10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission File Number: 001-04125

NORTHERN INDIANA PUBLIC SERVICE COMPANY

(Exact name of registrant as specified in its charter)

Indiana	35-0552990
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
801 East 86th Avenue Merrillville, Indiana	46410
(Address of principal executive offices)	(Zip Code)

(877) 647-5990
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

	Name of each exchange
Title of each class	on which registered
Series A Cumulative Preferred — No Par Value	New York
4-1/4% Cumulative Preferred — $100 Par Value	American

Securities registered pursuant to Section 12(g) of the Act: Cumulative Preferred Stock — $100 Par Value (4-1/2%, 4.22%, 4.88%, 7.44% and 7.50% Series)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 1, 2005, 73,282,258 shares of the registrant’s Common Shares, no par value, were issued and outstanding, all held beneficially and of record by NiSource Inc.

NORTHERN INDIANA PUBLIC SERVICE COMPANY
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTER ENDED JUNE 30, 2005

Table of Contents

			Page
	Defined Terms			3
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Statements of Consolidated Income		5
		Consolidated Balance Sheets		6
		Statements of Consolidated Cash Flows		8
		Statements of Consolidated Comprehensive Income		9
		Notes to Consolidated Financial Statements		10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34
	Item 4.	Controls and Procedures		34
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings		35
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		35
	Item 3.	Defaults Upon Senior Securities		35
	Item 4.	Submission of Matters to a Vote of Security Holders		35
	Item 5.	Other Information		35
	Item 6.	Exhibits		35
	Signature			36
Articles of Incorporation
By-laws
302 Certification of Principal Executive Officer
302 Certification of Principal Financial Officer
906 Certification of Principal Executive Officer
906 Certification of Principal Financial Officer

2

DEFINED TERMS

The following is a list of frequently used abbreviations or acronyms that are found in this report:

NiSource Subsidiaries and Affiliates
Columbia	Columbia Energy Group
NiSource	NiSource Inc.
NiSource Corporate Services	NiSource Corporate Services Company
NiSource Finance	NiSource Finance Corp.
Northern Indiana	Northern Indiana Public Service Company
NRC	NIPSCO Receivables Corporation
TPC	EnergyUSA-TPC Corp.
Whiting Clean Energy	Whiting Clean Energy, Inc.
Abbreviations
APB No. 28	Accounting Principles Board Opinion No. 28, “Interim Financial Reporting”
ARP	Alternative Regulatory Plan
BART	Best Available Retrofit Technology
CAIR	Clean Air Interstate Rule
CAMR	Clean Air Mercury Rule
ECRM	Environmental Cost Recovery Mechanism
ECT	Environmental cost tracker
EERM	Environmental Expense Recovery Mechanism
EGU	Electric generating units
EPA	United States Environmental Protection Agency
FAC	Fuel adjustment clause
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FIN 47	FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”
FTRs	Financial Transmission Rights
GCA	Gas cost adjustment
GCIM	Gas Cost Incentive Mechanism
gwh	Gigawatt hours
IBM	International Business Machines Corp.
IDEM	Indiana Department of Environmental Management
ITC	Independent Transmission Company (Grid America)
IURC	Indiana Utility Regulatory Commission
Jupiter	Jupiter Aluminum Corporation
MISO	Midwest Independent System Operator
Mitchell Station	Dean H. Mitchell Generating Station
MMDth	Million dekatherms
MMI	Midwest Market Initiative
MOU	Memorandum of Understanding
mw	Megawatts
NAAQS	National Ambient Air Quality Standards
NOx	Nitrogen oxide
NYMEX	New York Mercantile Exchange
OUCC	Indiana Office of Utility Consumer Counselor
PPS	Price Protection Services
PRB	Powder River Basin
QPAI	Qualified production activities income
RFP	Request for proposals
SEC	Securities and Exchange Commission
SFAS	Statement of Financial Accounting Standards
SFAS No. 71	Statement of Financial Accounting Standards No. 71, “Accounting for the Effects of Certain Types of Regulation”
SFAS No. 109	Statement of Financial Accounting Standards No. 109, “Accounting for Uncertain Tax Positions”

3

DEFINED TERMS (continued)

SFAS No. 123R	Statement of Financial Accounting Standards No. 123R, “Share-Based Payment”
SFAS No. 133	Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended
SFAS No. 143	Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations”
SIP	State Implementation Plan
SO2	Sulfur dioxide

4

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Northern Indiana Public Service Company

Statements of Consolidated Income (unaudited)

	Three Months						Six Months
	Ended June 30,						Ended June 30,
Three Months Ended March 31, (in millions)	2005			2004			2005			2004
Operating Revenues
Gas	$	146.5		$	149.1		$	579.2		$	563.5
Gas-affiliated		2.4			1.4			3.4			2.5
Electric		281.6			263.9			563.1			519.6
Electric-affiliated		0.4			3.5			1.3			8.7
Gross Operating Revenues		430.9			417.9			1,147.0			1,094.3
Cost of Energy
Gas costs		99.4			106.2			421.1			408.7
Gas costs-affiliated		2.3			—			2.9			—
Fuel for electric generation		64.3			54.0			122.0			108.4
Fuel for electric generation-affiliated		2.1			1.4			3.4			2.7
Power purchased		26.0			22.1			61.9			40.7
Power purchased-affiliated		—			7.4			0.8			14.5
Cost of sales		194.1			191.1			612.1			575.0
Total Net Revenues		236.8			226.8			534.9			519.3
Operating Expenses
Operation and maintenance		99.3			88.4			191.1			180.2
Depreciation and amortization		68.0			66.1			135.5			131.6
Gain on sale of assets		(0.8	)		—			(0.8	)		—
Other taxes		13.9			2.5			38.9			29.2
Total Operating Expenses		180.4			157.0			364.7			341.0
Operating Income		56.4			69.8			170.2			178.3
Other Income (Deductions)
Interest on long-term debt		(7.1	)		(6.7	)		(13.9	)		(14.7	)
Other interest		0.3			(1.5	)		(0.3	)		(2.2	)
Other interest-affiliated		(1.4	)		(1.6	)		(3.3	)		(3.7	)
Amortization of premium, reacquisition premium, discount and expense on debt, net		(0.9	)		(0.8	)		(1.8	)		(1.8	)
Other, net		(1.0	)		(0.8	)		(2.9	)		(0.7	)
Total Other Income (Deductions)		(10.1	)		(11.4	)		(22.2	)		(23.1	)
Income before Income Taxes		46.3			58.4			148.0			155.2
Income Taxes		18.5			23.1			59.9			62.4
Net Income	$	27.8		$	35.3		$	88.1		$	92.8
Dividend requirements on preferred stocks		1.1			1.1			2.1			2.2
Balance available for common shares	$	26.7		$	34.2		$	86.0		$	90.6
Common dividends declared	$	—		$	—		$	—		$	—

