Filed by: NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Registration Statement File No: 333-33896
On June 5, 2000, NiSource posted a video excerpt of its 2000
Annual Stockholders Meeting on its website at www.nisource.com. A
transcript of the video excerpt is set forth below.
TRANSCRIPT OF VIDEO EXCERPT OF NISOURCE ANNUAL MEETING
JUNE 5, 2000
Well, welcome to the revved up NiSource Annual Meeting. Good morning.
My name is Gary Neale. I'm Chairman, President and Chief Executive
Officer of NiSource. I'm pleased to welcome you to the Capitol
Theatre in Columbus for our Company's 2000 Annual Meeting of
Shareholders. Well, by the way, this is the first time our
shareholders meeting has ever been held outside the State of Indiana,
so this is a real privilege for us to be here in Columbus.
With me today on the stage are Stephen Adik, Senior Executive Vice
President and Chief Financial Officer, Peter Fazio, General Counsel,
and Nina Rausch, Corporate Secretary. The formal business of this
meeting is the election of directors, approval of a Merger Agreement
that provides for the formation of a new holding company in our
acquisition of Columbia Energy Group and for the change in the name of
the company to NiSource Inc., and the approval of the Amended and
Restated 1994 Long Term Incentive Plan. I will follow an agenda that
provides first for the completion of this formal business. In doing
so I do not intend to foreclose discussion of any business or affairs
of the Company or any proper questions that you may have. There will
be ample time for this following the completion of the formal
business. I now call the meeting to order.
The record date for the determination of shareholders entitled to vote
at the meeting was April 27, 2000. A list of the shareholders
entitled to vote at this meeting is in this room and may be inspected
by any shareholder who desires to do so. The Board of Directors has
appointed a Proxy Committee consisting of myself and Steve Adik who is
present at this meeting. Patrick Condon, a partner in the firm of
Arthur Andersen, the Corporation's independent public accountants, is
also present at the meeting and will be available to respond to
appropriate questions. Pat, would you please stand? Thanks. I've
appointed Arthur Paquin, Francis Girot and Gary Pottorff as Judges of
Election. Voting will be by written ballot.
Arthur, we're missing the numbers here on page four. Would you read
off the numbers, please?
The Judges of Election report that more than 99,000,000 shares
representing approximately 79% of the 121,058,468 outstanding common
shares entitled to vote at this meeting are represented at this
meeting. A quorum is therefore present. The Corporation's nominees
for directors as well as directors whose terms expire in later years
are identified in the Proxy Statement. I'd like to introduce them at
this time.
First I'll introduce those directors whose terms extend beyond the
date of this meeting. The directors whose terms expire in 2001 are
Steven C. Beering, President of Purdue University. Dr. Beering is
traveling in Europe today and could not be with us.
Dennis E. Foster, Vice Chairman of ALL-TEL Corporation. Dennis, will
you stand?
James T. Morris, Chairman, Chief Executive Officer and President of
IWC Resources. Mr. Morris is in Brazil right now representing the
U.S. Olympic Committee.
Carolyn Y. Woo, Gillen Dean and Siegfried Professor of Management at
the University of Notre Dame, College of Business Administration.
The directors whose terms expire in 2002 are:
Ian M. Rolland, retired Chairman and Chief Executive Officer of
Lincoln National Corporation.
John W. Thompson, Chairman, President and Chief Executive Officer of
Symantec Corporation.
Roger A. Young, Chairman of the Board, Bay States Company.
The nominees for terms to expire in 2003 are:
Arthur J. Decio, Chairman of the Board of Skyline Corporation. Arthur
was flying in this morning and had some aircraft problems so I don't
know whether he'll make it yet.
Robert J. Welsh, Chairman and Chief Executive Officer of Welsh, Inc.
and myself. Thank you.
The Proxy Committee has delivered its valid voting shares in
accordance with proxies it has received. Any shareholder who has not
voted or wants to, or who has given us a proxy and wishes to change
his or her vote, who wants to vote in person on any of the matters to
be voted upon, should raise his or her hand, and the shareholder will
be given a ballot for that purpose.
We have received proxies which vote in excess of 96.9 million shares
or approximately 79% of the outstanding shares in favor of the
election of each of the Corporation's nomination for Director.
Arthur Decio, Robert Welsh and myself.
