NiSource Reports Third Quarter Results

MERRILLVILLE, Ind., Oct. 28, 2011 /PRNewswire/ –

— Infrastructure investments, regulatory initiatives on track
— Growing portfolio of midstream, supply-driven growth opportunities
— 2011 earnings expected to be in the upper half of guidance range

NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing
operations (non-GAAP) of $33.1 million, or $0.11 per share for the three months
ended Sept. 30, 2011, compared to $10.3 million, or $0.04 per share for the
third quarter of 2010. Operating earnings for the quarter (non-GAAP) were $142.0
million compared to $109.9 million for the same period in 2010.

On a GAAP basis, NiSource reported income from continuing operations for the
three months ended Sept. 30, 2011, of $36.3 million, or $0.13 per share,
compared with $33.4 million, or $0.12 per share in the same period a year ago.
Operating income was $147.5 million for the third quarter of 2011 compared with
$123.3 million in the year-ago period. Schedules 1 and 2 of this news release
contain a reconciliation of net operating earnings and operating earnings to
GAAP.

“NiSource’s balanced, investment-driven business strategy continues to deliver
solid results in line with our 2011 earnings outlook and consistent with our
long-term growth plan,” NiSource President and Chief Executive Officer Robert C.
Skaggs Jr. said. “Despite sluggish economic conditions, NiSource teams continue
to execute on fundamental initiatives across each segment of our business. These
accomplishments are key to our commitments to enhance customer service,
modernize our energy infrastructure, drive long-term, sustainable earnings
growth and increase shareholder value.”

Based on year-to-date financial and operational performance, Skaggs said that
NiSource is on track to achieve net operating earnings from continuing
operations at the upper half of its 2011 guidance range of $1.25 to $1.35 per
share (non-GAAP). NiSource also is on pace to deliver double-digit shareholder
returns for the third consecutive year, significantly outperforming the utility
indices and broader markets.

Skaggs highlighted several key recent accomplishments in executing the company’s
business strategy:

Continued NIPSCO environmental, customer service and regulatory achievements

NiSource’s Northern Indiana Public Service Company’s (NIPSCO) electric business
continues to advance a broad business agenda designed to deliver exceptional
customer service, enhance operational and environmental performance, and
establish a robust platform for ongoing earnings growth.

— On July 18, NIPSCO filed a nearly unanimous settlement with the Indiana
Utility Regulatory Commission (IURC) to resolve the company’s 2010
electric base rate case. Hearings on the settlement were conducted in
September and, pending approval by the IURC, the company anticipates new
rates could be effective in late 2011 or early 2012.

— NIPSCO also continues to invest in environmental improvements, with
construction on schedule for a new Flue Gas Desulfurization unit at the
company’s Schahfer generating station. The project is part of the
company’s commitment to invest up to nearly $850 million in
environmental improvements over the next six to eight years.

— In July, NIPSCO received approval from the IURC to significantly broaden
its offering of electric energy efficiency programs. The new programs
are in addition to the company’s natural gas conservation programs,
which have helped customers save about 13.1 million therms, equating to
about $12.4 million, over the past four and a half years.

“While the pending electric rate case settlement is unquestionably a watershed
event for NIPSCO, its customers and other stakeholders, the NIPSCO team is also
making steady progress on a wide array of customer service, environmental, and
operational initiatives,” Skaggs said. “Taken together, these efforts are
helping customers manage energy use, providing long-term environmental and
economic development benefits for northern Indiana, and supporting stable and
sustainable earnings growth.”

Leveraging gas transmission, storage and midstream growth opportunities

NiSource Gas Transmission & Storage (NGT&S) also continued to make progress on
key strategies to enhance system reliability, develop new growth projects, and
leverage the company’s strategic footprint in emerging shale gas production
areas.

— Under the leadership of new business unit CEO Jimmy Staton, NGT&S is
working closely with customers, natural gas producers and other key
stakeholders to develop a comprehensive strategy for meeting customer
needs and maximizing the value of NiSource’s extensive natural gas
pipeline and storage assets overlaying the Marcellus and Utica shale
production regions.

— Having successfully completed several growth projects in the Marcellus
production area, and with more in progress and on schedule, the company
is developing a range of additional supply-driven growth initiatives,
including mineral leasing, midstream projects and traditional pipeline
expansion opportunities.

— NGT&S also continues to actively develop infrastructure projects to
serve new natural gas-fueled electric generation markets, involving both
new generation facilities as well as coal conversion opportunities.
NGT&S is in active discussions with a number of large power generators
to meet their need for new natural gas infrastructure.

“Our NGT&S team is proceeding on a measured, thoughtful path to leverage
NiSource’s unique position in the Marcellus and Utica shale production regions,”
Skaggs said. “This approach ensures that we pursue complementary projects that
capitalize on the near-term potential of this important business opportunity,
while also enhancing the long-term value of our pipeline and storage assets for
our customers and shareholders.”

Progress also continues on the regulatory front. On Sept. 9, Columbia Gulf
Transmission filed a settlement with the Federal Energy Regulatory Commission
(FERC) to resolve the company’s 2010 base rate case – its first in 14 years. The
settlement was certified to the Commission on Oct. 4, and is pending approval.

Executing on gas utility infrastructure, customer and regulatory programs

During the third quarter, NiSource Gas Distribution continued to successfully
execute on its strategy of combining long-term infrastructure modernization
programs with complementary customer programs and regulatory initiatives.

— NiSource’s gas distribution businesses continued to execute on an
industry-leading series of long-term infrastructure modernization and
replacement programs. NiSource is on track to invest more than $300
million in gas distribution modernization programs this year designed to
ensure safe and reliable service. These investments are part of a more
than $4 billion modernization program put in motion a few years ago.

