could include, without limitation, bank
borrowings and medium-term notes issued under the Indenture dated as of
November 28, 1995, between Columbia and Marine Midland Bank, Trustee, as
amended (the "Indenture"). The Indenture provides that the specific terms of
any securities issued be set by resolution of Columbia's Board of Directors.
The Indenture was approved under the Act pursuant to the Order of the
Commission dated August 25, 1995 (HCAR No. 26361). The maturities of such
borrowings would not exceed one year. In no case will the outstanding balance
of all short-term borrowings exceed $1 billion.

B. LONG-TERM FINANCING

Columbia requests Commission authorization through December 31, 2001,
to issue long-term debt securities in an amount, when combined with the
proceeds of issuances of
<PAGE> 13
Page 11

common stock and preferred stock during the period (as discussed below), not to
exceed $5 billion. Examples of such long-term debt securities would include,
but not be limited to, debentures, convertible debt, subordinated debt,
medium-term notes, bank borrowings, and securities with call or put options.
Any long-term debt security would have such designation, aggregate principal
amount, maturity, interest rate(s) or methods of determining the same, terms of
payment of interest, redemption provisions, non-refunding provisions, sinking
fund terms, conversion or put terms and other terms and conditions as Columbia
may determine at the time of issuance. Debentures and medium-term notes would
be issued under the Indenture.

C. HEDGING

In addition, Columbia requests authorization to enter into hedging
transactions to be initiated prior to December 31, 2001, to convert all or a
portion of existing floating rate debt from time to time to fixed rate debt or
to convert all or a portion of existing fixed rate debt from time to time to
floating rate debt using interest rate swaps or other derivative products
designed for such purposes.

1. Interest Rate Swaps for Existing Debt

Columbia is seeking authority to enter into one or more interest rate
swaps ("Swaps"), and one or more derivative instruments, such as interest rate
caps, interest rate floors and interest rate collars (collectively, "Derivative
Transactions"), with one or more counterparties from time to time through
December 31, 2001, in notional amounts aggregating not in excess of the amount
of debt outstanding at any one time. The authorization being sought is similar
to prior authorization granted to Consolidated Natural Gas Company.
<PAGE> 14
Page 12

Columbia proposes to use two different swap strategies. Under one swap
strategy, Columbia would agree to make payments of interest to a counterparty,
payable periodically. The interest would be payable at a variable or floating
rate index and would be calculated on a notional (i.e., principal) amount. In
return, the counterparty would agree to make payments to Columbia based upon the
same notional amount and at an agreed upon fixed interest rate. This would be a
"floating-to-fixed swap" on Columbia's part. Under another swap strategy,
Columbia and the counterparty may exchange roles. Columbia would pay a fixed
interest rate and receive a variable interest rate on a notional amount. This
would be a "fixed-to-floating swap" on Columbia's part. Columbia will enter
into Swaps and/or Derivative Transactions only with creditworthy counterparties.
All transactions entered into under the Hedge Program will be bona fide hedges
of interest rate risk and will meet the criteria established by the Financial
Accounting Standards Board in "Statement of Financial Accounting Standards
("SFAS") No. 80-Accounting for Futures Contracts." SFAS 80 establishes the
criteria which must be satisfied in order to qualify for hedge accounting
treatment,(1) and the financial disclosure requirements associated with hedging
transactions.

Columbia also seeks authorization to enter into an interest rate
hedging program (the "Hedge Program") within a limited time prior to the
issuance of long-term debt securities. The Hedge Program would only be
undertaken pursuant to the express approval of the Columbia Board of Directors
and would only be authorized to occur within 90 days of the issuance of
long-term debt securities.

The Hedge Program would be utilized to fix and/or limit the interest
rate risk exposure on the U.S. Treasury security component of any new issuance
through (i) a forward sale of exchange-traded U.S. Treasury futures contracts,
U.S. Treasury securities and/or a forward swap (each a "Forward Sale"), (ii)
the purchase of put options on U.S. Treasury securities (a "Put Options
Purchase"), (iii) a Put Options Purchase in combination with the sale of call
options on U.S. Treasury securities (a "Zero Cost Collar"), or (iv) some
combination of a Forward Sale, Put Options Purchase and/or Zero Cost Collar.
The program may be executed on-exchange ("On-Exchange Trades") with brokers
through the opening of futures and/or options positions traded on the Chicago
Board of Trade ("CBOT"), the opening of over-the-counter positions with one or
more counterparties ("Off-Exchange Trades") or a combination of On-Exchange
Trades and off-Exchange Trades. Columbia will determine the optimal structure
of the Hedge Program at the time of execution. Columbia may decide to lock in
interest rates and/or limit its exposure to interest rate increases. All open
positions under the Hedge Program will be closed on or prior to the date of the
New Issuance and Columbia will not, at any time, take possession of the
underlying U.S. Treasury securities. Further, no hedge position will be
outstanding for more than 90 days.

All transactions entered into under the Hedge Program will be bona
fide hedges of interest rate risk and will meet the criteria established by the
Financial Accounting Standards Board in "Statement of Financial Accounting
Standards ("SFAS") No. 80-Accounting for Futures Contracts." SFAS 80 establishes
the criteria which must be satisfied in order to qualify for hedge accounting
treatment(1), and the financial disclosure requirements associated with hedging
transactions.

The Hedge Program is designed to reduce risk to Columbia. To prohibit
the possibility of "speculative" transactions, each transaction (or set of
transactions) under the Hedge Program must be approved by the Columbia Hedge
Committee, consisting of senior executive officers, and authorized by
resolution of Columbia's Board of Directors prior to its execution.

Additionally, Columbia notes that the Commission approved an
anticipatory hedge program for commodity price risk management with respect to
SEI Holding, Inc. (HCAR No. 26581). Columbia seeks Commission approval of the
entire Hedge program to ensure the maximal flexibility in structuring effective
interest rate hedging strategies consistent with the authorization previously
granted to Columbia by the Commission pursuant to the Order dated October 1,
1995 (HCAR No. 26385).

2. Hedging Interest Rate Risk for Anticipated Debt Issuance

____________________

(1) SFAS 80 requires that (i) the item to be hedged exposes the
enterprise to price or interest rate risk, (ii) the hedging
instrument reduces that exposure and is designated as a hedge, (iii)
the significant characteristics and expected terms of the anticipated
financial transaction are identified, and (iv) it is probable the
expected transaction will occur. As such, hedging transactions
should not result in an increased risk to Columbia.
<PAGE> 15
Page 13

D. EQUITY FINANCING

Columbia requests Commission authorization through December 31, 2001,
to issue equity securities in an amount, when combined with long-term debt
securities issued pursuant to this Application, not to exceed $5
billion. Such issuance would include common stock issued pursuant to the
Long-Term Incentive Plan (HCAR No. 26515) where options to purchase up to
3,000,000 shares of common stock may be issued over a ten-year period through
February 21, 2006, monthly or quarterly income preferred securities, rights,
options and/or warrants convertible into common or preferred stock and common
and/or preferred stock issued upon the exercise of convertible debt, rights,
options, warrants and/or similar securities.

From time to time in the future, other employee benefit plans may be
adopted by Columbia or a dividend reinvestment plan or stock purchase plan may
be adopted, providing for the issuances of common stock. For instance, a
dividend reinvestment plan and direct stock purchase plan allowing sales to
persons not already shareholders may be implemented. Columbia now proposes to
issue and/or sell shares of common stock pursuant to the existing plan and
similar plans or plan funding arrangements hereinafter adopted and to engage in
other sales of its treasury shares, if any, for reasonable business purposes
without any additional prior Commission order through December 31, 2001, except
that the options to purchase shares under the Long-Term Incentive Plan may be
issued from time to time until February 21, 2006. Stock transactions of this
variety would thus be treated the same as other stock transactions permitted
pursuant to this Application. Such authorization would supersede the Long-Term
Incentive Plan authorization cited above.
<PAGE> 16
Page 14

E. OTHER SECURITIES

In addition to the specific securities for which authorization is
sought herein, Columbia also proposes to issue other types of securities that
it deems appropriate during the period ending December 31, 2001. Columbia
requests that the Commission reserve jurisdiction over the issuance of
additional types of securities. Columbia also undertakes to file a
post-effective amendment which will describe the general terms of each such
security and request a supplemental order of the Commission authorizing the
issuance thereof by Columbia. Columbia further requests that each supplemental
order be issued by the Commission without further time-consuming public notice.

II. INTRASYSTEM FINANCING

Under Rule 52, sales of certain listed securities are exempt when
issued by a utility if certain conditions are met and the issue is approved by
the state utility commission for the state in which the utility subsidiary
operates and are exempt when issued by a nonutility if certain conditions are
met. The Maryland Public Service Commission does not exercise jurisdiction
over the issuance by Columbia Maryland of long- or short-term securities. The
Kentucky, Ohio and Pennsylvania utility commissions do not exercise
jurisdiction over the issuance of short-term debt. Commission authorization
is, therefore, requested for the issuance, from time to time, prior to December
31, 2001, of short- term securities by Columbia Maryland, Columbia Kentucky,
Columbia Ohio and Columbia Pennsylvania and for the issuance, from time to
time, prior to December 31, 2001, of long-term securities by Columbia Maryland
and the purchase, thereof, in each instance, by Columbia.
<PAGE> 17
Page 15

A. LONG-TERM FINANCING

1. Utility Subsidiaries

Columbia and Columbia Maryland are seeking Commission authorization
for the sale of long-term debt securities ("Notes") by Columbia Maryland to
Columbia or the sale of common stock by Columbia Maryland to Columbia in a
cumulative amount not to exceed $30 million for the period through December 31,
2001.