The next item of business is the approval of the Merger Agreement that
provides for the formation of a new holding company in our acquisition
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of Columbia Energy Group and for the change of the name of the company
to NiSource Inc. We've received proxies which vote in excess of 79.6
million shares or approximately 65% of the outstanding shares in favor
of the approval of the proposal.
Final item of business is the approval of the Amended and Restated
1994 Long Term Incentive Plan, a copy of which was attached to Annex
VI to the Proxy Statement. We received proxy votes in excess of 66.6
million shares or approximately 55% of the outstanding shares in favor
of the approval of that Plan.
The voting is completed. I declare the nominees of the Corporation
have been elected Directors, that approval has been granted to approve
the Merger Agreement that provides for the formation of a new holding
company in our acquisition of Columbia Energy Group and the change of
the name of that corporation to NiSource Inc. and that the approval
has been granted to amend the 1994 Long Term Incentive Plan. The
certificates of the Judges of Election with respect to the
shareholders represented at the meeting and to the matters voted upon
in this meeting will be filed with the records of this meeting. The
shares voted today in person or by proxy other than by the
Corporation's Proxy Committee will be recorded and reflected in the
minutes of the meeting. There being no further business to come
before this meeting, the formal portion of this meeting is adjourned.
* * *
Before opening the meeting for discussion, I would like to take this
opportunity to make a few remarks which may anticipate some of your
questions.
This is really an exciting day for me, for our Board of Directors and
for the entire management team at NiSource and many of the Columbia
Gas of Ohio people that are here today. I think it's an exciting time
for us because what we've done in this millennium year -- if you think
about it -- we've brought together two very strong companies with very
proud histories and we're creating a new energy competitor in a
marketplace that's changing very, very rapidly. Today's vote is a
transforming transaction for your corporation, we believe. We're
moving from a strong state player to a super regional player. We'll
try to explain that as we go along. We're leveraging our regulatory
legacy, our ability to operate well in a regulated environment into
what we think is a premier energy competitor in a new market place.
What we're doing in fact then is creating a new company. Creating a
new future for this Company. A future which changes the way we look
at things. It's a future that means we are looking forward now and
not back and I think you'll see it from a lot of my discussions this
morning. It's a forward-looking company now and not a company that
looks back and says "what was the weather last year" or "what happened
to the regulatory bodies," or something like that. We're trying to
build a future. We're trying to create a strong platform for growth
for our shareholders. We're trying to survive as a corporation. The
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New NiSource is creating today what we think the energy company is
going to be tomorrow. This is based on a strategy that was
established over three years ago when we said we need to build
tomorrow. We need to change this corporation from what it was at that
point to what it needs to be in order to survive. And it's based on
this asset value chain position. What we talk about is in the center
of this value chain is commodity distribution. That's what we're all
about. That's what we're good at. We're good at managing regulated
utilities and so is Columbia Energy. We know how to do that. We know
how to make money doing that. We know how to grow customers. We know
how to provide the low risk and good returns to our shareholders.
That's what this business is all about. If you extend from those
commodities distributions you can see the opportunities that we have
for the future. Upstream we move into the wholesale business where we
have 19,000 miles of pipeline, 700 Bcf of gas storage, the opportunity
for marketing services in this industry, gas optionality and electric
optionality. In other words, the whole range of products and services
that surround the wholesale marketplace and the ability to use your
assets differently in this marketplace.
If you move downstream, you find 4.1 million customers and the
opportunity to sell something different to those 4.1 million customers
besides just distributing the gas commodity. Over here we're talking
about cogeneration. Here, we're talking about a new technology called
distributed generation which is a tremendous opportunity which I'd
like to spend some time on later. And energy-related products and
services and maybe even commodity conversions. Customer products that
are needed by the customer. What we're trying to do is through this
energy chain we're trying to become a new customer driven company. It
looks at the customer and the customer needs and provides those needs
and does it in an environment that relatively low risk and a
tremendous opportunity. We think the strategy is working. If you
look at first quarter of our operations, every component of that link
actually provided opportunities for us. Our basic earnings per share
went to 64 cents - up 3.2 cents for the quarter. The first quarter
earnings improved 15% even though we were 15% warmer than normal. As
a matter of fact, we had the warmest winter ever recorded in the
history of the Company and I'm sure that was true in Ohio and it
certainly was true by the time we got to New England. Gas operations
EBIT increased $10 million to $98 million. Electric operations
increased $9 million to $82 million. Water operations were up $1.5
million and gas marketing was actually up, increased $6.6 million. So
each part of the chain contributed to an increase in the first quarter
even though we lost 8 cents to what we call normal weather. So the
strategy is working. Having the components in place allows us to
withstand the warmest winter on record and still show growth in
earnings. With normal weather you can see what this company is
capable of and with the consolidation of Columbia Energy and that
becomes an even stronger chain.