— The gas distribution companies also continue to introduce or expand
programs to help customers reduce energy usage and manage monthly bills.
For example, on Sept. 12, Columbia Gas of Ohio (COH) filed a proposal
with the Public Utilities Commission of Ohio to extend and expand its
energy efficiency programs for an additional five years starting in
2012. Over the life of the measures installed through the proposed
programs, COH estimates customers will save up to $300 million.

— On the regulatory front, on Oct. 14, the Pennsylvania Public Utility
Commission approved a settlement of Columbia Gas of Pennsylvania’s (CPA)
base rate case. The order authorizes an annual revenue increase of $17
million, effective Oct. 18, and includes an additional $1 million
annually for payment assistance programs available to income-eligible
customers. Notably, the Commission approved a new rate design
incorporating a higher minimum monthly charge, including a fixed
customer charge and usage allowance.

— CPA remains actively engaged with elected officials and other key
stakeholders in advancing legislation that would streamline the recovery
process associated with infrastructure replacement programs.

“The hallmark of our gas distribution strategy is to work collaboratively with
all stakeholders to deliver a broad array of core infrastructure, customer and
regulatory initiatives, and the team’s execution of that strategy continues to
be exceptional,” Skaggs noted. “In addition to enhancing our ability to provide
safe, reliable and responsive service to our customers, these efforts continue
to produce predictable, long-term earnings growth.”

Capital investments and financial flexibility provide foundation for ongoing
growth

A disciplined, well-executed financial strategy is a key element of NiSource’s
commitment to meet customer needs and deliver long-term, investment-driven
earnings growth. NiSource continues to maintain significant financial
flexibility to fund its growing capital investment program, which for 2011 is
expected to be approximately $1.1 billion. At the end of the third quarter,
NiSource maintained in excess of $460 million in net available liquidity.

NiSource continues to monitor the historically attractive debt capital market
environment for opportunities to reduce financing costs and extend its maturity
profile. The company is actively evaluating a number of financing options that
could be executed as early as the fourth quarter of this year.

Third Quarter 2011 Operating Earnings — Segment Results (non-GAAP)

NiSource’s consolidated operating earnings (non-GAAP) for the quarter ended
Sept. 30, 2011, were $142.0 million, compared to $109.9 million in the third
quarter of 2010. Refer to Schedule 2 for the items included in 2011 and 2010
GAAP operating income but excluded from operating earnings.

Operating earnings for NiSource’s business segments for the quarter ended Sept.
30, 2011, are discussed below.

NiSource Gas Distribution reported operating earnings for the current quarter of
$8.0 million compared to an operating earnings loss of $40.7 million in the
third quarter of 2010. Net revenues, excluding the impact of trackers, increased
by $24.0 million, primarily attributable to increased residential and commercial
margins due to NIPSCO’s change from a volumetric-based rate design to one with a
higher fixed charge. The new rate design provides a greater proportion of
recovery through the monthly fixed customer charge for certain customer classes.
Additionally, there was an increase in other regulatory and service programs
largely due to new rates under Columbia Gas of Ohio’s approved infrastructure
replacement program and rate cases at other utilities.

Operating expenses, excluding trackers, were $24.7 million lower than the
comparable 2010 period primarily as a result of lower depreciation costs due to
reduced depreciation rates at NIPSCO.

NiSource Gas Transmission and Storage reported operating earnings for the
current quarter of $68.2 million compared to $76.4 million in the third quarter
of 2010. Net revenues, excluding the impact of trackers, increased by $10.8
million, primarily attributable to an increase in demand margin revenue as a
result of growth projects placed into service since the third quarter of 2010
and the impact of new Columbia Gulf rates placed into effect May 1, 2011,
subject to refund.

Operating expenses, excluding the impact of trackers, increased $19.0 million
from the comparable 2010 period primarily due to higher environmental costs,
increased employee and administrative expenses and separation costs. The
increased environmental costs, which amounted to $11.2 million, relate to an
expense for the portion of certain remediation activities that are not
recoverable from customers under the terms of a prior rate settlement.

Equity earnings remained flat due to 2010 hedge ineffectiveness charges for
Millennium Pipeline, offset by Millennium’s higher current year interest costs
resulting from its Aug. 2010 debt refinancing.

NiSource Electric reported operating earnings for the current quarter of $72.9
million compared to $80.0 million in the third quarter of 2010. Net revenues,
excluding the impact of trackers, decreased by $4.3 million primarily due to
lower environmental cost recovery levels during the quarter. Additionally, there
was a decrease in residential and commercial margins as well as lower off-system
sales. These decreases were partially offset by increased industrial usage and
margins as a result of improved economic conditions.

Operating expenses, excluding the impact of trackers, increased by $2.8 million,
primarily attributable to increased rate case costs and higher employee and
administrative expenses. These increases were partially offset by a one-time
inventory impairment recorded in the prior period.

Corporate and Other reported an operating earnings loss of $7.1 million for the
current quarter compared to an operating earnings loss of $5.8 million in the
third quarter of 2010.

Other Items

Interest expense decreased by $1.9 million due to a long-term debt maturity in
Nov. 2010 and a Dec. 2010 repurchase of long-term debt. The benefits were
partially offset by incremental interest expense associated with a swap maturity
in Nov. 2010, the issuance of long-term debt in June 2011 and Dec. 2010, and
higher average short-term borrowings and rates.

Other-net reflected income of $1.6 million in 2011 compared to income of $2.1
million in 2010.

The effective tax rate of net operating earnings was 30.9 percent compared to
28.5 percent for the same period last year.

Nine-Month Period 2011 Operating Earnings – Segment Results (non-GAAP)

NiSource’s consolidated operating earnings (non-GAAP) for the nine months ended
Sept. 30, 2011, were $699.2 million, compared to $669.0 million for the same
period in 2010. Refer to Schedule 2 for the items included in 2011 and 2010 GAAP
operating income but excluded from operating earnings.