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Consolidated Balance Sheets

	June 30,		December 31,
(in millions)	2005		2004
	(unaudited)
ASSETS
Utility Plant, at original cost
Electric	$	4,873.0	$	4,839.0
Gas		1,538.4		1,523.4
Common		370.6		366.4
Total Utility Plant		6,782.0		6,728.8
Less — Accumulated provision for depreciation and amortization		3,284.9		3,199.7
Net Utility Plant		3,497.1		3,529.1
Other Property and Investments		2.3		2.3
Current Assets:
Cash and cash equivalents		4.0		0.5
Restricted cash		0.8		22.4
Accounts receivable and unbilled revenue (less reserve of $14.3 and $8.6, respectively)		101.0		198.8
Underrecovered fuel costs		9.5		7.1
Materials and supplies, at average cost		48.9		47.7
Electric production fuel, at average cost		32.8		29.2
Natural gas in storage, at last-in, first-out cost		46.9		106.6
Price risk management assets		5.5		0.2
Regulatory assets		30.7		29.8
Prepayments and other		38.8		38.4
Total Current Assets		318.9		480.7
Other Assets:
Regulatory assets		173.3		183.7
Intangible assets		31.1		31.1
Deferred charges and other		7.0		6.9
Total Other Assets		211.4		221.7
Total Assets	$	4,029.7	$	4,233.8

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

6

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Consolidated Balance Sheets (continued)

	June 30,			December 31,
(in millions, except shares outstanding)	2005			2004
	(unaudited)
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholder’s equity
Common stock — without par value - 73,282,258 shares outstanding	$	859.5		$	859.5
Additional paid — in capital		62.9			63.0
Retained earnings		443.0			356.9
Other comprehensive income		(119.1	)		(123.2	)
Total common shareholder’s equity		1,246.3			1,156.2
Preferred Stocks — Series without mandatory redemption provisions		81.1			81.1
Long-term debt, excluding amounts due within one year		497.9			497.9
Long-term debt-affiliated, excluding amounts due within one year		275.0			—
Total Capitalization		2,100.3			1,735.2
Current Liabilities
Current portion of long-term debt		34.0			73.3
Short term borrowings-affiliated		22.7			494.9
Accounts payable		117.8			171.3
Accounts payable-affiliated		16.3			14.7
Dividends declared on preferred stocks		1.1			1.0
Customer deposits		58.6			56.4
Taxes accrued		62.8			55.8
Interest accrued		3.2			6.9
Overrecovered gas costs		26.0			13.0
Accrued employment costs		20.9			23.7
Price risk management liabilities		—			13.5
Regulatory liabilities		0.2			—
Accrued liability for postretirement and pension benefits		22.0			23.0
Other accruals		31.1			59.2
Total Current Liabilities		416.7			1,006.7
Other Liabilities and Deferred Credits
Deferred income taxes		442.2			455.8
Deferred investment tax credits		46.7			50.2
Deferred credits		18.1			19.3
Accrued liability for postretirement and pension benefits		250.1			239.6
Preferred stock liabilities with mandatory redemption provisions		0.6			0.6
Regulatory liabilities and other removal costs		735.0			706.6
Other noncurrent liabilities		20.0			19.8
Total Other		1,512.7			1,491.9
Commitments and Contingencies		—			—
Total Capitalization and Liabilities	$	4,029.7		$	4,233.8

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

7

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Statements of Consolidated Cash Flows (unaudited)

Six Months Ended June 30, (in millions)	2005			2004
Operating Activities
Net Income	$	88.1		$	92.8
Adjustments to reconcile net income to net cash:
Depreciation and amortization		135.5			131.6
Net changes in price risk management activities		(14.7	)		1.8
Deferred income taxes and investment tax credits		(23.2	)		(40.8	)
Amortization of unearned compensation		0.1			—
Amortization of discount/premium on debt		1.8			1.9
Gain on sale of assets		(0.8	)		—
Other		(0.2	)		0.6
Changes in assets and liabilities:
Accounts receivable and unbilled revenue		98.2			50.9
Inventories		64.1			76.6
Accounts payable		(45.2	)		(7.8	)
Customer deposits		2.2			2.0
Taxes accrued		6.0			43.2
Interest accrued		(3.7	)		(0.4	)
(Under) Overrecovered gas and fuel costs		10.6			(2.4	)
Prepayments and other current assets		6.7			9.1
Regulatory assets/liabilities		11.1			4.6
Postretirement and postemployment benefits		9.4			12.4
Deferred credits		0.4			2.1
Other accruals		(40.2	)		(28.6	)
Deferred charges and other noncurrent assets		(0.2	)		1.2
Other noncurrent liabilities		(6.1	)		(8.0	)
Net Cash Flows from Operating Activities		299.9			342.8
Investing Activities
Capital expenditures		(80.2	)		(114.0	)
Proceeds from disposition of assets		1.4			1.6
Other investing activities		21.6			(0.3	)
Net Cash Flows used for Investing Activities		(57.2	)		(112.7	)
Financing Activities
Issuance of affiliated long-term debt		275.0			—
Retirement of long-term debt		(39.3	)		(111.1	)
Change in affiliated money pool		(472.8	)		(114.6	)
Dividends paid — preferred shares		(2.1	)		(2.3	)
Net Cash Flows used for Financing Activities		(239.2	)		(228.0	)
Increase in cash and cash equivalents		3.5			2.1
Cash and cash equivalents at beginning of period		0.5			0.3
Cash and cash equivalents at end of period	$	4.0		$	2.4
Supplemental Disclosures of Cash Flow Information
Cash paid for interest		21.3			21.5
Interest capitalized		0.2			0.6
Cash paid for income taxes		64.5			66.0