Columbia Maryland plans to finance part of its 1997-2001 capital
expenditure programs with funds generated from the sale of Notes and common
stock to Columbia for cash. The portion of the financing to be effected
through the sale of stock cannot be ascertained at this time. Columbia would
continue to finance Columbia Maryland to maintain a capital structure in a
manner consistent with that of a company with an investment grade credit
rating.

The Notes will be dated the date of their issue, and will have other
provisions as provided for in HCAR No. 26462, dated January 25, 1996, hereby
incorporated by reference. The interest rate on the Notes will be the rate
(including issuance costs) for the most recent long- term debt securities
issued by Columbia during the previous calendar quarter. If no long-term debt
securities were issued during the previous calendar quarter, the interest rate
will be either the estimated new long-term rate that would be in effect if
Columbia were to issue securities, as projected by a major investment bank, or
the prevailing market rate for a newly-issued "A" rated utility bond as in the
procedure previously approved by this Commission in Columbia's current
authorization dated December 22, 1994 (HCAR No. 26201). The current rate on a
newly issued "A" rated 25-30 year utility bonds is 8%. A default rate equal to
2% per annum in excess of the stated
<PAGE> 18
Page 16

rate on unpaid principal or interest amounts would be assessed if any interest
or principal payment becomes past due. The principal amount of the Notes will
be repaid over a term not exceeding thirty years.

The Notes will be issued under a loan agreement pursuant to the Order
of the Commission dated January 25, 1996 (HCAR No. 26462). The loan
agreement will provide for Columbia Maryland to issue either secured or
unsecured debt securities to Columbia from time to time in exchange for cash.

2. Internal Non-Exempt Long-Term Financing by Nonutility Subsidiaries

The Nonutility Subsidiaries propose to issue and Columbia proposes to
acquire other types of securities which do not qualify for exemption under Rule
52 but which are considered appropriate during the period of authorization
granted pursuant to this Application. Columbia and the Nonutility Subsidiaries
request that the Commission reserve jurisdiction over the issuance of such
additional types of securities. The parties will undertake to cause a
post-effective amendment to be filed in this proceeding which will describe the
general terms of each security and request a supplemental order of the
Commission authorizing the issuance thereof by the subject Nonutility
Subsidiary. Columbia and the Nonutility subsidiaries further request that each
supplemental order be issued by the Commission without further time consuming
public notice. Such authorization is consistent with authorizations previously
granted by the Commission to Consolidated Natural Gas, HCAR No. 26500.

B. CONTINUATION OF MONEY POOL/INTERNAL SHORT-TERM FINANCING

The Subsidiaries require short-term funds to meet normal working
capital requirements. For example, Utility Subsidiaries participate in storage
services under which they pay for and
<PAGE> 19
Page 17

store gas during the summer months and recover the cost of such gas when it is
delivered to customers in the winter.

It is proposed that the Subsidiaries borrow short-term funds from the
Money Pool. The maximum amount of Money Pool borrowing outstanding for each
Subsidiary will be determined by Columbia and the Subsidiaries in accordance
with business needs. Actual short-term financing would be issued based on
working capital requirements and any interim financing needed to bridge between
issuances of long-term capital. The maximum short-term debt to be issued by
Columbia Pennsylvania, Columbia Ohio, Columbia Maryland and Columbia Kentucky
will not exceed 40% of their total capitalization.

There is considerable seasonal and daily fluctuation in each
Subsidiary's cash flow due to normal receipt and disbursement patterns. The
patterns vary from company to company so that the companies which have excess
cash and the companies which need cash vary from day to day. Accordingly, it
is proposed that the Money Pool, the existence of which was last approved by
the Commission in HCAR No. 26201 dated December 22, 1994, be continued for
all parties to this Joint Application-Declaration through December 31, 2001.
All short-term borrowing will be through the Money Pool with Service acting as
agent. Columbia may invest in the Money Pool, but will not borrow from the
Money Pool. Should there be insufficient funds in the Money Pool to meet
subsidiaries' aggregate short-term needs for funds, Columbia will borrow or
issue short- term securities and invest the proceeds in the Money Pool to fund
the shortage.

When Columbia and/or the subsidiaries generate cash in excess of their
immediate cash requirements, such temporary excess cash may be invested in the
Money Pool. Columbia and investing subsidiaries would be investors
("Investors") pursuant to a Money
<PAGE> 20
Page 18

Pool evidence of deposit. Loans to Subsidiaries ("Borrowers") through
the Money Pool will be made pursuant to a short-term grid note. Such
short-term grid notes will be due upon demand by the Investor(s), but in any
event will be repaid prior to May 1 of the following calender year after
borrowing. Each Borrower's loans will be allocated to the Investors based on
the proportion of each Investor's investment in the Money Pool to the aggregate
of such investments.

The Money Pool is designed to meet the following objectives: (i)
reduction of Columbia's need to borrow from outside sources to meet the
Subsidiaries' fluctuating cash needs; (ii) settlement of intrasystem
obligations on a non-cash basis; and (iii) reduction of the Subsidiaries' net
corporate interest expense by investment of the maximum funds available and the
borrowing of a lower amount of funds in a more timely fashion than the
Subsidiaries could otherwise achieve.

The cost of money on all short-term advances and the investment
rate for moneys invested in the Money Pool will be the lower of the interest
rate per annum equal to the Money Pool's weighted average short-term investment
rate or Columbia's short term borrowing rate. Should there be no Money Pool
investments or Columbia borrowings, the cost of money will be the prior month's
average Federal Funds rate as published in the Federal Reserve Statistical
Release, Publication H.15 (519). A default rate equal to 2% per annum above
the pre-default rate on unpaid principal or interest amounts will be assessed
if any interest or principal payment becomes past due.

Columbia requests authorization to continue the Money Pool through
December 31, 2001. For Money Pool participation by new direct or indirect
subsidiaries engaged in new lines of business, Columbia requests that the
Commission reserve jurisdiction.
<PAGE> 21
Page 19

C. GUARANTEES

Columbia and the Nonutility Subsidiaries and any nonutility subsidiary
established prior to December 31, 2001, request authorization to enter
guarantee arrangements, obtain letters of credit, and otherwise provide credit
support with respect to obligations of their respective Subsidiaries as may be
needed and appropriate to enable them to carry on in the ordinary course of
their respective businesses. The maximum aggregate limit on all such credit
support by Columbia and by all Subsidiaries at any time will be $500 million.
The $500 million of guarantees is in addition to any financing requested in
this Application. Such authorization of Columbia to provide credit support
would supersede and replace the requested authorization of Columbia to
guarantee up to $100 million of obligations as set forth in the application
noticed on August 2, 1996, HCAR No. 26550. Columbia would charge a cost-based
fee for its credit support under the guarantee arrangement.

D. REDUCTION OF AUTHORIZED SHARES

To the extent that authorization is required, certain of the
Subsidiaries (listed below) request authorization to reduce their authorized
and outstanding shares of common stock to 3,000 shares or less via a reverse
stock split. Each of the listed Subsidiaries is a Delaware corporation. The
reverse stock split will be accomplished through an amendment to their
respective certificates of incorporations. The State of Delaware assesses
franchise taxes based on the number of authorized shares. By reducing the
authorized shares to 3,000 or less via a reverse stock split, the Subsidiaries
will each pay the minimum filing amount of $30 per year. Based on reducing
their respective
<PAGE> 22
Page 20

authorized shares to 3,000 or less, the Subsidiaries will save an estimated
aggregate amount of $125,000 in franchise taxes each year. As a result of this
transaction, additional capital surplus will be created. It is requested that
each of the subsidiaries receive authorization to pay dividends from the
surplus created by the reverse stock split transaction; however, no
extraordinary dividends are anticipated at this time.

Listed below are the Subsidiaries requesting a reduction in authorized
and outstanding common shares:
<TABLE>
<CAPTION>

INCREASE IN
CURRENT SHARES PROJECTED SHARES PAID IN CAPITAL
------------------------- ------------------------ ---------------
SUBSIDIARY AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING ($000)
------------------------------ ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Columbia Atlantic 800,000 82,000 3,000 308 81
Columbia Gulf 9,000,000 5,977,951 3,000 1,993 59,760

Columbia Transmission 15,000,000 9,671,354 3,000 1,934 241,735

Columbia Maryland 420,000 283,686 3,000 2,026 7,041
Service 130,000 130,000 3,000 2,250 12,775

Columbia Propane 340,000 156,000 3,000 1,376 3,866

TriStar Capital 40,000 40,000 3,000 2,250 944
TriStar Ventures 1,000,000 611,704 3,000 1,835 15,247
</TABLE>

E. REINCORPORATION OF COLUMBIA NATURAL

For the reasons described below, Columbia Natural has decided to
reincorporate in Delaware. Under a Plan of Reorganization and Merger, all of
the assets and trade liabilities of Columbia Natural will be transferred to
Columbia Natural (DE) in exchange for common stock of Columbia Natural (DE)
which would simultaneously be transferred to Columbia in exchange for all
outstanding shares of Columbia Natural, leaving Columbia Natural (DE) the
surviving company. The merger will qualify as a tax-free reorganization
<PAGE> 23
Page 21

under Sections 368(a)(1)(A) and (F) of the Internal Revenue Code of 1986, as
amended. Columbia Natural (DE) will succeed to all of the rights and assets of
Columbia Natural and will assume all of its liabilities and obligations. The
officers and directors of Columbia Natural will become the officers and
directors of Columbia Natural (DE).