Operating earnings for NiSource’s business segments for the nine months ended
Sept. 30, 2011, are discussed below.

NiSource Gas Distribution reported operating earnings of $293.8 million compared
to $229.9 million reported for the nine months ended Sept. 30, 2010. Net
revenues, excluding the impact of regulatory trackers, increased $16.1 million
primarily attributable to an increase in other regulatory and service programs
largely due to new rates under Columbia Gas of Ohio’s approved infrastructure
replacement program and rate cases at other utilities. Additionally, there was
an increase in residential and commercial margins due to NIPSCO’s change from a
volumetric-based rate design to one with a higher fixed charge. The new rate
design provides a greater proportion of recovery through the monthly fixed
customer charge for certain customer classes. These increases were partially
offset by a decrease in off-system sales and lower industrial margins.

Operating expenses, excluding the impact of trackers, were $47.8 million lower
than the comparable period in the prior year primarily due to lower depreciation
costs as a result of reduced depreciation rates at NIPSCO and decreased
uncollectible accounts. These decreases were partially offset by an increase in
employee and administrative costs and higher outside service costs.

NiSource Gas Transmission and Storage reported operating earnings of $271.3
million versus operating earnings of $277.2 million for the nine months ended
Sept. 30, 2010. Net revenues, excluding trackers, increased $24.7 million
primarily attributable to an increase in demand margin revenue as a result of
growth projects placed into service since the third quarter of 2010 and the
impact of new Columbia Gulf rates placed into effect on May 1, 2011, subject to
refund. These increases were partially offset by the recognition of revenue in
the prior year related to a previously deferred gain for native gas and fees
received from a contract buyout. Additionally, there was a decrease in
short-term transportation and storage services.

Operating expenses, excluding trackers, increased by $28.1 million primarily due
to higher environmental costs, increased employee and administrative expenses,
and separation costs.

Equity earnings decreased by $2.5 million primarily from Millennium Pipeline’s
higher interest costs resulting from the Aug. 2010 debt refinancing partially
offset by the non-recurrence of 2010 hedge ineffectiveness charges at
Millennium.

NiSource Electric reported operating earnings of $152.1 million for the nine
months ended Sept. 30, 2011, compared with operating earnings of $174.5 million
for the prior year period. Net revenues, excluding trackers, increased by $5.0
million primarily due to increased industrial usage and margins as a result of
improved economic conditions and lower revenue credits partially offset by
decreased residential and commercial margins and lower environmental cost
recovery rates.

Operating expenses, excluding trackers, increased by $27.4 million due primarily
to an increase in employee and administrative expenses, higher electric
generation costs as a result of an increase in outage duration, a regulatory
adjustment, an increase in depreciation and higher rate case costs.

Corporate and Other reported an operating earnings loss of $18.0 million for the
nine months ended Sept. 30, 2011, compared to an operating earnings loss of
$12.6 million for the nine months ended Sept. 30, 2010.

Other Items

Interest expense decreased by $14.9 million due to a long-term debt maturity in
Nov. 2010 and a Dec. 2010 repurchase of long-term debt. The benefits were
partially offset by incremental interest expense associated with a swap maturity
in Nov. 2010, the issuance of long-term debt in June 2011 and Dec. 2010, and
higher average short-term borrowings and rates.

Other-net reflected income of $5.5 million in 2011 compared to income of $7.3
million in 2010.

The effective tax rate of net operating earnings was 33.9 percent compared to
35.6 percent for the same period last year.

Income from Continuing Operations (GAAP)

As noted above, on a GAAP basis, NiSource reported net income from continuing
operations for the three months ended Sept. 30, 2011, of $36.3 million, or $0.13
per share, compared with $33.4 million, or $0.12 per share, in the same period a
year ago. Operating income was $147.5 million for the third quarter of 2011,
compared with $123.3 million in the year-ago period.

On a GAAP basis, NiSource reported net income from continuing operations for the
nine months ended Sept. 30, 2011, of $280.6 million, or $1.00 per share,
compared with $258.8 million, or $0.93 per share last year. Operating income was
$710.0 million for the nine months ended Sept. 30, 2011 versus $665.9 million in
the year-ago period.

Refer to Schedule 1 for a complete list of the items included in 2011 and 2010
GAAP income from Continuing Operations but excluded from net operating earnings.

About NiSource

NiSource Inc. (NYSE: NI), based in Merrillville, Ind., is a Fortune 500 company
engaged in natural gas transmission, storage and distribution, as well as
electric generation, transmission and distribution. NiSource operating companies
deliver energy to 3.8 million customers located within the high-demand energy
corridor stretching from the Gulf Coast through the Midwest to New England.
Information about NiSource and its subsidiaries is available via the Internet at
www.nisource.com. NI-F

Forward-Looking Statements

This news release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Those statements include statements
regarding the intent, belief or current expectations of NiSource and its
management. Although NiSource believes that its expectations are based on
reasonable assumptions, it can give no assurance that its goals will be
achieved. Readers are cautioned that the forward-looking statements in this news
release are not guarantees of future performance and involve a number of risks
and uncertainties, and that actual results could differ materially from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements include, but are not limited to, the following: weather; fluctuations
in supply and demand for energy commodities; growth opportunities for NiSource’s
businesses; increased competition in deregulated energy markets; the success of
regulatory and commercial initiatives; dealings with third parties over whom
NiSource has no control; actual operating experience of NiSource’s assets; the
regulatory process; regulatory and legislative changes; the impact of potential
new environmental laws or regulations; the results of material litigation;
changes in pension funding requirements; changes in general economic, capital
and commodity market conditions; and counter-party credit risk, and the matters
set forth in the “Risk Factors” section in NiSource’s 2010 Form 10-K and
subsequent reports on Form 10-Q, many of which risks are beyond the control of
NiSource. NiSource expressly disclaims a duty to update any of the
forward-looking statements contained in this release.