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

8

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Statements of Consolidated Comprehensive Income (unaudited)

	Three Months						Six Months
	Ended June 30,						Ended June 30,
(in millions, net of tax)	2005			2004			2005		2004
Net Income	$	27.8		$	35.3		$	88.1	$	92.8
Other comprehensive loss, net of tax
Net unrealized losses on cash flow hedges		(0.7	)		(0.5	)		4.1		(1.7	)
Total Comprehensive Income	$	27.1		$	34.8		$	92.2	$	91.1

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

9

ITEM 1. FINANCIAL STATEMENTS

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

1. Basis of Accounting Presentation

Northern Indiana is a wholly-owned subsidiary of NiSource. NiSource is an energy holding company that provides natural gas, electricity and other products and services to approximately 3.8 million customers located within a corridor that runs from the Gulf Coast through the Midwest to New England. NiSource is a Delaware corporation and a registered holding company under the Public Utility Holding Company Act of 1935, as amended.

The accompanying unaudited consolidated financial statements for Northern Indiana reflect all normal recurring adjustments that are necessary, in the opinion of management, to present fairly the results of operations in accordance with accounting principles generally accepted in the United States of America.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Northern Indiana’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004. Income for interim periods may not be indicative of results for the calendar year due to weather variations and other factors. Certain reclassifications have been made to the 2004 financial statements to conform to the 2005 presentation. In the Statements of Consolidated Cash Flows for the six months ended June 30, 2004, the classification of the activity in restricted cash balances has been reclassified to an investing activity within “Other investing activities.” Northern Indiana previously presented such changes as an operating activity. For the six months ended June 30, 2004, this resulted in a $0.3 million decrease to investing cash flows and a corresponding increase to operating cash flows from the amounts previously reported.

2. Recent Accounting Pronouncements

FASB Interpretation No. 47 — Accounting for Conditional Asset Retirement Obligations. In March 2005, the FASB issued FIN 47 to clarify the accounting for conditional asset retirement obligations and to provide additional guidance for when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation, as used in SFAS No. 143. This interpretation is effective for fiscal years ending after December 15, 2005, and early adoption is encouraged. Northern Indiana is currently reviewing the legal obligations surrounding future retirement of tangible long-lived assets with regards to this interpretation.

SFAS No. 123 (revised 2004) — Share-Based Payment. In December 2004, the FASB issued SFAS No. 123R which requires that the cost resulting from all share-based payment transactions be recognized in the financial statements and establishes fair value as the measurement objective in accounting for these transactions. This statement is effective for public entities as of the beginning of the first interim or annual reporting period beginning after December 15, 2005, as directed by the SEC in their April 15, 2005 amendment to Rule 4-01(a) of Regulation S-X. Northern Indiana plans to adopt this standard on January 1, 2006, using a modified version of the prospective application for NiSource share-based awards issued to employees of Northern Indiana.

Accounting for Uncertain Tax Positions. On July 14, 2005, the FASB issued an Exposure Draft, “Accounting for Uncertain Tax Positions,” that would interpret SFAS No. 109. This proposal seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement requirements related to accounting for income taxes. Specifically, the proposal would require that a tax position meet a “probable recognition threshold” for the benefit of an uncertain tax position to be recognized in the financial statements. The proposal would require recognition in the financial statements of the best estimate of the effects of a tax position only if that position is probable of being sustained on audit by the appropriate taxing authorities, based solely on the technical merits of the position. Northern Indiana is currently reviewing the provisions of the Exposure Draft to determine the impact it may have on its Consolidated Financial Statements and Notes to Consolidated Financial Statements.

3. Restructuring Activities

During the second quarter of 2005, NiSource Corporate Services reached a definitive agreement with IBM under which IBM will provide a broad range of business transformation and outsourcing services to NiSource. The service and outsourcing agreement is for ten years with a transition period to extend through December 31, 2006. In connection with the IBM agreement, a total of approximately 1,000 positions have been identified for elimination through the transition period. Over 570 of the impacted employees are expected to become employees of IBM or its

10

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

subcontractors. As of June 30, 2005, no employees were terminated during the quarter as a result of the agreement with IBM. In June 2005, Northern Indiana recorded a restructuring charge of $3.2 million for severance payments expected to be made by NiSource Corporate Services in connection with the IBM agreement. Of the $3.2 million restructuring charge recorded for the period, $1.4 million was recorded by the Gas Distribution Operations segment and $1.8 million was recorded by the Electric Operations segment. Northern Indiana is allocated costs associated with NiSource Corporate Services employees identified for termination. NiSource expects to recognize approximately $20 million in restructuring charges in the third quarter of 2005 for non-cash pension and postretirement benefit expense related to the severed employees. A portion of these expenses will be allocated to Northern Indiana. These restructuring charges are included in “Operation and maintenance” expense on the Statements of Consolidated Income.

