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 August 25, 2000, NiSource posted several Frequently Asked
Questions on the Project Compass Intranet site. The Frequently
Asked Questions are set forth below.
FREQUENTLY ASKED QUESTIONS
AUGUST 25, 2000
BUSINESS STRATEGY
NISOURCE EXECUTIVES TALK ABOUT BUILDING SHAREHOLDER VALUE THROUGH
TECHNOLOGY. DOES NISOURCE PRESENTLY UTILIZE ELECTRONIC METERING FOR
ITS RESIDENTIAL CUSTOMERS?
Bay State Gas, a NiSource subsidiary in Massachusetts, uses
Automated Meter Reading (AMR) technology for residential customers.
Various forms of AMR technology are currently being piloted at
Northern Indiana Public Service Company (NIPSCO).
WHAT IS THE FUTURE OF NORTHERN INDIANA PUBLIC SERVICE COMPANY S
(NIPSCO'S) GENERATING STATIONS? ARE THEY FOR SALE?
The NIPSCO generating stations are not for sale. Pat Mulchay is
responsible for NIPSCO Generation as part of the Merchant Company.
The generation business will sell power to the NIPSCO distribution
business for use by residential, commercial and industrial customers,
and will also sell power to the wholesale market.
THE NEW NISOURCE
WHAT IS THE ROLE OF THE VICE CHAIRMAN?
All financial and administrative functions of the new NiSource
will report to Steve Adik, vice chairman. Steve also will serve as a
director of NiSource.
WHERE WILL THE DISTRIBUTION BUSINESS BE BASED?
The Distribution business, headed by Jeff Yundt, will be based in
Merrillville, Ind.
HOW WILL NORTHERN INDIANA PUBLIC SERVICE COMPANY (NIPSCO) BE ORGANIZED
IN THE NEW NISOURCE?
Operationally, NIPSCO will be split into two companies: electric
generation and energy distribution. This is in response to the demands
of the changing energy market. The primary customer of NIPSCO
Generation will be NIPSCO Distribution, while the secondary customer
of NIPSCO Generation will be the wholesale market. Or, to look at it
another way, NIPSCO Distribution will outsource its electric
generation needs to NIPSCO Generation. We believe this change will
help us remain competitive in the changing energy marketplace,
providing quality customer service at the best possible prices.
WILL CUSTOMERS SEE ANY CHANGE FROM THIS OPERATIONAL SPLIT OF NIPSCO,
SUCH AS A NAME CHANGE?
No. Customers will still receive a monthly bill from NIPSCO
covering their electric and gas distribution charges, as well as the
pass-through costs of energy supply and transmission.
WHAT DOES "MERCHANT" MEAN IN CALLING PAT MULCHAY'S ORGANIZATION THE
MERCHANT COMPANY? WHERE WILL IT BE BASED?
"Merchant" is the term the energy markets have labeled the
functions we have grouped into Pat Mulchay s areas of responsibility:
electric generation; wholesale gas and electric trading; gas supply
and storage; and gas exploration and production. Thus we have adopted
the term to reflect our focus in the marketplace. This business will
be based in Merrillville, Ind.
WHERE DOES ELECTRIC TRANSMISSION FIT IN THE NEW NIPSCO ORGANIZATION?
Electric transmission will be part of the Merchant Company.
WILL THERE BE A LOT OF OUTSOURCING IN THE NEW COMPANY?
The Project Compass teams are charged with finding the most
efficient ways to perform all work functions in the new NiSource,
while keeping both our companies' high standards for safety and
reliability, customer service and environmental stewardship. The
Business Services group will be designed to serve as a central
resource for efficient services to all business units. Outsourcing
will be used only where it offers the most cost-effective solution.
WHAT IS NEW ENERGY COMPANY? WHERE WILL IT BE BASED?
New Energy Company, headed by Mark Wyckoff, will encompass
distributed generation, electronic commerce (e-commerce) and any other
new technology businesses NiSource pursues. It will be based in
Merrillville, Ind.
CHANGE MANAGEMENT PROCESS/EMPLOYEE TRANSITION
WHAT IMPACT WILL THE MERGER HAVE ON UNION EMPLOYEES?
NiSource will, of course, honor all collective bargaining
agreements. As work is reengineered through the Project Compass
efforts and ongoing continuous improvement processes, the jobs of both
union and non-bargaining unit employees may change.
WHAT IS BEING DONE TO ENSURE THERE IS A BALANCED INTEGRATION EFFORT
BETWEEN NISOURCE AND COLUMBIA?
All Project Compass teams are comprised of a mix of NiSource and
Columbia employees as well as consultants from Andersen Consulting.
Team members have been selected based on their expertise and current
areas of responsibility in their respective companies. The teams are
expected to combine the best practices of both companies as well as of
third parties to develop the most cost-effective, productive structure
and procedures for the new NiSource. The make-up of a team is no
indication of how or where work will be performed in the future.
The following legend appears elsewhere on the Project Compass
intranet site:
These frequently asked questions contain forward-looking state-
ments 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' abiality to control or estimate precisely, such as
estimates of future market conditions, the behavior of other
market participants and the actions of 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 territory, 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 of information. 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 for NiSource and Columbia Energy
Group. The final joint proxy statement/prospectus, dated April
24, 2000, is available and has been distributed to the companies'
shareholders. Investment and security holders are urged to read
the joint proxy statement/prospectus and 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.