The strategy is an extension of the ten years of NIPSCO. It's
creating value with low risk and high returns. This is not a high
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tech company. It is not intended to be. It is not a full retail
company. It is a regulated company and we think we're good at running
regulated business and in getting positive returns because we have
positive relationships with our regulators. We are aggressive in our
cost efficiencies. We've been more efficient, I think, than any other
company in the industry and closely follows us is what Columbia Energy
has done in the last two or three years in their operations also. We
know how to do that and we know how to pursue the incentive
opportunities. One of the best incentive regulatory strategies that
we've seen is right here in Columbia of Ohio in their choice program -
- their collaborative choice program that they've put together. So,
we know how to do this and we think this is a tremendous opportunity.
Related diversification is leveraging our assets with knowledge-based
businesses and that's bringing in very bright people and turning them
loose and letting them do their job. That's what this company has
been all about and will be all about.
Also, the integration of existing businesses into a growth market. We
decided a long time ago that the best growth market for us as a
company was in the gas business. This was just proven in the last six
months when we saw reports coming out -- the American Gas Foundation
and others -- showing reports that for the next twenty-five years we
could expect a 60% growth in the gas market, gas usage in the United
States. Now, if you go back to the film where they talked about 40%
of that will be consumed in the energy corridor in which we operate,
you'll see a tremendous growth opportunity. This is a growth market
for us and a growth opportunity. We've created new business
opportunities in the growth and that's in asset optionality -- using
our assets differently in relation to each other and I'll talk more
about that when we get into the wholesale side of the business -- and
distributed generation which we think will create a new form of energy
company where you'll see gas companies actually actively competing for
customer choice in the electric business. So, it's a tremendous
opportunity to maintain a strong financial profile and investment
grade ratings as a company because you'll see that that's the backbone
to this company. We want to create shareholder value not only through
dividend growth, but also through appreciation because it is a growth
company.
Now, the strategy says that you first of all have to have a
marketplace and you have to define your marketplace. You can't be all
things to all people and given our size, even after the merger, we
can't operate as a national player, we're just not big enough. But we
can operate very effectively in a key piece of geography or a defined
market. In our defined market you see there listed, it starts with
the NIPSCO properties in Northern Indiana. It starts with pipelines
that extend from Chicago into Ohio. It starts with Bay State Gas. It
starts with the storage in Texas. And then you say, well, there's
lots of room for fill in here. There's lots of opportunities and
that's what we sought was the opportunity to fill in that piece of
geography. We want to capitalize on the Chicago hub for natural gas.
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Chicago is the cheapest gas in the northern part of the United States
because of the number of pipelines that serve the Chicago market.
They come from Canada, as I'll show you later, they come from the
Gulf, and the entire movement of this industry today is to decide how
to get cheap Chicago gas to flow east and flow through Ohio all the
way to New England. Many companies are looking at it. Very few
people have the opportunity. We've just produced that opportunity.
There's also what you'll note in that triangle and we'll talk a little
bit about it, there is an electric gridlock going on in that
particular piece of geography. The electric gridlock is transmission.