In previous years, NiSource implemented restructuring initiatives to streamline its operations and realize efficiencies as a result of the acquisition of Columbia. In 2000, these restructuring initiatives included a severance program, a voluntary early retirement program, and a transition plan to implement operational efficiencies throughout the company. In 2001, NiSource’s restructuring initiatives focused on creating operating efficiencies in the Gas Distribution and the Electric Operations segments and included the closure of the Mitchell Station in Gary, Indiana. During 2002, NiSource implemented a restructuring initiative which resulted in employee terminations throughout the organization mainly affecting executive and other management-level employees. In connection with these earlier restructuring initiatives, a total of approximately 170 management, professional, administrative and technical positions were identified for elimination at Northern Indiana. As of June 30, 2005, approximately 163 employees were terminated, of whom 1 was terminated during the quarter and six months ended June 30, 2005.

4. Regulatory Matters

Gas Distribution Operations Related Matters
Northern Indiana continues to offer a Choice Program where customers can choose to purchase gas from a third party supplier, through a regulatory initiative. Through the month of June 30, 2005, approximately 58,000 of Northern Indiana’s residential and small commercial customers selected an alternate supplier.

Northern Indiana’s gas costs are recovered under a flexible GCA mechanism approved by the IURC in 1999. Under the approved procedure, a demand component of the fuel adjustment factor is determined annually effective November 1 of each year, after hearings and IURC approval. The commodity component of the adjustment factor is determined by monthly filings, which do not require IURC approval but are reviewed by the IURC during the annual hearing that takes place regarding the demand component filing. Northern Indiana’s GCA factor also includes a GCIM which allows the sharing of any cost savings or cost increases with customers based on a comparison of actual gas supply portfolio cost to a market-based benchmark price.

Northern Indiana’s GCA6 annual demand cost recovery filing, covering the period November 1, 2004 through October 31, 2005 was made on August 26, 2004. The IURC authorized the collection of the demand charge, subject to refund, effective November 1, 2004 on October 20, 2004. The IURC held an evidentiary hearing in this Cause on March 2, 2005. Northern Indiana expects the IURC’s order in the third quarter of 2005.

Northern Indiana, the OUCC, Testimonial Staff of the IURC, and the Marketer Group (a group which collectively represents marketers participating in Northern Indiana Choice) filed a Stipulation and Settlement Agreement with the IURC on October 12, 2004, that, among other things, extends the expiration date of the current ARP to March 31, 2006. The IURC approved the settlement agreement on January 26, 2005. The agreement, as approved by the IURC, grandfathered the terms of existing contracts that marketers have with Choice customers and established a scope for negotiations. On May 2, 2005, Northern Indiana filed an unopposed motion that provided Parties more time to negotiate terms of the ARP and extend the expiration date of the current ARP to April 30, 2006. This action was approved by the IURC on May 25, 2005. A joint Stipulation and Settlement Agreement resolving all terms of the new ARP among Parties was filed with the IURC on July 13, 2005. The Settlement establishes a four year term that expires May 1, 2010, provides for the continuation of current products and services offered under the current ARP including the GCIM, spells out the terms of Northern Indiana’s merchant role, establishes a risk and reward mechanism to mitigate cost allocations created through Northern Indiana’s Choice program, and a rate moratorium

11

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

with exceptions for the term of the Agreement. A procedural schedule including a prehearing conference and evidentiary hearing to review testimony explaining the terms of the settlement will be established in the third quarter of 2005. A final IURC decision is expected in the fourth quarter of 2005.

Electric Operations Related Matters
During 2002, Northern Indiana settled certain regulatory matters related to an electric rate review. On September 23, 2002, the IURC issued an order adopting most aspects of the settlement. The order approving the settlement provides that electric customers of Northern Indiana will receive bill credits of approximately $55.1 million each year, for a cumulative total of $225 million, for the minimum 49-month period, beginning on July 1, 2002. The order also provides that 60% of any future earnings beyond a specified earnings level will be retained by Northern Indiana. Credits amounting to $29.2 million and $26.8 million were recognized for electric customers for the first half of 2005 and 2004, respectively.

On June 20, 2002, Northern Indiana, Ameren Corporation and First Energy Corporation established terms for joining the MISO through participation in an ITC. Northern Indiana transferred functional control of its electric transmission assets to the ITC and MISO on October 1, 2003, also known as “Day 1.” In April 2005, Northern Indiana, as well as the other two participants of the ITC, announced their withdrawal from the ITC and the ITC will cease operations effective November 1, 2005. As part of Northern Indiana’s use of MISO’s transmission service, Northern Indiana incurs new categories of transmission charges based upon MISO’s FERC-approved tariff. One of the new categories of charges, Schedule 10, relates to the payment of administrative charges to MISO for its continuing management and operations of the transmission system. Northern Indiana filed a petition on September 30, 2003, with the IURC seeking approval to establish accounting treatment for the deferral of the Schedule 10 charges from MISO. On July 21, 2004, the IURC issued an order which denied Northern Indiana’s request for deferred accounting treatment for the MISO Schedule 10 administrative fees. Northern Indiana appealed this decision to the Indiana Appellate Court, but on April 27, 2005, the Court affirmed the IURC’s original decision. Northern Indiana recorded a charge during the second quarter 2004 in the amount of $2.1 million related to the MISO administrative charges deferred through June 30, 2004, and recognized $1.6 million in MISO fees for the second half of 2004. MISO Day 1 administrative fees were $1.4 million for the first six months of 2005. The Day 1 MISO Schedule 10 administrative fees are currently estimated to be $2.5 to $3.0 million annually.