NiSource Inc.
Consolidated Net Operating Earnings (Non-GAAP)
(unaudited)

Three Months Nine Months
Ended
September Ended September
30, 30,
— —
(in millions,
except per
share amounts) 2011 2010 2011 2010
————— —- —- —- —-
Net Revenues
Gas
Distribution $326.5 $317.5 $2,196.7 $2,129.5
Gas
Transportation
and Storage 283.3 270.7 993.6 905.5
Electric 398.7 398.5 1,091.1 1,056.1
Other 15.3 17.8 63.5 59.5
—– —- —- —- —-
Gross Revenues 1,023.8 1,004.5 4,344.9 4,150.6
Cost of Sales
(excluding
depreciation
and
amortization) 285.0 296.1 1,788.5 1,626.9
————– —– —– ——- ——-
Total Net
Revenues 738.8 708.4 2,556.4 2,523.7
——— —– —– ——- ——-
Operating
Expenses
Operation and
maintenance 374.6 354.4 1,086.6 1,023.1
Operation and
maintenance -
trackers 31.7 32.9 152.1 177.1
Depreciation
and
amortization 131.0 149.4 397.5 445.3
Depreciation
and
amortization -
trackers 3.9 3.8 10.7 9.3
Other taxes 50.4 52.4 158.7 158.5
Other taxes -
trackers 8.7 9.1 60.4 52.7
————- — — —- —-
Total Operating
Expenses 600.3 602.0 1,866.0 1,866.0
————— —– —– ——- ——-
Equity Earnings
in
Unconsolidated
Affiliates 3.5 3.5 8.8 11.3
————— — — — —-
Operating
Earnings 142.0 109.9 699.2 669.0
——— —– —– —– —–
Other Income
(Deductions)
Interest
expense, net (95.7) (97.6) (279.9) (294.8)
Other, net 1.6 2.1 5.5 7.3
———- — — — —
Total Other
Deductions (94.1) (95.5) (274.4) (287.5)
———– —– —– —— ——
Operating
Earnings From
Continuing
Operations
Before Income
Taxes 47.9 14.4 424.8 381.5
Income Taxes 14.8 4.1 143.8 135.8
———— —- — —– —–
Net Operating
Earnings from
Continuing
Operations 33.1 10.3 281.0 245.7
————— —- —- —– —–
GAAP Adjustment 3.2 23.1 (0.4) 13.1
————— — —- —- —-
GAAP Income
from
Continuing
Operations $36.3 $33.4 $280.6 $258.8
=========== ===== ===== ====== ======

Basic Net
Operating
Earnings Per
Share from
Continuing
Operations 0.11 0.04 1.00 0.89
————- —- —- —- —-

GAAP Basic
Earnings Per
Share from
Continuing
Operations 0.13 0.12 1.00 0.93
————- —- —- —- —-

Basic Average
Common Shares
Outstanding 280.8 278.1 280.1 277.5
————– —– —– —– —–

NiSource Inc.
Segment Operating Earnings (Non-GAAP)

Three Months Nine Months
Gas Distribution Ended September Ended September
Operations 30, 30,
—————- —————-
(in millions) 2011 2010 2011 2010
————- —- —- —- —-
Net Revenues
Sales Revenues $418.1 $431.3 $2,631.4 $2,553.8
Less: Cost of
gas sold 158.9 188.3 1,473.7 1,385.8
————- —– —– ——- ——-
Net Revenues 259.2 243.0 1,157.7 1,168.0
———— —– —– ——- ——-
Operating
Expenses
Operation and
maintenance 172.0 176.3 516.1 506.9
Operation and
maintenance -
trackers 6.6 14.1 92.0 126.1
Depreciation and
amortization 43.7 63.9 130.3 189.8
Other taxes 20.2 20.4 65.1 62.6
Other taxes -
trackers 8.7 9.0 60.4 52.7
————- — — —- —-
Total Operating
Expenses 251.2 283.7 863.9 938.1
————— —– —– —– —–
Operating
Earnings (Loss) $8.0 $(40.7) $293.8 $229.9
================ ==== ====== ====== ======
GAAP Adjustment (0.1) (1.8) 2.1 (18.8)
————— —- —- — —–
GAAP Operating
Income (Loss) $7.9 $(42.5) $295.9 $211.1
============== ==== ====== ====== ======

Three Months Nine Months
Gas Transmission
and Storage Ended September Ended September
Operations 30, 30,
—————- —————-
(in millions) 2011 2010 2011 2010
————- —- —- —- —-
Net Revenues
Transportation
revenues $179.7 $163.7 $554.1 $522.6
Storage revenues 48.0 49.9 148.0 149.0
Other revenues 5.7 3.9 20.3 19.8
————– — — —- —-
Net Operating
Revenues 233.4 217.5 722.4 691.4
————- —– —– —– —–
Operating
Expenses
Operation and
maintenance 100.8 82.6 269.2 242.5
Operation and
maintenance -
trackers 21.3 16.1 50.6 44.3
Depreciation and
amortization 32.6 31.8 98.2 94.9
Other taxes 14.0 14.0 41.9 43.8
———– —- —- —- —-
Total Operating
Expenses 168.7 144.5 459.9 425.5
————— —– —– —– —–
Equity Earnings
in
Unconsolidated
Affiliates 3.5 3.4 8.8 11.3
————— — — — —-
Operating
Earnings $68.2 $76.4 $271.3 $277.2
========= ===== ===== ====== ======
GAAP Adjustment – (0.2) 0.1 (0.2)
————— — —- — —-
GAAP Operating
Income $68.2 $76.2 $271.4 $277.0
============== ===== ===== ====== ======

NiSource Inc.
Segment Operating Earnings (Non-GAAP)