Columbia Natural's decision to reincorporate in Delaware is based on
the following factors:

1) A majority of Columbia's subsidiaries are already incorporated in
Delaware. See HCAR No. 26536 (reincorporation of Energy Services). Further,
Delaware has followed a policy of encouraging incorporation in that state and,
in furtherance of that policy, has adopted comprehensive, modern, and flexible
corporation laws that are periodically updated and revised to meet changing
business needs. Delaware courts have developed considerable expertise in
dealing with corporate legal issues, and a substantial body of case law has
developed construing the Delaware law and establishing public policy with
respect to Delaware corporations. As a result, many major corporations have
chosen Delaware for their initial domicile or have subsequently reincorporated
in Delaware, in a manner similar to that proposed by Columbia Natural.

2) Texas, the current state of incorporation of Columbia Natural,
restricts dividends on common stock to capital surplus, i.e., retained earnings
and additional paid in capital. Whereas, Delaware law provides additional
capacity for the return of and on capital where dividends can be paid out of
current earnings as well as capital surplus.

III. EXTERNAL FINANCING BY NONUTILITIES

A. EXTERNAL NON-EXEMPT FINANCING BY NONUTILITY SUBSIDIARIES
<PAGE> 24
Page 22

The Nonutility Subsidiaries are expected to be active in the
development and expansion of energy-related, nonutility businesses in the
System. They will be competing with large, well-capitalized companies in
different sectors of the energy industry. In order to accomplish investments
in such competitive arenas, it will be necessary for the Nonutility
Subsidiaries to have the ability to engage in financing transactions which are
commonly accepted for such types of investments. For example, the Nonutility
Subsidiaries may issue and sell monthly and quarterly income preferred
securities pursuant to Rule 52.

The Nonutility Subsidiaries may engage in types of security financing
with nonaffiliates which do not qualify for the application of Rule 52. The
Nonutility Subsidiaries, therefore, request that the Commission reserve
jurisdiction over the issuance of such additional types of securities. They
also undertake to cause a post-effective amendment to be filed in this
proceeding which will describe the general terms of each such security and
request a supplemental order of the Commission authorizing the issuance thereof
by the subject Nonutility Subsidiary. The Nonutility Subsidiaries further
request that each supplemental order be issued by the Commission without
further time-consuming public notice.
<PAGE> 25
Page 23

B. FINANCING ENTITIES

Columbia and the Nonutility Subsidiaries seek authority to organize
new corporations, trusts, partnerships or other entities created for the
purpose of facilitating financings through their issue to third parties of
monthly and quarterly income preferred securities. Request is also made for
these financing entities to issue such securities to third parties in the event
such transactions may not be covered by exemptive Rule 52. Additionally,
request is made for authorization with respect to (i) the issuance of
debentures or other evidences of indebtedness by Columbia to a financing entity
in return for the proceeds of the financing, and (ii) the acquisition by
Columbia of voting interests or equity securities issued by the financing
entity to establish Columbia's ownership of the financing entity. Columbia and
the Nonutility Subsidiaries also request authorization to enter into expense
agreements with their respective financing entities, pursuant to which they
would agree to pay all expenses of such entity.

IV FINANCING OF EWGS AND FUCOS

Columbia currently owns no equity interests in either EWGs or FUCOs.
However, as outlined in HCAR No. 35-26209, Columbia's wholly-owned subsidiary
TriStar Ventures Corporation ("TVC") may expend internally generated funds on
the development of such projects. In addition, TVC continuously seeks out and
reviews investment opportunities which could lead to the acquisition of an
interest in or the construction of EWGs or FUCOs. Sections 32 and 33 of the Act
permit a registered holding company to acquire and maintain interests in one or
more EWGs and FUCOs without the need to apply for or receive approval from the
Commission. To the extent that funds for one or more projects are required in
excess of internally generated funds, Columbia hereby requests Commission
authorization to invest proceeds from the financings authorized hereby in EWGs
and FUCOs in compliance with Holding Company Act Rule 53(a)(1) such that
Columbia's aggregate investment at any one time during the period covered by
this Application will not exceed 50% of its "consolidated retained earnings",
as defined in Holding Company Act Rule 53(a)(1)(ii). Columbia may seek
additional Commission authorization if one or more prospective transactions
warrant additional financing.

Columbia undertakes to maintain, or cause to be maintained to the
extent reasonable under the circumstances, the books and records of any EWG,
foreign EWG or FUCO in which it holds an interest in accordance with the
requirements of Rule 53(a)(2). It is also anticipated that a minimal number of
employees of Columbia's domestic public utility subsidiaries will render
services, directly or indirectly, to EWGs and FUCOs in the Columbia Gas System,
provided that the number of such employees shall not in any event exceed two
percent (2%) of the total number of employees of such public utility companies.

A copy of this application will be submitted to the Public Utility
Commissions of the states of: (i) Kentucky, (ii) Maryland, (iii) Ohio, (iv)
Pennsylvania, and (v) Virginia, which are the only regulators having
jurisdiction over the retail rates of the public utility companies in the
Columbia Gas System. In addition, Columbia will submit to each such Commission
a copy of any Rule 24 certificate required hereunder as well as a copy of
Columbia's Form U5S, including exhibits thereto. None of the conditions
described in Rule 53(b) under the Act exists with respect to Columbia which
would thereby make satisfying Rule 53(b) and Rule 53(c) inapplicable. Thus, in
accordance with Rule 54, the requirements of Rule 53(a), (b), and (c) are
fulfilled.

FILING OF CERTIFICATES OF NOTIFICATION

Transactions contemplated herein which occur pursuant to the
authorization which may be granted by the Commission in this proceeding will be
reported through quarterly Rule 24 certificates of notification which, in order
to avoid duplication of reported information, may include cross-references to
Columbia's filings with the Commission under the Securities Act and Securities
Exchange Act. Rule 24 certificates of notification will be filed within 45
days after each of the first three calendar quarters and 90 days after the
fourth quarter.

With respect to Columbia's Hedge Program, within forty-five days
following the close of each fiscal quarter, Columbia will submit a report to
the Commission disclosing:
<PAGE> 26
Page 24

the trade date; the type of hedge transaction traded; the notional principal
amount; a description of the transaction and the material terms of the
underlying instrument.

SUMMARY OF AUTHORIZATIONS SOUGHT

Columbia requests Commission authorization with this application for
the following financing transactions without any additional Commission
approvals required except as indicated.

I. External financing by The Columbia Gas System, Inc.

A) To have outstanding at any one time up through December 31,
2001, up to $1 billion of short-term debt consisting of
borrowings under the Credit Facility, the issuance of
commercial paper, the sale of bid notes and other forms of
short-term financing generally available to borrowers with
investment grade credit ratings.

Authorization for the Credit Facility (Order dated August 25,
1995, HCAR No. 26361) to be withdrawn and superseded by the
order of the Commission
<PAGE> 27
Page 25

sought herein. Columbia further requests authorization to
amend the Credit Facility without further Commission
authorization provided that the maturity date does not go
beyond December 31, 2001, and the principal amount and
borrowing margins do not increase.

B) Authorization through December 31, 2001, to issue long-term
debt securities in an amount, when combined with the proceeds
from the issuance of equity securities during the period, not
to exceed $5 billion.

C) Authorization to enter into hedging transactions to be
initiated prior to December 31, 2001, to convert all or a
portion of floating rate debt existing or to be issued from
time to time to fixed rate debt or to convert all or a portion
of existing fixed rate debt existing or to be issued from time
to time to floating rate debt using interest rate swaps or
other derivative products designed for such purposes.

D) Authorization through December 31, 2001, to issue equity
securities in an amount, when combined with long-term debt
securities issued pursuant to this Application, not to exceed
$5 billion.

E) Authorization is also being sought to issue other types of
securities that Columbia deems appropriate during the period
ending December 31, 2001, for which the Commission would
reserve jurisdiction over its issuance.

II. Intrasystem financing

A) Columbia and Columbia Maryland are requesting Commission
authorization for the sale of long-term debt securities by
Columbia Maryland to Columbia or the sale of common stock by
Columbia Maryland to Columbia in an amount not to exceed $30
million on or before December 31, 2001.
<PAGE> 28
Page 26

Authority is requested for the Nonutility Subsidiaries to
issue, and Columbia would acquire, other types of securities
which do not qualify for exemption under Rule 52 but which are
considered appropriate during the period of authorization
granted pursuant to this Application. Columbia and the
Nonutility Subsidiaries request that the Commission reserve
jurisdiction over the issuance of such additional types of
securities and that each supplemental order be issued by the
Commission without further time consuming public notice.

B) Authorization is requested for the continuance of the Money
Pool through December 31, 2001, where the maximum amount of
Money Pool borrowing outstanding for each Subsidiary will be
determined by Columbia and the Subsidiaries in accordance with
business needs. Actual short-term financing would be issued
based on working capital requirements and any interim
financing needed to bridge between issuances of long-term
capital. The maximum short-term debt to be issued by
Columbia Pennsylvania, Columbia Ohio, Columbia Maryland and
Columbia Kentucky would not exceed 40% of their total
capitalization.