The MISO has launched the MMI, also known as “Day 2,” implementing structures and processes of an electricity market for the MISO region. The MMI provides non-discriminatory transmission service, reliable grid operation, and the purchase and sale of electric energy in a competitive, efficient and non-discriminatory manner. MISO’s MMI tariffs have been approved by the FERC. Financially binding activities began with the opening of the market for bids and offers on March 25, 2005, and the real-time market on April 1, 2005. Northern Indiana is actively participating in the MMI. Based on the first quarter of market operations, management expects a financial impact of approximately $3.3 million annually in operating expenses for MMI administrative costs. These are in addition to the MISO Day 1 Schedule 10 administrative costs for which Northern Indiana was denied deferral treatment in 2004. MMI energy costs are being accounted for in the same manner that energy costs were recorded prior to the implementation of the MMI, and are recovered through the FAC in accordance with the final IURC order issued on June 1, 2005. The detailed MMI tariff manages aspects of system reliability through the use of a market-based congestion management system. The FERC approved tariff includes a centralized dispatch platform, which dispatches the most economic resources to meet load requirements efficiently and reliably in the MISO region. The tariff uses Locational Marginal Pricing (i.e. the energy price for the next lowest priced megawatt available at each location within the MISO footprint). The MISO performs a day-ahead unit commitment and dispatch forecast for all resources in its market. The MISO also performs the real-time resource dispatch for resources under its control on a five-minute basis. The tariff also allows for the allocation, auction or sale of FTRs, which are instruments that protect against congestion costs occurring in the day-ahead market. Northern Indiana has not yet been a participant in the auction market for FTRs, but is allocated FTRs on a seasonal basis and at zero cost, for its use to protect against congestion costs. Northern Indiana retains its obligation for load following and other ancillary services.

Northern Indiana has been recovering the costs of electric power purchased for sale to its customers through the FAC. The FAC provides for costs to be collected if they are below a negotiated cap. If costs exceed this cap, Northern Indiana must demonstrate that the costs were prudently incurred to achieve approval for recovery. On June 15, 2005, Northern Indiana filed testimony and exhibits establishing a new basis for the cap. Northern Indiana

12

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

received approval from the IURC of its request on July 20, 2005. A group of industrial customers challenged the manner in which Northern Indiana applied such costs under a specific interruptible sales tariff. A settlement was reached with the customers and the challenge was withdrawn and dismissed in January 2004. In addition, as a result of the settlement, Northern Indiana has sought and received approval by the IURC to reduce the charges applicable to the interruptible sales tariff. This reduction will remain in effect until the Mitchell Station returns to service.

In January 2002, Northern Indiana indefinitely shut down its Mitchell Station. In February 2004, the City of Gary announced an interest in acquiring the land on which the Mitchell Station is located for economic development, including a proposal to increase the length of the runways at the Gary International Airport. On May 7, 2004, the City of Gary filed a petition with the IURC seeking to have the IURC establish a value for the Mitchell Station and establish the terms and conditions under which the City of Gary would acquire the Mitchell Station. Northern Indiana has reached an agreement with the City of Gary that provides for a joint redevelopment process for the Mitchell Station where the City of Gary could ultimately receive ownership of the property provided that the City of Gary and Northern Indiana can find funding for the demolition and environmental cleanup cost associated with demolishing the facility. The agreement expressly provides that neither Northern Indiana nor its customers will be obligated to provide funds for these costs.

On May 25, 2004, Northern Indiana filed a petition for approval of a Purchased Power and Transmission Tracker Mechanism to recover the cost of purchased power to meet Northern Indiana’s retail electric load requirements and charges imposed on Northern Indiana by MISO and ITC. A hearing in this matter was held December 1 and 2, 2004. An IURC order is expected in the third quarter of 2005.

On March 31, 2005, Northern Indiana and the OUCC filed an MOU with the IURC that could have resulted in settlements of the City of Gary petition and Purchased Power and Transmission Tracker petition. The settlement agreement that was contemplated by the MOU would have provided, among other things, for the recovery of Northern Indiana’s costs for intermediate dispatchable power purchased from TPC and would have required Northern Indiana to file a base rate case in 2007. The MOU provided that a settlement was contingent upon: 1) acceptable results of a third party evaluation study to be performed by an independent consultant relating to the use of Whiting Clean Energy and the Mitchell Station to meet the control performance standards required by the North American Electric Reliability Council and 2) affirmative consent to the other terms of the MOU by Northern Indiana’s large industrial electric customers. The scope of the proposed settlement did not include MISO costs. The ability to recover or defer MISO costs was to be determined in another proceeding before the IURC, filed by several of the investor-owned electric utilities in Indiana (see the following paragraph). The evaluation study was completed on June 30, 2005 by the engineering firm, Burns and McDonnell. On July 14, 2005, the OUCC filed a notice disavowing the MOU. In addition to confirming the need for a solution to help Northern Indiana meet certain control performance standards, the evaluation study identified several potential, alternative solutions. Northern Indiana continues to work with the OUCC and some of the utility’s industrial customers to explore the various options suggested by the independent study. Northern Indiana anticipates that the parties will collaborate to reach a mutually acceptable solution that will address electric reliability issues.

On July 9, 2004, a verified joint petition was filed by PSI Energy, Inc., Indianapolis Power & Light Company, Northern Indiana and Vectren Energy Delivery of Indiana, Inc., seeking approval of certain changes in operations that are likely to result from the MISO’s implementation of energy markets, and for determination of the manner and timing of recovery of costs resulting from the MISO’s implementation of standard market design mechanisms, such as the MISO’s proposed real-time and day-ahead energy markets. The hearing in this matter was completed on February 11, 2005, and an IURC order was issued on June 1, 2005. The order, applicable to Northern Indiana, authorized recovery or deferral of fuel related MISO Day 2 costs but denied recovery or deferral of non-fuel MISO Day 2 costs during Northern Indiana’s rate moratorium.