Three Months Nine Months
Electric Ended September Ended September
Operations 30, 30,
—————- —————-
(in millions) 2011 2010 2011 2010
————- —- —- —- —-
Net Revenues
Sales revenues $400.7 $389.8 $1,097.0 $1,051.4
Less: Cost of
sales 156.4 142.5 426.3 389.9
————- —– —– —– —–
Net Revenues 244.3 247.3 670.7 661.5
———— —– —– —– —–
Operating
Expenses
Operation and
maintenance 100.8 95.2 300.5 276.6
Operation and
maintenance -
trackers 3.8 2.7 9.5 6.7
Depreciation and
amortization 49.8 50.0 155.3 149.7
Depreciation and
amortization -
trackers 3.9 3.7 10.7 9.3
Other taxes 13.1 15.7 42.6 44.7
———– —- —- —- —-
Total Operating
Expenses 171.4 167.3 518.6 487.0
————— —– —– —– —–
Operating
Earnings $72.9 $80.0 $152.1 $174.5
========= ===== ===== ====== ======
GAAP Adjustment 5.9 15.9 9.7 16.1
————— — —- — —-
GAAP Operating
Income $78.8 $95.9 $161.8 $190.6
============== ===== ===== ====== ======

Three Months Nine Months
Corporate and Ended September Ended September
Other Operations 30, 30,
—————- —————-
(in millions) 2011 2010 2011 2010
————- —- —- —- —-
Operating Loss $(7.1) $(5.8) $(18.0) $(12.6)
================= ===== ===== ====== ======
GAAP Adjustment (0.3) (0.5) (1.1) (0.2)
————— —- —- —- —-
GAAP Operating
Loss $(7.4) $(6.3) $(19.1) $(12.8)
============== ===== ===== ====== ======

NiSource Inc.
Segment Volumes and Statistical Data

Three Months Nine Months
Gas Distribution
Operations Ended September Ended September
30, 30,
— –
2011 2010 2011 2010
—- —- —- —-
Sales and Transportation
(MMDth)
Residential 13.8 15.0 181.9 170.2
Commercial 17.6 19.1 121.9 115.1
Industrial 102.5 98.3 322.2 284.3
Off System 14.4 13.7 52.3 56.8
Other – 0.1 0.5 0.8
—– — — — —
Total 148.3 146.2 678.8 627.2
—– —– —– —– —–
Weather Adjustment (0.3) 1.1 (5.3) 14.6
—————— —- — —- —-
Sales and Transportation
Volumes -Excluding
Weather 148.0 147.3 673.5 641.8
======================== ===== ===== ===== =====

Heating Degree Days 112 72 3,692 3,370
Normal Heating Degree
Days 88 88 3,596 3,596
% Colder (Warmer) than
Normal 27% (18%) 3% (6%)

Customers
Residential 2,987,202 2,980,557
Commercial 275,677 273,371
Industrial 7,724 7,686
Other 18 81
—– — —
Total 3,270,621 3,261,695
—– ——— ———

Three Months Nine Months
Gas Transmission and Ended September Ended September
Storage Operations 30, 30,
—————- —————-
2011 2010 2011 2010
—- —- —- —-
Throughput (MMDth)
Columbia Transmission 184.6 191.1 816.1 750.1
Columbia Gulf 270.3 225.0 777.4 625.0
Crossroads Gas Pipeline 4.0 6.5 14.7 20.2
Intrasegment eliminations (124.2) (141.6) (424.5) (423.2)
————————- —— —— —— ——
Total 334.7 281.0 1,183.7 972.1
—– —– —– ——- —–

NiSource Inc.
Segment Volumes and Statistical Data

Three Months Nine Months
Ended September Ended September
Electric Operations 30, 30,
—————- —————-
2011 2010 2011 2010
—- —- —- —-
Sales (Gigawatt Hours)
Residential 1,120.7 1,175.7 2,760.9 2,833.2
Commercial 1,083.7 1,103.8 2,955.2 2,991.1
Industrial 2,242.0 2,180.0 7,010.1 6,321.8
Wholesale 239.9 330.0 507.2 635.7
Other 39.7 47.0 121.3 128.2
—– —- —- —– —–
Total 4,726.0 4,836.5 13,354.7 12,910.0
—– ——- ——- ——– ——–
Weather Adjustment (81.2) (470.0) (132.2) (501.7)
—————— —– —— —— ——
Sales Volumes -Excluding
Weather impacts 4,644.8 4,366.5 13,222.5 12,408.3
======================== ======= ======= ======== ========

Cooling Degree Days 649 700 907 977
Normal Cooling Degree Days 578 578 808 808
% Warmer (Colder) than Normal 12% 21% 12% 21%

Electric Customers
Residential 399,525 399,556
Commercial 53,879 53,696
Industrial 2,411 2,435
Wholesale 16 15
Other 737 741
—– — —
Total 456,568 456,443
—– ——- ——-

NiSource Inc.
Schedule 1 – Reconciliation of Net Operating
Earnings to GAAP

Three Months Nine Months
Ended Ended
September September
30, 30,
— —
(in millions,
except per
share
amounts) 2011 2010 2011 2010
————- —- —- —- —-
Net Operating
Earnings from
Continuing
Operations
(Non-GAAP) $33.1 $10.3 $281.0 $245.7
————– —– —– —— ——
Items excluded
from
operating
earnings:
Net Revenues:
Weather -
compared to
normal 6.3 8.8 12.3 (1.3)
Revenue
adjustment – – – (5.7)
Unregulated
natural gas
marketing
business 0.6 0.9 4.0 5.8

Operating
Expenses:
Restructuring – 0.2 – (0.7)
Environmental
reserve
adjustment – 6.0 – 6.0
Unregulated
natural gas
marketing
business (1.0) (1.3) (4.4) (5.9)
Gain/Loss on
sale of
assets and
asset
impairments (0.6) (1.2) (1.1) (1.3)
———— —- —- —- —-
Total items
excluded from
operating
earnings 5.3 13.4 10.8 (3.1)
————– — —- —- —-