C) Columbia and its existing Non-utility Subsidiaries and any
non-utility subsidiary established prior to December 31, 2001,
request authorization to enter guarantee arrangements, obtain
letters of credit, and otherwise provide credit support with
respect to obligations of their respective Subsidiaries as may
be needed and appropriate to enable them to carry on in the
ordinary course of their respective businesses. The maximum
aggregate limit on all
<PAGE> 29
Page 27

such credit support by Columbia and by all Subsidiaries at any
time will be $500 million. The $500 million of guarantees is
in addition to any financing requested in this Application.

D) Columbia and certain of the Subsidiaries request authorization
to effect a reverse stock split in order to reduce their
authorized and outstanding shares to 3,000 shares or less and
to pay dividends from any additional capital surplus, which
arose from the reverse stock split.

E) Authorization is also sought to reincorporate Columbia Natural
in Delaware.

III. External financing by Nonutilities

A) The Nonutility subsidiaries request that the Commission
reserve jurisdiction over the issuance of securities to
nonaffiliates which do not qualify for the application of Rule
52. The Nonutility Subsidiaries further request that each
supplemental order be issued by the Commission without further
time-consuming public notice.

B) Columbia and the Nonutility Subsidiaries seek authority to
organize new corporations, trusts, partnerships or other
entities created for the purpose of facilitating financings
through their issue to third parties of monthly and quarterly
income preferred securities. Request for authorization is also
made for these financing entities to issue such securities to
third parties in the event such transaction may not be covered
by exemptive Rule 52. Additionally, request is made for
authorization with respect to (i) the issuance of debentures
or other evidences of indebtedness by Columbia to a financing
entity in return for the proceeds of the financing, and (ii)
the
<PAGE> 30
Page 28

acquisition by Columbia of voting interests or equity securities
issued by the financing entity to establish Columbia's ownership of
the financing. Columbia and the Nonutility Subsidiaries also request
authorization to enter into expense agreements with their respective
financing entities, pursuant to which they would agree to pay all
expenses of such entity.

IV. Financing of EWGs and FUCOs. Columbia seeks Commission authorization
for financing acquisitions of EWGs and FUCOs in compliance with the standards
set forth in Rule 53.

(b) Describe briefly, and where practicable state the approximate
amount of, any material interest in the proposed transaction, direct or
indirect, of any associate or affiliate of the applicant or declarant company
or any affiliate of any such associate company.

Not applicable.

(c) If the proposed transaction involves the acquisition of
securities not issued by a registered holding company or subsidiary thereof,
describe briefly the business and property, present or proposed, of the issuer
of such securities.

Not applicable.

(d) If the proposed transaction involves the acquisition or
disposition of assets, describe briefly such assets, setting forth original
cost, vendor's book cost (including the basis of determination) and applicable
valuation and qualifying reserves.

Not applicable.

ITEM 2. FEES, COMMISSIONS AND EXPENSES
<PAGE> 31
Page 29

(a) State (1) the fees, commissions and expenses paid or incurred,
or to be paid or incurred, directly or indirectly, in connection with the
proposed transaction by the applicant or declarant or any associate company
thereof, and (2) if the proposed transaction involves the sale of securities at
competitive bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.

<TABLE>
<S> <C>
U.S. Securities and Exchange Commission Filing Fee . . . . . . . . . $2,000
Services of Columbia Gas System Service Corporation
in connection with the preparation of the
Application-Declaration . . . . . . . . . . . . . . . . . . . . . 20,000
--------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,000*
=======
</TABLE>

*The above fees do not include the expenses for the issuance of up to $2
billion of long-term debt and equity securities. As noted previously, Columbia
proposes that such fees be capped at 5% of the issuance amount.

(b) If any person to whom fees or commissions have been or are to
be paid in connection with the proposed transaction is an associate company or
an affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.

Service will perform certain services at cost as set forth in
Item 2(a) above.

ITEM 3. APPLICABLE STATUTORY PROVISIONS

(a) State the section of the Act and the rules thereunder believed
to be applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of
exemption.
<PAGE> 32
Page 30

External Financing:

The issuance of debt and equity securities by Columbia is subject to
Sections 6 and 7 of the Act.

Intrasystem Financing:

Subject to the applicability of Rule 52 as discussed below, Sections
6, 7 and 12(b) and Rule 43 are applicable to the issuance and sale of common
stock, Notes and short-term advances by the Subsidiaries and Sections 9, 10
and 12(b) and Rule 45 are applicable to the acquisition by Columbia of such
securities.

The State of Maryland does not regulate the issue of securities by
Columbia of Maryland. Therefore, the Commission is requested to issue its order
authorizing the issue by Columbia of Maryland and the acquisition by Columbia
of short-term borrowings, common stock and Installment Notes.

As set forth in Part (a) of Item 4 of this Application-Declaration,
certain state regulatory commissions having jurisdiction will have authorized
the sale of securities described herein. The acquisition by Columbia and the
issuance by Columbia Ohio, Columbia Pennsylvania, Columbia Kentucky and
Commonwealth Services of common stock and Notes will be exempt from Sections 6,
7, 9 and 10 under the terms of Rule 52.

Rule 52 does not apply to short-term borrowings since such borrowings
are exempt from state commission approval by provision of state law if certain
criteria are met. These criteria will be met except in the state of Virginia
where the short-term borrowings will exceed 5% of Commonwealth Services' total
capitalization. The Commission is requested to issue an order authorizing the
issue of short-term advances and Notes by Columbia Kentucky, Columbia Ohio and
Columbia Pennsylvania.
<PAGE> 33
Page 31

The Money Pool transactions are subject to Sections 6, 7, 9, 10 and
12(b) and (f) of the Act and Rule 45 thereunder. The requirements of such
sections of the Act and Rule will be complied with if the Commission permits
this Application-Declaration to become effective.

Hedging:

To the extent that the Hedge Program involves the jurisdictional
acquisition of a "security" or an "extension of credit", Sections 6(a), 7,
9(a), 10 and 12(b) of the Act and Rules 23, 24 and 45 promulgated thereunder
are applicable to the proposed transactions.

Guarantees:

The issuance by Columbia of a guarantee is subject to Section 12(b) of
the Act and Rule 45 thereunder. To the extent that the transactions which are
the subject matter of this Application-Declaration are considered by the
Commission to require authorization, approval or exemption under any section of
the Act or provision of the rules and regulations other than those specifically
referred to herein, request for such authorization, approval or exemption is
hereby made.

Reduction of Authorized Shares:

To the extent that Section 6 or any other section of the Act or
the rules promulgated thereunder may be applicable to the reverse stock split
proposed transactions, Columbia hereby requests appropriate orders thereunder
as Section 12 (c) of the Act and Rule 46 promulgated thereunder apply to the
payment of dividends. Columbia requests the appropriate orders with respect to
the payment of future dividends from capital surplus following the reverse
stock split and reduction of authorized shares.

Financing of EWGs and FUCOs:

The authorization to invest proceeds from the financings authorized
hereby in EWGs and FUCOs is subject to Sections 32 and 33 of the Act and Rules
53 and 54 promulgated thereunder.

(b) If any person to whom fees or commissions have been or are to
be paid in connection with the proposed transaction is an associate company or
an affiliate of any
<PAGE> 34
Page 32

applicant or declarant, or is an affiliate of an associate company, set forth
the facts with respect thereto.

Not Applicable.

ITEM 4. REGULATORY APPROVAL

(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the U. S. Securities and
Exchange Commission) over the proposed transaction.

The State Corporation Commission of Virginia has jurisdiction over
the acquisition by Columbia and the sale by Commonwealth Services of short-term
and long-term debt securities. Regulatory commissions in the states of
Kentucky, Ohio and Pennsylvania exercise jurisdiction over the issuance and
sale of common stock and Notes by Columbia Kentucky, Columbia Ohio and Columbia
Pennsylvania, but do not exercise jurisdiction over the acquisition of those
securities by Columbia.

(b) Describe the action taken or proposed to be taken before any
commission named in answer to paragraph (1) of this item in connection with the
proposed transaction.

An application will be made by the aforementioned subsidiary
companies to their respective state regulatory commissions as set forth in
answer to Item 3(a) above.

ITEM 5. PROCEDURE

(a) State the date when Commission action is requested. If the
date is less than 40 days from the date of the original filing, set forth the
reasons for acceleration.

It is requested that the Commission issue its Notice by October 15
and its order on or before November 11.

(b) State (i) whether there should be a recommended decision by a
hearing officer, (ii) whether there should be a recommended decision by any
other responsible officer of the Commission, (iii) whether the Division of
Investment Management may assist in the preparation of the Commission's
decision, and (iv) whether there should be a 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
<PAGE> 35
Page 33

Applicants hereby (i) waive a recommended decision by a hearing
officer, (ii) waive a recommended decision by any other responsible officer or
the Commission, (iii) consent that the Division of Investment Management may
assist in the preparation of the Commission's decision, and (iv) waive a 30-day
waiting period between the issuance of the Commission's order and the date on
which it is to become effective.

ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
A-1 Form of Note for all Subsidiaries.
A-2 Form of Subsidiary common stock certificate
(Exhibit A-2 to Joint Application-Declaration File No.
70-7276 is hereby incorporated by reference).
A-3 Form of Money Pool Evidence of Deposit.
A-4 Form of Subsidiary Money Pool Short-Term Grid Note.
A-5 Form of Proposed Bid Note.
D-1 Plan of Reorganization and Merger for Columbia Natural
(to be filed by Amendment).
F Opinion of Counsel for Columbia and Subsidiaries
(to be filed by Amendment).
G Proposed Notice.
H List of Acronyms used in exhibits and financial statements.
</TABLE>

(b) Financial Statements

The Columbia Gas System, Inc. and Subsidiaries:
<PAGE> 36
Page 34

(1) Condensed Statements of Capitalization as of July 31, 1996
Actual and Pro Forma.