On April 11, 2005, Whiting Clean Energy, TPC and Northern Indiana, each a subsidiary of NiSource, filed their petition with the IURC for approval of an arrangement pursuant to which Whiting Clean Energy would sell to TPC electric power generated at Whiting Clean Energy’s generating facility in Whiting, Indiana (“Whiting Clean Energy Facility”) which power would then be sold by TPC to Northern Indiana. On July 1, 2005, the IURC issued an interim order approving the ultimate sales of the necessary capacity and energy produced by the Whiting Clean Energy Facility to Northern Indiana through TPC under the Power Sales Tariff on an interim basis until December

13

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

31, 2005, or until a subsequent order is issued by the IURC, and authorized Northern Indiana recovery of fuel costs associated with interim purchases made under the Power Sales Tariff as part of its normal FAC proceedings. The IURC is expected to issue a final order in late 2005 or early 2006 following an evidentiary hearing, which is scheduled for the fourth quarter of 2005. On July 21, 2005, Intervenor LaPorte County filed a Petition for Reconsideration of the interim order with the IURC.

On November 26, 2002, Northern Indiana received approval for an ECT. Under the ECT, Northern Indiana is permitted to recover (1) allowance for funds used during construction and a return on the capital investment expended by Northern Indiana to implement IDEM’s NOx State Implementation Plan through an ECRM and (2) related operation and maintenance and depreciation expenses once the environmental facilities become operational through an EERM. Under the IURC’s November 26, 2002 order, Northern Indiana is permitted to submit filings on a semi-annual basis for the ECRM and on an annual basis for the EERM. Northern Indiana currently anticipates a total capital investment amounting to approximately $305 million. This amount was filed in Northern Indiana’s latest compliance plan, which was approved by the IURC on January 19, 2005. The ECRM revenues amounted to $12.8 million for the six months ended June 30, 2005, and $36.8 million from inception to date, while EERM revenues were $2.4 million for the first half of 2005. On February 4, 2005, Northern Indiana filed ECR-5 simultaneously with EER-2 for capital expenditures of $235.6 million and depreciation and operating expenses of $10.5 million through December 31, 2004. ECR-6 is expected to be filed in August 2005.

On April 13, 2005, Northern Indiana received an order from the IURC in a complaint filed by Jupiter. The complaint asserted that Northern Indiana’s service quality was not reasonably adequate. While concluding that Northern Indiana’s service was reasonably adequate, the IURC ruled that Northern Indiana must construct a backup line and pay Jupiter $2.5 million to install special fast switching equipment at the Jupiter plant. Further, Northern Indiana is precluded from recovering the $2.5 million in rates. Northern Indiana and Jupiter had both filed motions requesting the IURC to reconsider its order and were denied. Northern Indiana and Jupiter both have appealed the IURC’s order in this matter to the Indiana Court of Appeals. These appeals are currently pending. On June 15, 2005, Northern Indiana filed a Motion to Stay with the Indiana Court of Appeals requesting a stay of the portions of the order that require Northern Indiana to pay $2.5 million to Jupiter and install a backup line to serve Jupiter. On July 13, 2005, Northern Indiana’s Motion to Stay the IURC’s April 13, 2005 ruling was denied. Northern Indiana remitted the payment of $2.5 million to Jupiter in July 2005, and is working to comply with the remainder of the IURC’s order concerning the installation of a backup line.

5. Risk Management Activities

Northern Indiana uses commodity-based derivative financial instruments to manage certain risks in its business. Northern Indiana accounts for its derivatives under SFAS No. 133.

14

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

Hedging Activities. The activity for the second quarter and six months ended June 30, 2005 and 2004 affecting accumulated other comprehensive income, with respect to cash flow hedges included the following:

	Three Months						Six Months
	Ended June 30,						Ended June 30,
(in millions, net of tax)	2005			2004			2005			2004
Unrealized gains on derivatives qualifying as cash flow hedges at the beginning of the period	$	1.1		$	1.4		$	(3.7	)	$	2.6
Unrealized hedging gains (losses) arising during the period of derivatives qualifying as cash flow hedges		(0.4	)		—			1.3			0.6
Reclassification adjustment for net loss (gain) included in net income		(0.3	)		(0.5	)		2.8			(2.3	)
Net unrealized gains on derivatives qualifying as cash flow hedges at the end of the period	$	0.4		$	0.9		$	0.4		$	0.9

Unrealized gains and losses on Northern Indiana’s hedges were recorded as price risk management assets and liabilities. The accompanying Consolidated Balance Sheets include price risk management assets related to unrealized gains and losses on hedges of $0.7 million and zero at June 30, 2005 and December 31, 2004, respectively, all of which were included in “Current Assets.” Price risk management liabilities were zero and $6.1 million at June 30, 2005 and December 31, 2004, respectively, all of which were included in “Current Liabilities.”

During the second quarter of 2005 and 2004, a loss of $0.1 million and zero, net of taxes respectively, were recognized in earnings due to the change in value of certain derivative instruments primarily representing time value. Additionally, all derivatives classified as a hedge are assessed for hedge effectiveness, with any components determined to be ineffective charged to earnings or classified as a regulatory asset or liability per SFAS No. 71 as appropriate. During the second quarter of 2005 and 2004, Northern Indiana reclassified no amounts related to its cash flow hedges from other comprehensive income to earnings, due to the probability that certain forecasted transactions would not occur. It is anticipated that during the next twelve months the expiration and settlement of cash flow hedge contracts will result in income recognition of amounts currently classified in other comprehensive income of approximately $0.4 million, net of taxes.