Tax effect of
above items (2.1) (5.5) (4.4) 1.0
————- —- —- —- —

Indiana tax
law change – – (6.8) -
Rate
settlement
flow-through – 15.2 – 15.2

Total items
excluded from
net operating
earnings 3.2 23.1 (0.4) 13.1
————– — —- —- —-

Reported
Income from
Continuing
Operations -
GAAP $36.3 $33.4 $280.6 $258.8
============= ===== ===== ====== ======

Basic Average
Common Shares
Outstanding 280.8 278.1 280.1 277.5
————– —– —– —– —–

Basic Net
Operating
Earnings Per
Share from
Continuing
Operations $0.11 $0.04 $1.00 $0.89
————- —– —– —– —–
Items excluded
from net
operating
earnings
(after-tax) 0.02 0.08 – 0.04
————– —- —- — —-
GAAP Basic
Earnings
(Loss) Per
Share from
Continuing
Operations $0.13 $0.12 $1.00 $0.93
———– —– —– —– —–

NiSource Inc.
Schedule 2 – Adjustments by Segment from Operating Earnings to
GAAP
For Quarter ended September 30

2011 (in
millions)
———-
Gas Gas Electric Corporate Total
Distribution Transmission ——– & Other —–
and
———— Storage ——-
——–

Operating
Earnings
(Loss) $8.0 $68.2 $72.9 $(7.1) $142.0

Net Revenues:
Weather
(compared to
normal) 0.2 – 6.1 – 6.3
Unregulated
natural gas
marketing
business – – – 0.6 0.6
— — — — —
Total Impact -
Net Revenues 0.2 – 6.1 0.6 6.9

Operating
Expenses
Unregulated
natural gas
marketing
business – – – (0.9) (0.9)
Loss on sale of
assets and
asset
impairments (0.3) – (0.2) – (0.5)
—- — —- — —-
Total Impact -
Operating
Expenses (0.3) – (0.2) (0.9) (1.4)

Total Impact -
Operating
(Loss) Income $(0.1) $ – $5.9 $(0.3) $5.5
—– — — — —– —

Operating
Income (Loss)
-GAAP $7.9 $68.2 $78.8 $(7.4) $147.5
— —– —– —– ——

2010 (in
millions)
———-
Gas Gas Electric Corporate Total
Distribution Transmission ——– ——— —–
and
———— Storage
——–

Operating
Earnings
(Loss) $(40.7) $76.4 $80.0 $(5.8) $109.9

Net Revenues:
Weather
(compared to
normal) (1.1) – 9.9 – 8.8
Unregulated
natural gas
marketing
business – – – 0.9 0.9
— — — — —
Total Impact -
Net Revenues (1.1) – 9.9 0.9 9.7
Operating
Expenses
Restructuring 0.1 – 0.1 – 0.2
Environmental
reserve – – 6.0 – 6.0
Unregulated
natural gas
marketing
business – – – (1.3) (1.3)
Loss on sale of
assets and
asset
impairments (0.8) (0.2) (0.1) (0.1) (1.2)
—- —- —- —- —-
Total Impact -
Operating
Expenses (0.7) (0.2) 6.0 (1.4) 3.7
—- —- — —- —

Total Impact -
Operating
(Loss) Income $(1.8) $(0.2) $15.9 $(0.5) $13.4
—– —– —– —– —–

Operating
(Loss) Income
-GAAP $(42.5) $76.2 $95.9 $(6.3) $123.3

NiSource Inc.
Schedule 2 – Adjustments by Segment from Operating Earnings to
GAAP
For Nine Months ended September 30

2011 (in millions)
——————
Gas
Gas Transmission Corporate
and and
Distribution Storage Electric Other Total
———— ——– ——– —— —–

Operating Earnings
(Loss) $293.8 $271.3 $152.1 $(18.0) $699.2

Net Revenues:
Weather (compared to
normal) 2.4 – 9.9 – 12.3
Unregulated natural
gas marketing
business – – – 4.0 4.0
— — — — —
Total Impact -Net
Revenues 2.4 – 9.9 4.0 16.3

Operating Expenses
Unregulated natural
gas marketing
business – – – (4.4) (4.4)
Loss on sale of
assets and asset
impairments (0.3) 0.1 (0.2) (0.7) (1.1)
—- — —- —- —-
Total Impact -
Operating Expenses (0.3) 0.1 (0.2) (5.1) (5.5)

Total Impact -
Operating Income
(Loss) $2.1 $0.1 $9.7 $(1.1) $10.8
— —- —- —– —–

Operating Income
(Loss) -GAAP $295.9 $271.4 $161.8 $(19.1) $710.0
—— —— —— —— ——

2010 (in millions)
——————
Gas
Gas Transmission
and
Distribution Storage Electric Corporate Total
———— ——– ——– ——— —–

Operating Earnings
(Loss) $229.9 $277.2 $174.5 $(12.6) $669.0

Net Revenues:
Weather (compared to
normal) (12.0) – 10.7 – (1.3)
Revenue adjustment (5.7) – – – (5.7)
Unregulated natural
gas marketing
business – – – 5.8 5.8
— — — — —
Total Impact -Net
Revenues (17.7) – 10.7 5.8 (1.2)

Operating Expenses
Restructuring (0.2) – (0.5) – (0.7)
Environmental
reserve – – 6.0 – 6.0
Unregulated natural
gas marketing
business – – – (5.9) (5.9)
Loss on sale of
assets and asset
impairments (0.9) (0.2) (0.1) (0.1) (1.3)
—- —- —- —- —-
Total Impact -
Operating Expenses (1.1) (0.2) 5.4 (6.0) (1.9)