You heard about the problems -- the summer problems -- in the various
areas in the Midwest and the Northeast. A lot of it has to do with
the inability to move electricity over the transmission lines. They
are overloaded at certain peak times. Now, the chances of us building
more high voltage transmission systems are pretty slim so the
opportunity is to build generation in the urban areas not try to build
generation hundreds of miles away and put it on transmission lines and
move it into the urban areas. If you're going to move it into the
urban areas, the best way to do it is on the rooftops and in the
basements. And that means natural gas because the only fuel that can
make that happen is natural gas. So that's why we did Columbia. To
fill in this particular piece of geography and what we consider the
market. To create a set of assets that we can work in concert and if
you look at the concentration there now and the pipeline to the Gulf
and the opportunities that we have, it completes the energy corridor
connection. It completes the transaction from Chicago all the way to
the East. We now have distribution in nine states, 4.1 million
customers, 19,000 miles of pipeline, 700 Bcf of storage, near the
markets and near supply. As a matter of fact we'll be the largest
storage company in North America. There's no asset overlap. This is
a true market merger where we're connecting markets together and
creating opportunities that didn't exist before. We think we've
created here a shareholders' opportunity for growth in a growth
market. I want to underscore that. I'll say that more than once
before I finish today because we really believe it's important.
How do we get this growth? Well, we get this growth in three or four
different ways. First of all, if you look at the baseline blue
section of that graph, that's what we call "base business." That's
the opportunity to grow earnings from the baseline businesses. We
believe we can grow that six to eight percent per year and that's the
history of NIPSCO and NiSource for the last ten years. That's the
history of the last two to three years at Columbia Energy. We believe
that these businesses have that capability. It's done through being
good cost control managers, it's done through providing excellent
customer service in the most efficient manner and in growing
opportunities in those basic businesses. Those downstream and
upstream opportunities that we talked about though are gas
optionality, electric optionality and last, but not least, the
distributed generation. We think that layering those all on top of
the base business gives us the opportunity to grow in the twelve to
fifteen percent range and we're certainly shooting for the fifteen
6
percent range. This would certainly be a new energy growth company if
we can achieve that and we certainly believe that we can.
Now, we've had some shareholder comments and I'd like to go through
what we consider to be the value creation as a result of the merger.
There's always synergies involved and these are the types of synergies
we've been talking about at Wall Street because there's no overlap
operationally. There's very few people to take out from an
operational standpoint so you see the distribution synergies in the
five states start about $15 million and build themselves all the way
up to $29 million. The transmission moves from $8 million up to $17
million. The biggest savings in this merger will come at the
corporate level. We will eliminate one corporate overhead and create
a new shared services opportunity from the standpoint of looking at
doing one set of services for all companies. So the biggest savings
is in the corporate overlap. The integration team is focusing on cost
savings and shared benefits and putting in best practices and the best
practices we're looking at here in many cases are not necessarily the
best practices in our industry but the best practices that can be
available for purchasing or for employee benefits or other things that
we're doing. So, the savings doubles in a five year period. The
opportunity to grow earnings from these synergies alone is significant
and we at the same time can maintain the strong safe and reliable
local operating headquarters that we had before and the opportunities
that we had before.
The merger is on schedule. We have scheduled completion of the merger
in the fourth quarter. This shareholder meeting today, this
shareholder vote, moves us a long way toward completion. Columbia
will hold their meeting tomorrow -- their shareholder meeting
tomorrow. All early indications are that we will find a solid vote in
favor of merger there. Ohio stepped out early and approved our merger
as far as the SEC is concerned and sent a letter to the SEC approving
it. We're getting similar approvals in a variety of states. We filed
in Virginia. We expect a hearing in Virginia in the next month. We
filed in Kentucky. We expect completion in Kentucky by the end of
June. We filed in Pennsylvania. We expect by the end of July in
Pennsylvania. So, the merger is on track. On track for a close we
think at the end of October or early November. It is similar to the
Dominion/CNG model. They completed theirs in nine months and they had
to spin off a piece of property in Virginia so believe we can do it.
It is on time and we think it will work.
There have been questions on the financing issues of the merger. The
amount of leverage. This is the issue that we see today of how the
merger will be paid for and what the actual uses of the funds are.
The debt financing will be approximately $3 million -- $3 billion --
excuse me -- a big number there -- 52% of the total acquisition,
SAILS{SM} will be 2% which are the additives. Asset sales and cash on
hand. This will be from sales of particular assets which we consider
to be non-core assets, will be $1 billion. We're well on our way to
that. Columbia has already announced the sale of LNG and they've
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announced that propane and their petroleum business will be sold and
their electric QFs will be sold. At the same time, NiSource is
looking at its non-core assets and we will make decisions on each one
of those assets in the next two to three months also. So, we're well
on our way to that billion dollars and last but not least, we now
believe that the common equity portion of the transaction will reach
$1.8 billion or 30%. Early indications from Columbia shareholders are
that they will accept the tax-free exchange which can go up to 30% so
we're now expecting $1.8 billion. So of the $6.6 billion in sources
and uses, which is $6.6 billion, the debt financing is in place and
completed at this point and so we feel very confident that this is a
transaction that can be carried off and still maintain a credit rating
that is investment grade.