Commodity Price Risk Programs. Northern Indiana uses NYMEX derivative contracts to minimize risk associated with gas price volatility. These derivative hedging programs must be marked to fair value, but because these derivatives are used within the framework of their gas cost recovery mechanism, regulatory assets or liabilities are recorded to offset the change in the fair value of these derivatives. The Consolidated Balance Sheets reflected $4.7 million and $0.2 million of price risk management assets associated with these programs at June 30, 2005 and December 31, 2004, respectively. In addition, the Consolidated Balance Sheets reflected zero and $7.4 million of price risk management liabilities associated with these programs at June 30, 2005 and December 31, 2004, respectively.

Northern Indiana offers a PPS as an alternative to the standard gas cost recovery mechanism. This service provides Northern Indiana customers with the opportunity to either lock in their gas cost or place a cap on the total cost that could be charged for any future month specified. In order to hedge the anticipated physical future purchases associated with these obligations, Northern Indiana purchases NYMEX futures and options contracts that correspond to a fixed or capped price in the associated delivery month. The NYMEX futures and options contracts are designated as cash flow hedges. The Consolidated Balance Sheets reflected $0.3 million and zero of price risk management assets and zero and $5.3 million of price risk management liabilities associated with these programs at June 30, 2005 and December 31, 2004, respectively.

Northern Indiana also offers a DependaBill program to its customers as an alternative to the standard tariff rate that is charged to residential customers. The program allows Northern Indiana customers to fix their total monthly bill at

15

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

a flat rate regardless of gas usage or commodity cost. In order to hedge the anticipated physical purchases associated with these obligations, Northern Indiana purchases fixed priced gas as well as options to call on additional volumes that match the anticipated delivery needs of the program and currently uses NYMEX futures and options contracts for these hedge transactions. These derivatives are presently designated as cash flow hedges. The Consolidated Balance Sheets reflected $0.4 million and zero of price risk management assets and zero and $0.8 million of price risk management liabilities at June 30, 2005 and December 31, 2004, respectively, associated with the DependaBill program.

As part of the new MISO Day 2 initiative, Northern Indiana was allocated FTRs. These rights protect the company against congestion losses due to the new MISO Day 2 activity. The FTRs do not qualify for hedge accounting treatment, but since congestion costs are recoverable through the fuel cost recovery mechanism the related gains and losses associated with these transactions are recorded as a regulatory asset or liability, in accordance with SFAS No. 71.

For regulatory incentive purposes, Northern Indiana enters into purchase contracts at first of the month prices that give counterparties the daily option to either sell an additional package of gas at first of the month prices or recall the original volume to be delivered. Northern Indiana charges a fee for this option. The changes in the fair value of these options are primarily due to the changing expectations of the future intra-month volatility of gas prices. These written options are derivative instruments, must be marked to fair value and do not meet the requirement for hedge accounting treatment. However, in accordance with SFAS No. 71, Northern Indiana records the related gains and losses associated with these transactions as a regulatory asset or liability.

6. Pension and Other Postretirement Benefits

Northern Indiana participates in the NiSource pension and other postretirement benefit plans. NiSource uses September 30 as its measurement date for its pension and other postretirement benefit plans. Northern Indiana recognized $3.5 million and $3.9 million in allocated pension expenses, and $6.9 million and $7.1 million in other postretirement benefit expenses for the second quarter of 2005 and the second quarter of 2004, respectively. Northern Indiana recognized $7.0 million and $7.9 million in allocated pension expenses, and $13.8 million and $14.1 million in other postretirement benefit expenses for the first half of 2005 and the first half of 2004, respectively.

Northern Indiana does not expect to make contributions to the pension plan in 2005. However, Northern Indiana expects to contribute $19.3 million to the other postretirement benefit plans in 2005. Northern Indiana contributed $4.3 million for the second quarter of 2005 and $8.6 million for the first half of 2005 to the other postretirement benefit plans.

The following disclosures are for the NiSource pension and other postretirement benefit plans, which include Northern Indiana and NiSource Corporate Services employees. The following tables provide the components of the plans’ net periodic benefits cost for second quarter and six months ended June 30, 2005 and June 30, 2004:

16

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

	Pension Benefits						Other Benefits
Three months ended June 30, (in millions)	2005			2004			2005		2004
Net periodic cost
Service cost	$	4.5		$	4.3		$	0.9	$	0.9
Interest cost		17.9			17.6			4.3		4.0
Expected return on assets		(22.8	)		(21.7	)		—		—
Amortization of transitional obligation		—			—			2.1		2.5
Amortization of prior service cost		2.2			1.8			—		—
Recognized actuarial loss		3.5			3.7			—		—
Net Periodic Benefits Cost (Benefit)	$	5.3		$	5.7		$	7.3	$	7.4

	Pension Benefits						Other Benefits
Six months ended June 30, (in millions)	2005			2004			2005		2004
Net periodic cost
Service cost	$	9.0		$	8.6		$	1.9	$	1.9
Interest cost		35.8			35.2			8.6		8.0
Expected return on assets		(45.5	)		(43.5	)		—		(0.1	)
Amortization of transitional obligation		—			—			4.2		5.1
Amortization of prior service cost		4.3			3.7			—		—
Recognized actuarial loss		7.1			7.5			—		—
Net Periodic Benefits Cost (Benefit)	$	10.7		$	11.5		$	14.7	$	14.9

7. Other Commitments and Contingencies

A. Service Agreements. Northern Indiana has a service agreement with Pure Air, a general partnership between Air Products and Chemicals, Inc. and First Air Partners LP, under which Pure Air provides scrubber services to reduce sulfur dioxide emissions for Units 7 and 8 at the Bailly Generating Station. Services under this contract commenced on June 15, 1992, and has estimated current annual charges approximating $17.6 million. The agreement provides that, assuming various performance standards are met by Pure Air, a termination payment would be due if Northern Indiana terminated the agreement prior to the end of the twenty-year contract period.