There have been no material changes, not in the ordinary course of
business, since the date of the financial statements filed herewith.

ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS

(a) Describe briefly the environmental effects of the proposed
transaction in terms of the standards set forth in Section 102(2) (C) of the
National Environmental Policy Act [42 U.S.C. 4232(2)(C)]. If the response to
this term is a negative statement as to the applicability of Section 102(2)(C)
in connection with the proposed transaction, also briefly state the reasons for
that response.

As more fully described in Item 1, the proposed transactions
subject to the jurisdiction of this Commission relate only to the means of
financing activities. The proposed transactions subject to the jurisdiction of
this Commission have no environmental impact in and of themselves.

(b) State whether any other federal agency has prepared or is
preparing an environmental impact statement ("EIS") with respect to the
proposed transaction. If any other federal agency has prepared or is preparing
an EIS, state which agency or agencies and indicate the status of that EIS
preparation.

No federal agency has prepared or, to Columbia's knowledge, is
preparing an EIS with respect to the proposed transaction.
<PAGE> 37
Page 35

SIGNATURE

Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Post- Effective
Amendment to be signed on their behalf by the undersigned thereunto duly
authorized.

The signatures of the applicants and of the persons signing on their
behalf are restricted to the information contained in this application which is
pertinent to the application of the respective companies.

THE COLUMBIA GAS SYSTEM, INC.

DATE: October 3, 1996 BY: //s//M. W. O'Donnell
----------------------------------------------
M. W. O'Donnell, Senior Vice President
& Chief Financial Officer

COLUMBIA GAS OF OHIO, INC.
COLUMBIA GAS OF KENTUCKY, INC.

DATE: October 3, 1996 by: //s//R. C. Skaggs Jr.
----------------------------------------------
R. C. Skaggs Jr., President & Chief
Executive Officer

COLUMBIA GAS OF MARYLAND, INC.
COLUMBIA GAS OF PENNSYLVANIA, INC.

DATE: October 3, 1996 by: //s//G. J. Robinson
----------------------------------------------
G. J. Robinson, President &
Chief Executive Officer

COMMONWEALTH GAS SERVICES, INC.

DATE: October 3, 1996 by: //s//T. E. Harris
-----------------------------------------------
T. E. Harris, President & Chief Executive
Officer
<PAGE> 38
Page 36

COLUMBIA GULF TRANSMISSION COMPANY
COLUMBIA GAS TRANSMISSION CORPORATION

DATE: October 3, 1996 by: //s//M. P. O'Flynn
----------------------------------------------
M. P. O'Flynn, Senior Vice President &
Chief Financial Officer

COLUMBIA PROPANE CORPORATION
COMMONWEALTH PROPANE, INC.

DATE: October 3, 1996 by: //s//A. M. Brent
-----------------------------------------------
A. M. Brent, President

COLUMBIA GAS SYSTEM SERVICE CORPORATION

DATE: October 3, 1996 by: //s//J. W. Trost
----------------------------------------------
J. W. Trost, Vice President

COLUMBIA NATURAL RESOURCES, INC.

DATE: October 3, 1996 by: //s//W. H. Harmon
----------------------------------------------
W. H. Harmon, President

TRISTAR CAPITAL CORPORATION

DATE: October 3, 1996 by: //s//J. W. Grossman
----------------------------------------------
J. W. Grossman, Treasurer

COLUMBIA LNG CORPORATION
COLUMBIA ATLANTIC TRADING CORPORATION

DATE: October 3, 1996 by: //s//L. M. Bridges
----------------------------------------------
L. M. Bridges, President
<PAGE> 39
Page 37

COLUMBIA ENERGY SERVICES CORPORATION
COLUMBIA ENERGY MARKETING CORPORATION
COLUMBIA NETWORK SERVICES CORPORATION
COLUMBIA SERVICE PARTNERS, INC.

DATE: October 3, 1996 by: //s//A. Trubisz, Jr.
-----------------------------------------------
A. Trubisz, Jr., President

TRISTAR VENTURES CORPORATION
TRISTAR PEDRICK LIMITED CORPORATION
TRISTAR PEDRICK GENERAL CORPORATION
TRISTAR BINGHAMTON LIMITED CORPORATION
TRISTAR BINGHAMTON GENERAL CORPORATION
TRISTAR VINELAND LIMITED CORPORATION
TRISTAR VINELAND GENERAL CORPORATION
TRISTAR RUMFORD LIMITED CORPORATION
TRISTAR FUEL CELLS CORPORATION
TRISTAR GEORGETOWN GENERAL CORPORATION
TRISTAR GEORGETOWN LIMITED CORPORATION
TVC NINE CORPORATION
TVC TEN CORPORATION
TRISTAR SYSTEM, INC.

DATE: October 3, 1996 BY: //s// D. DETAR
-------------------------------------------
D. DETAR, TREASURER

<PAGE> 1
Exhibit A-1

PROMISSORY NOTE

Date:

FOR VALUE RECEIVED, the undersigned,
___________________________________, a ______________________ corporation (the
"Company"), promises to pay to the order of The Columbia Gas System, Inc.,
("Lender"), in lawful money of the United States of America and immediately
available funds, the unpaid Principal Amount of each Borrowing made by the
Lender to the Company pursuant to the Loan Agreement, dated August 21, 1996,
between the Lender and the Company (the "Agreement"). The Company promises to
pay interest on the unpaid Principal Amount on the Interest Payment Dates and
at the rate or rates provided for on the schedule attached hereto (the
"Schedule"). All Borrowings, including the date thereof, the principal
balance, the interest on the unpaid principle balance, the rate of interest or
method of determining such rate, the maturity date of such Borrowing and the
Interest Payment Dates shall be recorded by the Lender on the attached
Schedule. Any principal or interest not paid when due shall bear interest from
maturity until paid in full at a default rate of interest as specified in the
Agreement.

Upon the happening of an Event of Default other than those specified in
Section 6.01(6) or 6.01(7) of the Agreement, the Lender may declare the
Principal Amount and all accrued and unpaid interest on the Note due and
payable. Upon the happening of an Event of Default specified in Section
6.01(6) or 6.01(7) of the Agreement, the Principal Amount and all accrued and
unpaid interest shall become and be immediately due and payable without any
declaration or other act on the part of the Lender.

The Company hereby authorizes the Lender to endorse on the Schedule the
date, amount and maturity date of, and the interest rate with respect to, each
Borrowing evidenced hereby and all payments thereof, provided that the failure
to do so shall not affect the obligations of either the Company or the Lender.
Additional Schedule pages may be attached hereto from time to time by Lender,
as necessary.

The Company hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.

The Company hereby irrevocably constitutes and appoints the Lender and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Company and in the name of the Company or in its own name,
from time to time in the Lender's discretion after the occurrence of an Event
of Default or the Company's failure to provide adequate assurances in
accordance with paragraphs (a) or (b) of Section 4.04 of the Agreement, for the
purposes of carrying out the Agreement, to take any and all appropriate

Page 38
<PAGE> 2
action and to execute any and all documents and instruments which may be, in
the Lender's sole judgement, necessary or desirable to accomplish the purpose
of the Agreement, including, but not limited to, providing security to the
Lender with respect to the Company's obligations under this Note or the
Agreement. The powers conferred on the Lender hereunder are solely to allow
the Lender to protect its interest in the Company's Property and shall not
impose any duty upon the Lender to exercise any such powers.

The Lender may assign this Note at any time without the consent of the Company.

The terms of the Agreement are incorporated herein by reference. Any
capitalized terms not defined herein shall have the meaning assigned to them in
the Agreement.

This Note shall be governed by and construed in accordance with the laws
of the State of Delaware.

_____________________________
Company

By:__________________________
Authorized Officer

And: ________________________
Secretary

Page 39

<PAGE> 1
EXHIBIT A-3

COLUMBIA GAS SYSTEM
INTRASYSTEM MONEY POOL
EVIDENCE OF DEPOSIT

$ (see attached schedule)
Wilmington, Delaware
______________, 1994

The undersigned, Columbia Gas System Service Corporation, a Delaware
corporation, ("Service"), in its capacity as Agent of the funds invested in
Columbia Gas System's Intrasystem Money Pool (the "Money Pool"), hereby
acknowledges receipt of the aggregate unpaid principal amount of all
investments deposited in the Money Pool (that are posted on the schedule
annexed hereto and made a part hereof) made by the investor to the undersigned
pursuant to the short-term financing authorization approved by the Securities
and Exchange Commission.

Under the terms of Money Pool Borrowing, the subsidiaries pay interest
on the unpaid principal amount hereof from time to time from the date hereof at
the rate per annum equal to the Money Pool's weighted average short-term
investment rate. Should there be no Money Pool investments, the rate will be
the prior month's Federal Funds rate as published in the Federal Reserve
Statistical Release, Publication H.15 (519). Interest shall be payable monthly
in arrears and upon payment (including prepayment) in full of the unpaid
principal amount hereof. Upon demand for payment, demand will be made of the
borrowing Subsidiaries.