Total Impact -
Operating Income
(Loss) $(18.8) $(0.2) $16.1 $(0.2) $(3.1)
—— —– —– —– —–

Operating Income
(Loss) -GAAP $211.1 $277.0 $190.6 $(12.8) $665.9

NiSource Inc.
Consolidated Income Statement (GAAP)
(unaudited)

Three Months Nine Months
Ended Ended
September 30, September 30,
————- ————-
(in
millions,
except per
share
amounts) 2011 2010 2011 2010
———– —- —- —- —-
Net
Revenues
Gas
Distribution $326.7 $327.0 $2,199.1 $2,122.4
Gas
Transportation
and
Storage 283.3 270.7 993.6 905.5
Electric 404.7 397.7 1,101.0 1,056.1
Other 54.0 142.7 235.5 583.9
—– —- —– —– —–
Gross
Revenues 1,068.7 1,138.1 4,529.2 4,667.9
Cost of
Sales
(excluding
depreciation
and
amortization) 323.1 420.0 1,956.5 2,145.4
————– —– —– ——- ——-
Total Net
Revenues 745.6 718.1 2,572.7 2,522.5
——— —– —– ——- ——-
Operating
Expenses
Operation
and
maintenance 407.1 382.1 1,242.1 1,198.8
Depreciation
and
amortization 134.9 153.1 408.3 454.5
Impairment
and loss
on sale of
assets,
net 0.4 1.1 1.1 1.2
Other taxes 59.2 62.0 220.0 213.4
———– —- —- —– —–
Total
Operating
Expenses 601.6 598.3 1,871.5 1,867.9
———- —– —– ——- ——-
Equity
Earnings
in
Unconsolidated
Affiliates 3.5 3.5 8.8 11.3
————— — — — —-
Operating
Income 147.5 123.3 710.0 665.9
——— —– —– —– —–
Other
Income
(Deductions)
Interest
expense,
net (95.7) (97.6) (279.9) (294.8)
Other, net 1.6 2.1 5.5 7.3
———- — — — —
Total Other
Deductions (94.1) (95.5) (274.4) (287.5)
———– —– —– —— ——
Income from
Continuing
Operations
before
Income
Taxes 53.4 27.8 435.6 378.4
Income Tax
Expense
(Benefit) 17.1 (5.6) 155.0 119.6
———- —- —- —– —–
Income from
Continuing
Operations 36.3 33.4 280.6 258.8
———– —- —- —– —–
Loss from
Discontinued
Operations
-net of
taxes (1.6) (0.2) (1.8) (0.3)
Gain on
Disposition
of
Discontinued
Operations
-net of
taxes – – – 0.1
— — — —
Net Income $34.7 $33.2 $278.8 $258.6
========== ===== ===== ====== ======

Basic
Earnings
Per Share
Continuing
operations $0.13 $0.12 $1.00 $0.93
Discontinued
operations (0.01) – (0.01) -
———— —– — —– —
Basic
Earnings
Per Share $0.12 $0.12 $0.99 $0.93
========== ===== ===== ===== =====

Diluted
Earnings
Per Share
Continuing
operations $0.13 $0.12 $0.98 $0.93
Discontinued
operations (0.01) – (0.01) -
———— —– — —– —
Diluted
Earnings
Per Share $0.12 $0.12 $0.97 $0.93
========== ===== ===== ===== =====

Dividends
Declared
Per Common
Share $0.23 $0.23 $0.92 $0.92
———– —– —– —– —–

Basic
Average
Common
Shares
Outstanding 280.8 278.1 280.1 277.5
Diluted
Average
Common
Shares 289.0 279.9 287.4 278.9
——– —– —– —– —–

NiSource Inc.
Consolidated Balance Sheets (GAAP)
(unaudited)

September 30, December 31,
(in millions) 2011 2010
————- —- —-

ASSETS
Property, Plant and Equipment
Utility Plant $20,095.5 $19,494.9
Accumulated depreciation and
amortization (8,672.3) (8,492.6)
——– ——–
Net utility plant 11,423.2 11,002.3
—————– ——– ——–
Other property, at cost, less
accumulated depreciation 125.5 94.7
—————————– —– —-
Net Property, Plant and Equipment 11,548.7 11,097.0
——————————— ——– ——–

Investments and Other Assets
Assets of discontinued operations
and assets held for sale 2.3 7.9
Unconsolidated affiliates 200.2 200.9
Total Investments and Other Assets 164.3 139.7
———————————- —– —–
Total Investments and Other Assets 366.8 348.5
———————————- —– —–

Current Assets
Cash and cash equivalents 22.2 9.2
Restricted cash 180.1 202.9
Accounts receivable (less reserve
of $29.7 and $37.4, respectively) 512.5 1,079.3
Income tax receivable 1.2 99.0
Gas inventory 467.0 298.2
Underrecovered gas and fuel costs 57.7 135.7
Materials and supplies, at average
cost 87.0 83.8
Electric production fuel, at
average cost 41.3 46.0
Price risk management assets 136.7 159.5
Exchange gas receivable 92.7 62.7
Regulatory assets 142.4 151.8
Prepayments and other 119.7 120.8
——————— —– —–
Total Current Assets 1,860.5 2,448.9
——————– ——- ——-

Other Assets
Price risk management assets 191.4 240.3
Regulatory assets 1,618.8 1,650.4
Goodwill 3,677.3 3,677.3
Intangible assets 300.4 308.6
Postretirement and postemployment
benefits assets 43.6 35.1
Deferred charges and other 134.6 132.7
————————– —– —–
Total Other Assets 5,966.1 6,044.4
—————— ——- ——-
Total Assets $19,742.1 $19,938.8
============ ========= =========

NiSource Inc.
Consolidated Balance Sheets (continued)
(GAAP) (unaudited)

September 30, December 31,
(in millions, except share amounts) 2011 2010
———————————– —- —-

