COLUMBIA ENERGY GROUP
425, 2000-09-12
NATURAL GAS TRANSMISISON & DISTRIBUTION
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                                                 Filed by:  NiSource Inc.
                    Pursuant to Rule 425 under the Securities Act of 1933

                                  Subject Company:  Columbia Energy Group
                                        Registration Statement: 333-33896

        On September 12, 2000, NiSource and Columbia Energy Group issued
   the following press release.

                                PRESS RELEASE
                             SEPTEMBER 12, 2000

   [NiSource Logo]                                 [Columbia Energy Logo]

   NEWS RELEASE                                 CONTACTS:
                                                Media
                                                -----
                                                NiSource-Maria P. Hibbs
                                                (219) 647-6201
                                                Columbia-R.A. Rankin, Jr.
                                                (703) 561-6044

                                                Investor Relations
                                                ------------------
                                                NiSource-Dennis Senchak
                                                (219) 647-6085
                                                NiSource-Rae Kozlowski
                                                (219) 647-6083
                                                Columbia-Thomas L. Hughes
                                                (703) 561-6001


           NISOURCE/COLUMBIA ENERGY GROUP OFFER CEG SHAREHOLDERS
                             ELECTION OF STOCK;
               MERGER TARGETED FOR COMPLETION IN LATE OCTOBER

        MERRILLVILLE, Ind., and HERNDON, Va. (September 12, 2000) -
   NiSource Inc. and Columbia Energy Group today announced that Columbia
   shareholders are being asked to elect whether they want to receive
   stock of the New NiSource Inc. in exchange for their Columbia shares
   under the terms of the merger with NiSource.

        In a package mailed to Columbia shareholders, the companies said
   that Columbia shareholders wishing to receive New NiSource stock in
   the merger must submit their completed election forms and stock
   certificates in time to be received by the exchange agent, ChaseMellon
   Shareholder Services, L.L.C., no later than 5 p.m. Eastern Time on the
   second business day before the merger becomes effective.

        The companies said they currently anticipate that the effective
   time of the merger will occur in late October 2000, subject to meeting
   the conditions to closing.





        The companies said that when the effective date and the election
   deadline are known, they will be announced in a press release, on the
   NiSource and Columbia web sites and in a filing with the Securities
   and Exchange Commission.

        Under the terms of the merger agreement, Columbia shareholders
   can elect to receive New NiSource stock.  Otherwise, they will receive
   of a combination of cash and New NiSource SAILS (Stock Appreciation
   Income Linked Securities) units consisting of a zero coupon debt
   security and a forward equity contract.

        Elections are subject to proration, if Columbia shareholders
   elect stock for more than 30 percent of the total outstanding Columbia
   common shares.  The right to elect stock is conditioned on Columbia
   shareholders electing stock for at least 10 percent of the outstanding
   Columbia shares.

        Shareholders are asked to review the stock election materials for
   details, and to contact ChaseMellon Shareholder Services at 1-800-685-
   4258 with additional questions.

        NiSource Inc. (NYSE: NI) is a holding company with headquarters
   in Merrillville, Ind., whose primary business is the distribution of
   electricity, natural gas and water in the Midwest and Northeastern
   United States. The company also markets utility services and customer-
   focused resource solutions along a corridor from Texas to Maine.  More
   information about the company is available on the Internet at
   www.nisource.com

        Columbia Energy Group (NYSE: CG), based in Herndon, Va., is one
   of the nation's leading energy services companies.  Its operating
   companies engage in nearly all phases of the natural gas business,
   including exploration and production, transmission, storage and
   distribution, as well as propane and petroleum product sales and
   electric power generation.  More information about Columbia is
   available on the Internet at www.columbiaenergygroup.com.

        This release contains forward-looking statements within the
        meaning of the federal securities laws.  These forward-looking
        statements are subject to various risks and uncertainties.  The
        factors that could cause actual results to differ materially from
        the projections, forecasts, estimates and expectations discussed
        herein include factors that are beyond the companies' ability to
        control or estimate precisely, such as estimates of future market
        conditions, the behavior of other market participants and the
        actions of the federal and state regulators.

        Other factors include, but are not limited to, actions in the
        financial markets, weather conditions, economic conditions in the
        two companies' service territories, fluctuations in energy-
        related commodity prices, conversion activity, other marketing
        efforts and other uncertainties.  These and other risk factors
        are detailed from time to time in the two companies' SEC reports.
        Readers are cautioned not to place undue reliance on these





        forward-looking statements, which speak only as of the date of
        this release.  The companies do not undertake any obligation to
        publicly release any revisions to these forward-looking
        statements to reflect events or circumstances after the date of
        the document.

        In addition to other documents filed with the Securities and
        Exchange Commission by the two companies, NiSource and the new
        holding company have filed a registration statement, which
        contains a joint proxy statement/prospectus for NiSource and
        Columbia Energy.  The final joint proxy statement/prospectus,
        dated April 24, 2000, is available and has been distributed to
        the companies' shareholders. Investors and security holders are
        urged to read the joint proxy statement/prospectus and any other
        relevant documents filed with the SEC because they contain
        important information.  Investors and security holders may
        receive the joint proxy statement/prospectus and other documents
        free of charge at the SEC's Web site, www.sec.gov, from NiSource
        Investor Relations at 801 East 86th Avenue, Merrillville, Indiana
        46410 or at its Web site, www.nisource.com, or from Columbia
        Investor Relations at 13880 Dulles Corner Lane, Herndon, Virginia
        20171 or at its Web site, www.columbiaenergygroup.com.

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