IN WITNESS WHEREOF said Columbia Gas System Service Corporation
pursuant to due authorization has caused this Evidence of Deposit to be
executed on behalf of Columbia's Intrasystem Money Pool by its duly authorized
officers, all as of the aforementioned Note Execution Date first above written.

(Columbia Intrasystem Money Pool)

By: _____________________________
Title:

Page 40

<PAGE> 1
EXHIBIT A-4

COLUMBIA GAS SYSTEM
INTRASYSTEM MONEY POOL ADVANCES

As of _______________
_____________________

FOR VALUE RECEIVED, the undersigned,
__________________________________, a __________________corporation, (the
"Company"), hereby unconditionally promises to pay on demand or in any event by
_______________ to the order of Columbia Gas System Service Corporation
("Service"), in its capacity as Agent of the Columbia Gas System Intrasystem
Money Pool (the "Money Pool") and for the benefit of the Money Pool depositors,
at the Office of Service located at 20 Montchanin Road, Wilmington, Delaware
19807, in lawful money of the United States of America and in immediately
available funds, the principal amount of the aggregate unpaid principal amount
of all Loans (that are posted on the schedule annexed hereto and made a part
hereof) made by the Money Pool to the undersigned pursuant to the financing
authorization approved by the Securities and Exchange Commission.

The undersigned further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time from the date
hereof at the rate per annum equal to the Money Pool's weighted average
short-term investment rate. Should there be no Money Pool investments, the
cost of money will be the prior month's Federal Funds rate as published in the
Federal Reserve Statistical Release, Publication H.15 (519). Interest shall be
payable monthly in arrears and upon payment (including prepayment) in full of
the unpaid principal amount hereof. If applicable, a default rate equal to 2%
per annum above the pre-default rate on the unpaid principal amount will be
assessed if any interest or principal payment becomes past due.

This Note shall be governed by, and construed and interpreted in
accordance with, the Laws of the State of Delaware without regard to conflicts
of laws principles, except as preempted by Federal law.

IN WITNESS WHEREOF said ______________________________ pursuant to due
authorization has caused this Note to be executed in its name and on its behalf
by its duly authorized officers, all as of the aforementioned Note Execution
Date first above written.

__________________________
Company

By:__________________________
Title:

Page 41

<PAGE> 1
Exhibit A-5

CG LETTERHEAD

Date _______________________________

Bank Name
Address

Attention: __________________________________

Bid Note Program Letter Agreement

Ladies and Gentlemen:

The Columbia Gas System, Inc. ("COLUMBIA" or the "COMPANY") hereby
offers ________________________________________ (the "BANK") the opportunity to
participate in an uncommitted credit facility for general corporate purposes.

1. Columbia may from time to time request advances ("ADVANCES") from
the Bank, on the terms and conditions set forth below. This letter does not
commit the Bank to lend but rather sets forth the procedures to be used in
connection with Columbia's requests for Advances from the Bank from time to
time on or prior to the termination hereof pursuant to paragraph 11 and, in the
event that the Bank makes Advances to Columbia hereunder, the Company's
obligations to the Bank with respect thereto. The Advances shall be evidenced
by the unsecured "grid" promissory note executed by Columbia in substantially
the form of Exhibit A hereto (the "NOTE").

2. Each Advance shall be $1,000,000 and in integral multiples thereof
and shall be made upon (i) Columbia's request to the Bank by telephone, telex
or letter, given by any of the persons empowered to borrow by Columbia's Board
of Directors and listed on Exhibit B hereto or otherwise designated by Columbia
in writing ("DESIGNATED PERSONS"), that Columbia wishes to borrow money on a
specified date, in a specified amount and for a specified term (which shall, in
no event, be longer than 270 days); and (ii) our agreement with you, and your
agreement with us, as to such date, amount and term, and as to the Quoted Rate
(as defined in the Note) of interest per annum applicable to such Advance. The
Bank agrees to transfer or wire funds only to accounts designated in writing by
Designated Persons. Promptly after the date of each Advance, the Bank will
send Columbia a written confirmation of such Advance and the amount and term
thereof and the interest rate per annum applicable thereto.

3. Columbia will furnish the Bank, as soon as available, the
Company's quarterly financial statements and annual audited financial
statements, and other public information that you may from time to time
reasonably request. The Bank may furnish to purchasers and prospective
purchasers of participations in or assignments of any Advance copies of the
foregoing statements, filings and other information. However, to the extent
that the

Page 42
<PAGE> 2
bank requests proprietary and/or confidential information, Columbia may request
the execution of an appropriate confidentiality agreement, if that information
is provided, and in no event shall such information be provided to third
parties.

4. Columbia's request for an Advance shall constitute: (i) a
representation and warranty by us that no payment default has occurred and is
continuing under any agreement or instrument relating to any of Columbia's
indebtedness or would result after giving effect to such Advance and to the
application of the proceeds therefrom (ii) a representation and warranty by
Columbia that no Event of Default (as defined in the Note) or event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both and (iii) a representation and warranty by it that no event
has occurred and no circumstance exists as a result of which the information
which we have provided to the Bank pursuant to paragraph 3 would include an
untrue statement of a material fact or omit to state any material fact or any
fact necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.

5. Columbia shall repay, and shall pay interest on, each Advance in
accordance with the terms hereof and of the Note. Columbia shall have no right
to prepay any unpaid amount of any Advance.

6. Columbia shall make each payment hereunder and under the Note on
or before 3:00 P.M. (New York City time) on the day when due in lawful money of
the United States of America to the Bank at its office at
______________________________________________________________________
_______________________________________________________________________, in
same day funds. Columbia hereby authorizes the Bank, if and to the extent that
payment is not made when due hereunder, to charge from time to time against any
or all of Columbia's accounts with the Bank any amount so due. All
computations of interest shall be made by the Bank on the basis of a year of
360 days, for the actual number of days (including the first day but excluding
the last day) elapsed.

7. Whenever any payment to be made hereunder shall be stated to be
due on a Saturday, a Sunday or a public or bank holiday in New York City (any
other day being a "BUSINESS DAY"), such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.

8. The Bank shall incur no liability to Columbia in acting upon any
telephone, telex or letter request or other communication which the Bank
believes in the absence of gross negligence to have been given by a Designated
Person or in otherwise acting in good faith under this letter. Further, all
documents required to be executed in conjunction with Advances under this
letter may be signed by any Designated Person.

9. This letter shall remain in effect until terminated by either
Columbia or the Bank by giving prior written notice of termination hereof to
the other party hereto, but no such

Page 43
<PAGE> 3
termination shall affect Columbia's obligations with respect to the Advances
outstanding at the time of such termination.

10. All written communications hereunder shall be mailed, telexed or
delivered to the address specified below for Columbia and for the Bank, or as
to each party, to such other address as shall be designated by such party in a
written notice to the other party.

If to Columbia, Mr. Edward D. Harvey, Jr.
Assistant Treasurer
Columbia Gas System Service Corporation
Suite 300
Sunrise Valley Drive
Reston, Virginia 20191-3458
Phone: (703) 295-0494
Fax: (703) 715-7916

If to the Bank,

11. The Bank may assign to one or more banks or other entities all or
any part of, or may grant participations to one or more banks or other entities
in or to all or any part of, any Advance or Advances hereunder and under the
Note. Columbia may not assign its rights hereunder or any interest herein
without the Bank's prior written consent and any such assignment without the
Bank's consent shall be null and void.

12. Columbia agrees to pay on demand all reasonable costs and
expenses, if any, incurred by the Bank in connection with the enforcement of
this letter or the Note.

13. Columbia hereby represents and warrants that (i) the execution,
delivery and performance by us of this letter and the Note are within our
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (x) our charter or by-laws or (y) law or any contractual
restriction binding on or affecting us or any entity that controls us; (ii) no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or any other third party is
required for the due execution, delivery and performance by Columbia of this
letter or the Note; and (iii) each of this letter and the Note has been duly
executed and delivered by Columbia, and is its legal, valid and binding
obligation, enforceable against Columbia in accordance with its terms.

14. This letter shall be governed by, and construed in accordance
with, the laws of the State of New York.

Page 44
<PAGE> 4
15. Columbia and the Bank each hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) arising out of or relating to this letter or the
Note or any Advances hereunder.

If the terms of this letter are satisfactory to the Bank, please
indicate your agreement and acceptance thereof by signing a counterpart of this
letter and returning it to us.

Very truly yours,

THE COLUMBIA GAS SYSTEM, INC.