CAPITALIZATION AND LIABILITIES
Capitalization
Common Stockholders’ Equity
Common stock -$0.01 par value,
400,000,000 shares authorized;
281,111,006 and 278,855,291 shares
issued and outstanding,
respectively $2.8 $2.8
Additional paid-in capital 4,149.4 4,103.9
Retained earnings 922.6 901.8
Accumulated other comprehensive
loss (54.4) (57.9)
Treasury stock (30.4) (27.4)
————– —– —–
Total Common Stockholders’ Equity 4,990.0 4,923.2
Long-term debt, excluding amounts
due within one year 6,337.3 5,936.1
——- ——-
Total Capitalization 11,327.3 10,859.3
——————– ——– ——–

Current Liabilities
Current portion of long-term debt 8.2 34.2
Short-term borrowings 1,234.0 1,382.5
Accounts payable 244.4 581.8
Dividends payable 64.7 0.1
Customer deposits and credits 281.3 318.1
Taxes accrued 157.8 221.1
Interest accrued 67.7 114.4
Overrecovered gas and fuel costs 80.2 11.8
Price risk management liabilities 171.6 173.9
Exchange gas payable 178.3 266.1
Deferred revenue 3.5 6.8
Regulatory liabilities 88.8 92.9
Accrued liability for
postretirement and postemployment
benefits 23.3 23.3
Legal and environmental reserves 28.9 86.0
Other accruals 254.5 336.4
————– —– —–
Total Current Liabilities 2,887.2 3,649.4
————————- ——- ——-

Other Liabilities and Deferred
Credits
Price risk management liabilities 136.6 181.6
Deferred income taxes 2,430.2 2,209.7
Deferred investment tax credits 30.1 33.7
Deferred credits 79.0 68.6
Deferred revenue – 0.3
Accrued liability for
postretirement and postemployment
benefits 874.4 1,039.6
Regulatory liabilities and other
removal costs 1,643.7 1,595.8
Asset retirement obligations 140.5 138.8
Other noncurrent liabilities 193.1 162.0
—————————- —– —–
Total Other Liabilities and
Deferred Credits 5,527.6 5,430.1
————————— ——- ——-
Total Capitalization and
Liabilities $19,742.1 $19,938.8
======================== ========= =========

NiSource Inc.
Statements of Consolidated Cash Flows (GAAP)
(unaudited)

Nine Months Ended September 30, (in
millions) 2011 2010
———————————– —- —-
Operating Activities
Net Income $278.8 $258.6
Adjustments to Reconcile Net Income to Net
Cash from Continuing Operations:
Depreciation and amortization 408.3 454.5
Net changes in price risk management assets
and liabilities 14.1 (4.2)
Deferred income taxes and investment tax
credits 165.2 130.6
Deferred revenue (4.2) (22.7)
Stock compensation expense and 401(k)
profit sharing contribution 27.4 23.2
Gain on sale of assets (0.1) (0.1)
Loss on impairment of assets 1.2 1.1
Income from unconsolidated affiliates (8.0) (11.1)
Gain on disposition of discontinued
operations -net of taxes – (0.1)
Loss from discontinued operations -net of
taxes 1.8 0.3
Amortization of debt related costs 6.6 8.1
AFUDC equity (3.2) (4.9)
Distributions of earnings received from
equity investee 10.9 7.9
Changes in Assets and Liabilities:
Accounts receivable 561.4 299.2
Income tax receivable 97.8 24.9
Inventories (171.4) (32.8)
Accounts payable (325.1) (266.8)
Customer deposits and credits (36.8) (10.7)
Taxes accrued (62.8) (96.1)
Interest accrued (46.6) (40.0)
Over (Under) recovered gas and fuel costs 146.4 (289.9)
Exchange gas receivable/payable (117.9) (12.9)
Other accruals (32.2) (22.7)
Prepayments and other current assets 31.1 32.4
Regulatory assets/liabilities 39.2 103.9
Postretirement and postemployment benefits (163.5) (142.3)
Deferred credits (2.0) (0.2)
Deferred charges and other noncurrent
assets (6.3) 9.9
Other noncurrent liabilities 32.6 (9.7)
—————————- —- —-
Net Operating Activities from Continuing
Operations 842.7 387.4
Net Operating Activities used for
Discontinued Operations (48.6) (54.9)
——————————— —– —–
Net Cash Flows from Operating Activities 794.1 332.5
—————————————- —– —–

Investing Activities
Capital expenditures (774.2) (553.7)
Insurance recoveries – 3.5
Proceeds from disposition of assets 9.4 0.3
Restricted cash withdrawals (deposits) 22.8 (101.8)
Contributions to equity investees (0.2) (87.7)
Distributions from equity investees – 23.8
Other investing activities (59.7) (45.9)
————————– —– —–
Net Investing Activities used for
Continuing Operations (801.9) (761.5)
Net Investing Activities from Discontinued
Operations – 0.4
—————————————— — —
Net Cash Flow used for Investing Activities (801.9) (761.1)
——————————————- —— ——

Financing Activities
Issuance of long-term debt 395.3 -
Retirement of long-term debt (36.5) (16.3)
Premiums and other debt related costs (8.2) -
Change in short-term borrowings, net (148.5) 621.6
Issuance of common stock 15.1 10.6
Acquisition of treasury stock (3.1) (1.4)
Dividends paid – common stock (193.3) (191.4)
—————————– —— ——
Net Cash Flows from Financing Activities 20.8 423.1
—————————————- —- —–
Change in cash and cash equivalents from
continuing operations 61.6 49.0
Cash contributions to discontinued
operations (48.6) (54.5)
Cash and cash equivalents at beginning of
period 9.2 16.4
—————————————– — —-
Cash and Cash Equivalents at End of Period $22.2 $10.9
========================================== ===== =====

SOURCE NiSource Inc.