Let me now turn to some of strategy pieces as it relates to the new
businesses. First of all, let's look at the retail or the brand
strategy that we've tried to establish here because this is important
to our future. We've tried to grow a retail footprint and we really
believe that local utilities have the best brand names for energy
services. The idea was to start with a well known brand which was
NIPSCO and NIPSCO started with 700,000 gas customers and about 500,000
electric customers. We've extended that footprint to Bay State, which
is Massachusetts, New Hampshire and Maine, and here we increase that
footprint by 500,000 customers -- and by the way, of those 500,000
customers, we're still only 45% saturated in that marketplace up there
-- so tremendous opportunity for growth. Now we add in the Columbia
retail part of the business and we see a footprint that's gigantic as
we add in 2.1 million new customers in five states -- over half of
which are right here in Ohio -- and what we end up with is 3.6 million
gas customers alone. Now, I would tell you that that is a product
marketer's dream -- to have under contract in one form or another, as
part of your service territory, or the ability to bill every month --
3.6 million customers. The opportunities for new products and
services are unlimited. This is the real opportunity we believe in
the retail side of the business.
Also looking upstream we move to the wholesale business. I mentioned
to you the issue of the pipelines coming into Chicago and you can see
the number of pipelines into Chicago -- there are one, two, three,
four, five, six major, seven major pipelines moving into the Chicago
area and bringing in very cheap gas. Our Crossroads pipeline is the
only link right now into Ohio out of the Chicago market, Chicago hub.
But Vector is being built which goes through Michigan, across Lake
Erie to attach to Millennium which is a new project of Columbia, and
you can see the Columbia distribution system and then the extension
all the way up the Allegheny pipeline to New England. This is a
tremendous opportunity when you consider that this company will own a
majority of that pipe east of Chicago. Tremendous wholesale
opportunity. There is projected 14,000 megawatts of new generation in
that corridor and it will all be gas fired generation served off those
pipelines. Even 7,500 of that megawatts of that is built is still a
tremendous added load to that pipeline capacity. It's a growing
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opportunity. It's a new opportunity we believe for shareholder value
because the ability to utilize those pipes differently is really what
we're looking at and we'll talk more about that.
The other end of the wholesale operation is the southern end of
Columbia Gulf, which is one of the largest aggregation systems in the
Gulf today. They have a new SunStar deepwater partnership which will
be on stream next year supplying 3.4 billion cubic feet by 2005. This
is a tremendous opportunity because this is the largest gas producing
area in the world right at this point. You'll notice the Egan storage
up there in the blue. That happens to be a NiSource salt dome storage
so it ties in very nicely with Columbia's underwater storage -- under
water gathering system. So, it's another great opportunity.
We move to the Ohio Valley the storage that creates the synergies.
You'll see everyone of those yellow dots as storage -- 700 Bcf of
storage in the market areas. To give you an example of that, the
throughput that NiSource alone is about 350 Bcf a year so it's double
our normal throughput. It is a tremendous opportunity. We believe
that storage will be the opportunity in these new energy markets as we
see more gas fired generation coming on line, this is the place to be.
To have storage, to have pipeline services and distribution services
because it is a tremendous opportunity. There's 9,000 megawatts of
peaking capacity in these twenty-two states where the storage tanks
are at -- where the storage opportunities are. So, it really provides
an incumbent advantage for the company who owns those particular
assets and those opportunities.
The electric strategy that we have been following for years continues.
We still are in the best strategic location in the United States
because most of the electricity that flows east or west, north or
south, has to pass through our service territory. We're building
extended gas fired generations through our Primary Energy ventures
today. In cogeneration, we think with this storage we're able to
really leverage the legacy businesses that we have on the electric
side of our business so we're very bullish about the electric
opportunities. But we put them all together and we say we have
optionality now. This is what we've been talking about all along.