By: _________________________________
Name:
Title:

Agreed and Accepted

____________________________________________

By: ______________________________________
Name:
Title:

Page 45
<PAGE> 5
EXHIBIT A
TO
BID NOTE PROGRAM LETTER AGREEMENT
DATED ________________
BETWEEN THE COLUMBIA GAS SYSTEM, INC. AND
______________________________________

SHORT-TERM NOTE

Dated _______________

FOR VALUE RECEIVED, the undersigned (the "BORROWER"), HEREBY PROMISES
TO PAY to the order of __________________________ (the "BANK") the principal
amount of each Advance (as defined below) made by the Bank to the Borrower, on
the date mutually agreed to by the Bank and the Borrower at the time of such
Advance as the maturity date thereof; together with interest (computed on the
basis of a year of 360 days for the actual number of days, including the first
day but excluding the last day, elapsed) on the principal amount of each
Advance outstanding from time to time from and including the date on which such
Advance is made until the maturity date of such Advance, payable on the
maturity date of such Advance at a rate quoted by the Bank and agreed to by the
Borrower at the time of such Advance (the "QUOTED RATE"). If, in accordance
with the Bid Note Program referred to below, the Borrower shall make a timely
objection as to the Quoted Rate for any Advance, such Advance shall be payable
on demand and shall bear interest at a fluctuating interest rate per annum in
effect from time to time equal to 120% of the higher of:

(a) the rate of interest announced publicly by the Bank in New York,
New York, from time to time, as the Bank's base rate; or

(b) 1/2 of one percent above the latest three-week moving average of
secondary market morning offering rates (expressed as an annual rate) in the
United States for three-month certificates of deposit of major United States
money market banks, such three-week moving average being determined weekly on
each Monday (or, if any such day is not a Business Day, on the next scheduled
Business Day) for the three-week period ending on the previous Friday by the
Bank on the basis of such rates reported by certificate of deposit dealers to
and published by the Federal Reserve Bank of New York or, if such publication
shall be suspended or terminated, on the basis of quotations for such rates
received by the Bank from three New York certificate of deposit dealers of
recognized standing selected by the Bank, in either case adjusted to the
nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent (the higher of (a) or (b) being the "BASE
RATE").

Any overdue amount of principal, interest, fees or other amounts
payable hereunder or under the Bid Note Program referred to below shall bear
interest, payable on demand, at the Base Rate plus 2% per annum.

Page 46
<PAGE> 6
The Borrower shall have no right to prepay any unpaid amount of any
Advance. If any of the following events shall occur and be continuing (each,
and "EVENT OF DEFAULT"):

(a) the Borrower shall fail to pay any principal of, or any interest
on, any Advance when the same becomes due and payable; or

(b) any representation or warranty made by the Borrower (or any of its
officers) pursuant to the Bid Note Agreement shall prove to have been
incorrect in any material respect when made; or

(c) the Borrower shall, without the prior written consent of the Bank,
merge or consolidate with or into, or convey, transfer, lease or
dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets to, any person or entity; or

(d) the Borrower shall fail to pay any principal of or premium or
interest on any indebtedness (excluding indebtedness evidenced by this
Note) in a principal amount of $30,000,000 in aggregate when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in such
agreement or instrument relating to such indebtedness; or any other
event shall occur or condition shall exist under any agreement of
instrument relating to any such indebtedness and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such indebtedness;
or any such indebtedness shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or

(e) the Borrower shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar
official for it or any substantial part of its property; and in the
case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian
or other similar official for, it or for any substantial part of its
property) shall occur; or the Borrower shall take any corporate action
to authorize any of the actions set forth above in this subsection
(e);

Page 47
<PAGE> 7
then, and in any such event, the Bank may declare this Note, all
interest thereon and all other amounts payable hereunder to be
forthwith due and payable, whereupon this Note, all such interest and
all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind,
all of which the Borrower hereby expressly waives; provided, however,
that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower under the Federal Bankruptcy Code, this
Note, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by
the Borrower.

The Borrower shall make each payment of principal and interest
hereunder prior to 3:00 P. M. (New York City time) on the day when due in
lawful money of the United States of America to the Bank at its office
at _____________________________________________________________________________
_______________________________________, in same day funds. Whenever any
payment to be made hereunder shall be otherwise due on a Saturday, a Sunday or
a public or bank holiday in New York City (any other day being a "BUSINESS
DAY), such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest.

The Borrower hereby authorizes the Bank to endorse on the grid
attached hereto the date and amount of each Advance made by he Bank to the
Borrower hereunder, the maturity date thereof, all payments made on account of
principal thereof and the interest rate applicable thereto, provide that the
failure to do so shall not affect the obligations of the Borrower to the Bank.

The Borrower also agrees to pay on demand all reasonable costs and
expenses (including fees and expenses of counsel) incurred by the Bank in
enforcing this Note.

This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.

This Note is the Note referred to in, and is entitled to the benefits
of, the Bid Note Program, dated _____________ (the "BID NOTE PROGRAM"), between
the Borrower and the Bank, which Bid Note Program, among other things, sets
forth procedures to be used in connection with the Borrower's periodic requests
that the Bank make advances (the "ADVANCES) to it from time to time.

Capitalized terms used herein but not defined in this Note shall have
the meanings attributed to them in the agreement.

THE COLUMBIA GAS SYSTEM, INC.

By:__________________________
Title:

Page 48

<PAGE> 1
EXHIBIT G

SECURITIES AND EXCHANGE COMMISSION

(Release No. )

The Columbia Gas System, Inc. and Subsidiaries Notice of Proposed External
Financing by The Columbia Gas System, Inc., Intrasystem Financing of
Subsidiaries and External Financing by Nonutility subsidiaries for the period
January 1, 1996 through December 31, 2001.

The Columbia Gas System, Inc. ("Columbia"), a Delaware corporation and
registered holding company and subsidiaries:

COLUMBIA GAS OF OHIO, INC. ("Columbia Ohio")
COLUMBIA GAS OF PENNSYLVANIA, INC. ("Columbia Pennsylvania")
COLUMBIA GAS OF KENTUCKY, INC. ("Columbia Kentucky")
COLUMBIA GAS OF MARYLAND, INC. ("Columbia Maryland")
COMMONWEALTH GAS SERVICES, INC. ("Commonwealth Services")
200 Civic Center Drive
Columbia, Ohio 43215
COLUMBIA GAS TRANSMISSION CORPORATION ("Columbia Transmission")
COLUMBIA GULF TRANSMISSION COMPANY ("Columbia Gulf")
1700 MacCorkle Avenue, S.E.
Charleston, West Virginia 25314
COLUMBIA NATURAL RESOURCES, INC. ("Columbia Natural")
900 Pennsylvania Ave.
Charleston, West Virginia 25302
COMMONWEALTH PROPANE, INC. ("Commonwealth Propane")
COLUMBIA PROPANE CORPORATION ("Columbia Propane")
800 Moorefield Park Drive
Richmond, Virginia 23236
COLUMBIA ENERGY SERVICES CORPORATION ("Energy Services")
COLUMBIA SERVICE PARTNERS, INC. ("Service Partners")
COLUMBIA ENERGY MARKETING CORPORATION ("Energy Marketing")
2581 Washington Road
Upper Saint Clair, PA 15241
COLUMBIA GAS SYSTEM SERVICE CORPORATION ("Service")
COLUMBIA LNG CORPORATION ("Columbia LNG")
COLUMBIA ATLANTIC TRADING CORPORATION ("Columbia Atlantic")
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458
TRISTAR VENTURES CORPORATION ("TriStar Ventures")
TRISTAR CAPITAL CORPORATION ("TriStar Capital")
205 VanBuren
Herndon, VA 22070

Page 49
<PAGE> 2
(the "Subsidiaries") have filed a joint application-declaration with this
Commission pursuant to [Sections 6, 7, 9, 10, 12(b), 12(c) and 12(f) under the
Public Utility Holding Company Act of 1935 (the "Act") and Rules 43, 45 and 52
thereunder].

Columbia proposes the following financing transactions without any
additional Commission approvals required, except as noted:

I. External financing by The Columbia Gas System, Inc.

A) To have outstanding at any one time up through
December 31, 2001, up to $1 billion of short-term
debt consisting of borrowings under the Credit
Facility*, the issuance of commercial paper, the sale
of bid notes and other forms of short-term financing
generally available to borrowers with investment
grade credit ratings.

Columbia further requests authorization to
amend the Credit Facility, without further Commission
authorization provided that the maturity date does
not go beyond December 31, 2001, and the principal
amount and borrowing margins do not increase.

B) Authorization through December 31, 2001, to issue
long-term debt securities in an amount, when combined
with the proceeds from equity financings during the
period, not to exceed $5 billion.

C) Authorization to enter into hedging transactions to
be initiated prior to December 31, 2001, to convert
all or a portion of floating rate debt existing or to
be issued from time to time to fixed rate debt or to
convert all or a portion of fixed rate debt existing
or to be issued from time to time to floating rate
debt using interest rate swaps or other derivative
products designed for such purposes.

D) Authorization through December 31, 2001, to issue
equity securities in an amount, when combined with
long-term debt securities issued pursuant to this
Application, not to exceed $5 billion.

E) Authorization to issue other types of securities that
Columbia deems appropriate during the period ending
December 31, 2001, in an amount when combined with
long-term debt securities and equity issued pursuant
to this Application, not to exceed $5 billion subject
to a reservation of jurisdiction over the terms of
said securities.

II. Intrasystem financing

A) Columbia Maryland plans for the sale of long-term
debt securities and common stock to Columbia in an
amount not to exceed $30 million on or before
December 31, 2001.

Authority for the Nonutility Subsidiaries to
issue, and Columbia to acquire, other types of
securities which do not qualify for exemption under
Rule 52 but which are considered appropriate during
the period of authorization granted pursuant to this
Application. Columbia and the Nonutility
Subsidiaries propose that the Commission reserve
jurisdiction over the issuance of such
_____________
*Authorization for the Credit Facility (Order dated August 25, 1995, HCAR
35-26361; 70-8627) to be withdrawn and superseded by the order of the
Commission sought herein.

Page 50
<PAGE> 3
additional types of securities and that each supplemental order be issued by
the Commission without further time consuming public notice.

B) Authorization for the continuance of the Money Pool
through December 31, 2001, where the maximum amount
of Money Pool borrowing outstanding for each
Subsidiary will be determined in accordance with
business needs. Actual short-term financing would be
issued based on working capital requirements and any
interim financing needed to bridge between issuances
of long-term capital. The maximum short-term debt
to be issued by Columbia Pennsylvania, Columbia Ohio,
Columbia Maryland and Columbia Kentucky would not
exceed 40% of their total capitalization.

C) Columbia and its existing Nonutility Subsidiaries and
any Nonutility Subsidiary established is seeking
authorization to enter guarantee arrangements, obtain
letters of credit, and otherwise provide credit
support with respect to obligations of their
respective Subsidiaries to third parties as may be
needed and appropriate to enable them to carry on in
the ordinary course of their respective businesses
prior to December 31, 2001. The maximum aggregate
limit on all such credit support by Columbia and by
all Subsidiaries at any time will be $500 million.
The $500 million of guarantees is in addition to any
financing planned for in this Application.

D) Columbia and certain of the Subsidiaries plan to
reduce their authorized and outstanding shares to
3,000 shares or less in order to reduce franchise
taxes.

E) Authorization to reincorporate Columbia Natural in
Delaware.

III. External financing by Nonutilities

A) The Nonutility Subsidiaries request that the
Commission approve the issuance of securities to
nonaffiliates which do not qualify for the
application of Rule 52 but reserve jurisdiction over
the terms of the securities. The Nonutility
Subsidiaries further propose that each supplemental
order be issued by the Commission without further
time-consuming public notice.

B) Columbia and the Nonutility Subsidiaries plan to
organize new corporations, trusts, partnerships or
other entities created for the purpose of
facilitating financings through their issue to third
parties of monthly and quarterly income preferred
securities. Authorization is also being sought for
these financing entities to issue such securities to
third parties in the event such transactions
involving financing by Columbia may not be covered by
exemptive Rule 52. Additionally, authorization is
required with respect to (I) the issuance of
debentures or other evidences of indebtedness by
Columbia to a financing entity in return for the
proceeds of the financing entity, and (ii) the
acquisition by Columbia of voting interests or equity
securities issued by the financing entity to
establish Columbia's ownership of the financing.
Columbia and the Nonutility Subsidiaries also are
seeking authorization to enter into expense
agreements with their respective financing entities,
pursuant to which they would agree to pay all
expenses of such entity.

IV. Financing of EWGs and FUCOs. Columbia seeks Commission
authorization of EWGs and FUCOs in compliance with the standards
set forth in Rule 53.

Page 51
<PAGE> 4

The joint application-declaration and any amendments thereto are
available for public inspection through the commission's Office of Public
Reference. Interested persons wishing to comment or request a hearing should
submit their views in writing by December 15, 1994, to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on
the applicants-declarants at the address specified above. Proof of service (by
affidavit or, in case of an attorney-at-law, by certificate) should be filed
with the request. Any request for a hearing shall identify specifically the
issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in this matter. After said date, the joint
application-declaration, as filed or as it may be amended, may be permitted to
become effective.

For the Commission, by the Division of Investment Management, pursuant
to delegated authority.

Jonathan G. Katz
Secretary

Page 52

<PAGE> 1
EXHIBIT H

LIST OF ACRONYMS FOR EXHIBITS AND FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Company Acronym
------- -------
<S> <C>
The Columbia Gas System, Inc. & Subsidiaries . . . . . . . . . . . CGS
The Columbia Gas System, Inc. . . . . . . . . . . . . . . . . . . CG
Columbia Gas System Service Corporation . . . . . . . . . . . . . CS
Columbia Gulf Transmission Company . . . . . . . . . . . . . . . . CGT
Columbia Energy Services Corporation . . . . . . . . . . . . . . . CES
TriStar Ventures Corporation . . . . . . . . . . . . . . . . . . . TVC
TriStar Capital Corporation . . . . . . . . . . . . . . . . . . . TCC
Columbia LNG Corporation . . . . . . . . . . . . . . . . . . . . . CLG
Columbia Coal Gasification Corporation . . . . . . . . . . . . . . CGC
Columbia Gas of Kentucky, Inc. . . . . . . . . . . . . . . . . . . CKY
Columbia Gas of Ohio, Inc. . . . . . . . . . . . . . . . . . . . . COH
Columbia Gas of Maryland, Inc. . . . . . . . . . . . . . . . . . . CMD
Columbia Gas of Pennsylvania, Inc. . . . . . . . . . . . . . . . . CPA
Commonwealth Gas Services, Inc. . . . . . . . . . . . . . . . . . COS
Commonwealth Propane, Inc. . . . . . . . . . . . . . . . . . . . . CPI
Columbia Propane Corporation . . . . . . . . . . . . . . . . . . . CPC
Columbia Atlantic Trading Corporation . . . . . . . . . . . . . . CAT
Columbia Natural Resources, Inc. . . . . . . . . . . . . . . . . . CNR
</TABLE>

Page 1
<PAGE> 2

THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
(b)(1)
(1 of 2)
CONDENSED STATEMENTS OF CAPITALIZATION
ACTUAL and PRO FORMA
As of July 31, 1996
($000)

<TABLE>
<CAPTION>
CGS* CG CS CGT CPC
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ACTUAL CAPITALIAZTION

Common Stock Equity
Common stock .............................. 551,812 551,812 13,000 59,780 3,900
Additional paid in capital ................ 740,453 740,453 - 22,669 1,940
Retained earnings ......................... 213,716 213,716 (2,161) 21,142 (1,556)
Unearned employee compensation ............ (1,459) (1,459) - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... 1,504,522 1,504,522 10,839 103,591 4,284
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... 2,004,108 2,000,056 - - -
Additional installment notes .............. - - 13,769 59,630 1,574
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ 2,004,108 2,000,056 13,769 59,630 1,574
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ 3,508,630 3,504,578 24,608 163,221 5,858
--------- --------- --------- --------- ---------
===================================================================================================

ADJUSTMENTS TO CAPITALIZATION

Common Stock Equity
Common stock .............................. - - (12,775) (59,760) (3,866)
Additional paid in capital ................ - - 12,775 59,760 3,866
Retained earnings ......................... - - - - -
Unearned employee compensation ............ - - - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... - - - - -
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... - - - - -
Additional installment notes .............. - - - - -
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ - - - - -
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ - - - - -
--------- --------- --------- --------- ---------
===================================================================================================

PRO FORMA CAPITALIZATION

Common Stock Equity
Common stock .............................. 551,812 551,812 225 20 34
Additional paid in capital ................ 740,453 740,453 12,775 82,429 5,806
Retained earnings ......................... 213,716 213,716 (2,161) 21,142 (1,556)
Unearned employee compensation ............ (1,459) (1,459) - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... 1,504,522 1,504,522 10,839 103,591 4,284
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... 2,004,108 2,000,056 - - -
Additional installment notes .............. - - 13,769 59,630 1,574
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ 2,004,108 2,000,056 13,769 59,630 1,574
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ 3,508,630 3,504,578 24,608 163,221 5,858
--------- --------- --------- --------- ---------
===================================================================================================
</TABLE>
* Consolidated Statement of Capitalization

THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED

Page 2
<PAGE> 3
(b)(1)
(2 of 2)
CONDENSED STATEMENTS OF CAPITALIZATION
ACTUAL and PRO FORMA
As of July 31, 1996
($000)

<TABLE>
<CAPTION>
TVC TCC CMD TCO CAT
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ACTUAL CAPITALIAZTION

Common Stock Equity
Common stock .............................. 15,293 1,000 7,092 241,784 82
Additional paid in capital ................ 42,802 1,075 - 1,270,289 1,483
Retained earnings ......................... (16,962) (426) 12,867 (644,310) (901)
Unearned employee compensation ............ - - - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... 41,133 1,649 19,959 867,763 664
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... - - 63 600 -
Additional installment notes .............. - - 11,994 643,000 -
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ - - 12,057 643,600 -
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ 41,133 1,649 32,016 1,511,363 664
--------- --------- --------- --------- ---------
===================================================================================================

ADJUSTMENTS TO CAPITALIZATION

Common Stock Equity
Common stock .............................. (15,247) (944) (7,041) (241,735) (81)
Additional paid in capital ................ 15,247 944 7,041 241,735 81
Retained earnings ......................... - - - - -
Unearned employee compensation ............ - - - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... - - - - -
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... - - - - -
Additional installment notes .............. - - - - -
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ - - - - -
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ - - - - -
--------- --------- --------- --------- ---------
===================================================================================================

PRO FORMA CAPITALIZATION

Common Stock Equity
Common stock .............................. 46 56 51 49 1
Additional paid in capital ................ 58,049 2,019 7,041 1,512,024 1,564
Retained earnings ......................... (16,962) (426) 12,867 (644,310) (901)
Unearned employee compensation ............ - - - - -
--------- --------- --------- --------- ---------
Total Common Stock Equity ................... 41,133 1,649 19,959 867,763 664
--------- --------- --------- --------- ---------
Long-Term Debt
Existing notes and other long-term debt ... - - 63 600 -
Additional installment notes .............. - - 11,994 643,000 -
--------- --------- --------- --------- ---------
Total Long-Term Debt ........................ - - 12,057 643,600 -
--------- --------- --------- --------- ---------
TOTAL CAPITALIZATION ........................ 41,133 1,649 32,016 1,511,363 664
--------- --------- --------- --------- ---------
===================================================================================================
</TABLE>

THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
(b)(1)
(3 of 3)
CONDENSED STATEMENTS OF CAPITALIZATION
ACTUAL and PRO FORMA

Page 3