Why is it important to have storage? Why is it important to have
pipelines and all of these issues? Well, we're optimizing assets
through this value chain. We can capture the highest value, buy or
sell, store or burn, at any given time. That is in real world time.
We can move from annually or hourly or real time choices for gas or
electric sales, so we can choose to go either way on an hourly, daily
or quarterly or annual basis. Because we have that, we have the
options available to us. That's the way people are making money in
this business today with flexibility and responsiveness. Trying to
monetize the volatility that exists in these markets and the price
differentials that exist in these markets. This is a way we create
shareholder value. We create shareholder value by the assets that we
own and the assets that we control in this marketplace. It's a
tremendous opportunity, we believe, for the future.
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The second big opportunity given the fact that we put these two
companies together, is the opportunity to utilize new technology. New
technology is moving very rapidly in our favor. That technology is
called "distributed generation." It's coming, it's here and it's
available. The microturbines are here today. They're available to
the commercial customers and we expect fuel cells to be out in the
test fields this year and commercial next year. We think the electric
industry is moving closer to the customer. For many reasons that I
talked about earlier, customers want this kind of opportunity. This
is real customer choice. It provides a level of independence to the
customers. If you're a Walgreens store and you have a unit like this
running on top of your store, you're never out of power. You can run
twenty-four hours a day, seven days a week. That store can be open
and you never worry about a storm coming through or anything else
happening -- you're open! Every time that store closes down for
twenty-four hours because of loss of power, it costs them $200,000.
It s a tremendous opportunity and as a matter of fact it could be
cheaper than the rest. What this technology gives us though is an
opportunity to fill our pipes twelve months out of the year. That's
the important part. Right now, as a gas company, we flow our peak
flows in the winter months as everyone knows. In November through
March, 80% of the gas business is done today. In the future with this
kind of technology, we'll be selling gas twelve months out of the
year. We'll be filling those pipes in the off months without
increasing infrastructure because we'll still be heating in the
wintertime but at the same time we'll be generating electricity. In
the summertime we'll be generating electricity to meet the needs of
what we think is new customer market.
We're pioneering the fuel cell. The fuel cell is a perfect
opportunity for homes. We have a joint venture between IGT and our
subsidiary, EnergyUSA. It's called Mosaic Energy. It uses natural
gas as a feed stock for the chemical process to produce electricity
right in the home. The home can be on the grid or it can be not
attached to the grid. In other words, it can be a self-sustaining
operation. It's environmentally very friendly. It has the
opportunity, I believe, to be a true customer choice and we will have
this in a home in the Indiana area by September of this year and we'll
be moving that to Ohio by the Spring of next year. So the opportunity
is there.
The key that we think here is the key of reliability. We think
customers' concerns about reliability of their electric grids, their
distribution grids are becoming more acute all the time. If they have
the opportunity to have self-generation, they're going to take it.
Almost regardless of the price. We know that to be the case in our
industrial market where our Primary Energy works, because our
customers want reliable energy. A steel mill, for instance, which is
one of our primary customers for cogeneration, it costs them a million
dollars every time they scrap a line of steel because of a power
interruption. As I mentioned, Walgreens, it's $200,000 if they lose
that store for twenty-four hours. But think about it from a
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residential customer. What's a residential customer concerned about?
They want their sump pump to work all the time, right? During storms,
they want their computer to continue to run, especially if they're
working at home. They, you know, believe they're entitled to
electricity because the new modern home is becoming more dependent all
the time on electricity. They're not buying a commodity called
electricity. They're entitled to it. And they are entitled to have
it reliable twenty-four hours a day, every minute of the day. The
opportunity to have a home generation that is as simple as a fuel
cell, is a tremendous opportunity. We believe that the driving force
for this new technology will be customer choice and customer choice
because they want reliability and if you don't believe that, look
what's happening in Chicago based on for instance, the reliability of
the distribution grid in the last two years in downtown Chicago. Or,
two weeks ago when 150,000 customers on the North Shore of Chicago
were out of power for three days. If we had 50,000 fuel cells to go
out to sell to those neighborhoods, we would have sold every one of
them. Every one of them. Even at five to six thousand dollars a
piece. We think that this addresses the issue of reliability
addresses where we're going.
On the combined heat and power, our first test is in Walgreens and
we're going to keep gong with this. We think this is a 10% reduction
in electric costs. It's a tremendous opportunity. We've formed a
joint venture with Capstone turbines to build these. These provide
not only the electricity, but the heat and the air conditioning for
the units and it really -- once again -- filling the gas lines twelve
months out of the year. This unit was started up last May. It hasn't
shut off since then. It's been running twenty-four hours a day, seven
days a week, producing electricity for their shop.
Well, let me summarize before I open up to questions. The brick and
mortar, the strategy and the structure are in place for a growth
company and growth opportunity for shareholder value. We put the
plans in place and from the plans we're building the structure. This
is a domestic strategy. It is a low risk strategy and yet it has the
potential of giving us good returns. It's built on the same approach
that NIPSCO has used for the last ten years and that's in creating
shareholder value where we've been number one in producing shareholder
value up to the last year in the entire industry for ten years. So we
think we know what we're doing. We think we know what the approach
is.
The strategy, of course, is to be the premier competitor. Create a
new company and be the strongest in the market we serve. The only way
I know to be successful in a competitive market is to be the premier
provider. Be the dominant provider. If you can't be that, you should
get out of it. We believe we're in it now and we're in it in a very
big way and the opportunity is tremendous.
We're building structure as a result of that, in support of that
strategy. We produced a team, an internal team, that's composed of
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both Columbia Energy and NiSource employees and we're going to put
together the best structure to service that strategy that we possibly
can. Employees, by the time this merger closes will know exactly
what their job is, who they report to, and what they have to do to
achieve the goals that we've set for it. The mission will focus on
reducing costs and delivering value to the bottom line, positioning
and building the organization of the future and supporting initial
steps in the process of cultural change. These steps will all be done
by the time the merger closes. I'm convinced of that. The
Integration Team is off and running. Tremendous cooperation between
both companies and we think that this early integration will create
early value and we expect to even exceed some of the numbers that we
talked about on the integration and we've talked about on Wall Street.
We think the opportunity is there.
So, what can we say? We can say that this is the same company, this
is the same slide I've used for five years. In talking about where
this company is going. It starts with a financial strength and it has
building blocks. The building blocks are really employee
effectiveness, the quality of our people being customer driven,
supporting the customer in every way and understanding that the
customer is the one that drives and not the engineering, not the
technology. Managing our expenses and our margins and keeping that in
the forefront and utilizing technology. Technology wherever possible.
Technology that gives us market advantage. Technology that gives us a
chance to grow and do things that we couldn't do before. Stacked on
top of that is our ability to maximize the utilization of our assets.
Our assets can work in concert. If you look at that piece of
geography. It's a tremendous opportunity to look at weather and all
the other issues that affect the flow of gas. We're focused on
strategic investments. As part of this process we're eliminating non-
core assets and focusing on the strategy that you see here. It's very
clear. It's very real. And last, but not least, we think that we are
the leader in environmental stewardship and we think that's important
to the future of our company and the culture in which we operate.
So, it's the same set of objectives. The same set of building blocks
applied to a new company and a new opportunity.
Thank you very much.
[Applauding.]
I'd like at this time to take any questions from shareholders. Please
stand and identify yourself and the number of shares that you own.
We'd be happy to answer any question that you might have.
Yes, sir?
Excuse me, could you give us your name and number of shares?
Shareholder: I'm Tom Golf of Monticello, Indiana and I have over, I
don't know, over 2,000 shares.
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Mr. Neale: Okay.
Shareholder: I'm wondering how I get a fuel cell in a residential.
Mr. Neale: How you get one?
Shareholder: Yes.
Mr. Neale: Well, we'd be happy to put you on the list.
Shareholder: I'm buying electricity from REMC right now.
Mr. Neale: Okay. We are installing a fuel cell in September in a
home in Chesterton, Indiana. You'll have a chance to
come up and see it and look at it and I would say that
the commercial applications, in other words, when we go
out commercial with that, will probably be eight to
twelve months later. We certainly, if you raise your
hand and there is someone here that would take your
name, I'm sure.
Shareholder: I appreciate. I'll go up and see it. I'm not too far
from Chesterton.
Mr. Neale: Okay, fine.
Shareholder: Thank you.
Mr. Neale: Any other questions? If not, thank you very much for
attending. We're delighted to be here in Columbus and
we're delighted that we have a new company to talk
about.
Thank you.
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