B. Other Legal Proceedings. In the normal course of its business, Northern Indiana has been named as a defendant in various legal proceedings. In the opinion of management, the ultimate disposition of these currently asserted claims will not have a material adverse impact on Northern Indiana’s consolidated financial position.

C. Environmental Matters.

General. The operations of Northern Indiana are subject to extensive and evolving federal, state and local environmental laws and regulations intended to protect the public health and the environment. Such environmental laws and regulations affect operations as they relate to impacts on air, water and land.

As of June 30, 2005, a reserve of approximately $14.2 million has been recorded to cover probable corrective actions at sites where Northern Indiana has environmental remediation liability. The ultimate liability in connection with these sites will depend upon many factors, including the volume of material contributed to the site, the number of the other potentially responsible parties and their financial viability, the extent of corrective actions required and rate recovery. Based upon investigations and management’s understanding of current environmental laws and regulations, Northern Indiana believes that any corrective actions required will not have a material effect on its financial position or results of operations.

Gas Distribution Operations. There were no new environmental matters relating to Gas Distribution Operations during the first six months of 2005.

17

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

Electric Operations.
Air. On June 28 and 29, 2004, the EPA responded to the states’ initial recommendations for the EPA designation of areas meeting and not meeting the NAAQS for fine particles. (Fine particles are those less than or equal to 2.5 micrometers in diameter and are also referred to as PM2.5.) The EPA’s PM2.5 nonattainment designations were announced on December 17, 2004, and published in the Federal Register on January 5, 2005. The designations became effective on April 5, 2005. Indiana has disputed some of the June 2004, EPA designation recommendations and submitted final 2004 monitoring data on February 17, 2005, for EPA re-evaluation of the disputed areas. On March 7, 2005, the Indiana Attorney General filed a legal action on behalf of the IDEM asking that all but three areas (none of these three areas are in Northern Indiana’s service territory) be removed from the EPA’s nonattainment list. The EPA is expected to finalize by early 2006, an implementation rule detailing state obligations to bring the nonattainment areas into attainment with the PM2.5 NAAQS. Indiana and other states will be required to finalize state rulemaking by April 2008 that specify emissions reductions consistent with the final EPA implementation rule to bring the designated areas into attainment by as early as April 2010. Northern Indiana will continue to closely monitor developments in this area.

On March 10, 2005, the EPA issued the CAIR final regulations. The rule establishes phased reductions of NOx and SO2 from 28 Eastern States, including Indiana electric utilities, by establishing an annual emissions cap for NOx and SO2 and an additional cap on NOx emissions during the ozone control season. Phase I reductions would be required by January 2009 and January 2010 for NOx and SO2, respectively. Phase II reductions for both NOx and SO2 would be required by January 2015. Emission trading programs would be established to meet the emission caps. As an affected state, Indiana is required to initiate a state rulemaking, for submittal to the EPA by September 11, 2006, creating rules, or a SIP, detailing how it will implement the federal rule and meet the emission caps. In June 2005, Indiana initiated the process to develop a state rule to implement the EPA CAIR. The final form of the state rule will determine whether Northern Indiana and other utilities in the state will be able to participate in the EPA’s emission trading programs and impact the level of control required for each unit. Northern Indiana will continue to closely monitor developments in this area and cannot accurately estimate the timing or cost of emission controls at this time.

On March 15, 2005, the EPA issued the CAMR, that will require mercury emissions reductions from electric power generating stations. The rule establishes a two-phased reduction of mercury from Indiana electric utilities by establishing a cap-and-trade program with a state-wide annual cap on emissions. The first phase begins in 2010, a second phase in 2018, designed to achieve about a 70% reduction in utility emissions of mercury. Emission trading programs could be established to assist compliance with these emission caps. In June 2005, Indiana initiated the state process to develop a state rule to implement the EPA’s CAMR. The final form of the state rule implementing the CAMR will determine Northern Indiana’s ability to participate in the federal trading program and impact the level of control required for each unit. Northern Indiana will continue to closely monitor developments in this area and cannot accurately estimate the timing or cost of emission controls at this time.

As an alternative to the regulatory approach defined in the CAIR and CAMR rules, as discussed above, the Bush Administration is attempting to pursue multi-pollutant legislation in 2005, the Clear Skies Act, which would require significant reductions of SO2, NOx and mercury emissions from electric power generating stations, including Northern Indiana’s stations. The proposed legislation contains phased-in reductions for these three pollutants under alternative control approaches, including trading programs. The current proposal has not been passed out of its legislative committee and may still be revisited by Congress either later this year or at some point in the future. Until the legislation passes and/or the rulemaking is completed by the EPA and implemented by the states, the potential impact on Northern Indiana will be uncertain. Nonetheless, if implemented, these potential reduction requirements could impose substantial costs on affected utilities, including Northern Indiana.

On April 15, 2004, the EPA proposed amendments to its July 1999 Regional Haze Rule that requires states to set periodic goals for improving visibility in 156 natural areas across the United States by implementing state emission reduction rules. These amendments would apply to the BART for eligible industrial facilities emitting air pollutants that reduce visibility. States must develop implementation rules by January 2008. Resulting rules could require additional reductions of NOx, SO2 and particulate matter from coal-fired boilers including Northern Indiana’s electric generating stations, depending upon the outcome of multi-pollutant regulations/legislation. On July 6, 2005, EPA finalized Regional Haze Regulations and Guidelines for BART Determinations that allow states that opt to

18

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

participate in the CAIR cap-and-trade program to not require affected BART-eligible EGU’s to install, operate and maintain BART. Until the state rules are promulgated, the potential impact on Northern Indiana is uncertain. Northern Indiana will continue to closely monitor developments in this area.

Water. On February 16, 2004, the EPA Administrator signed the Phase II Rule of the Clean Water Act Section 316(b) which requires all large existing steam electric generating stations meet certain performance standards to reduce the effects on aquatic organisms at their cooling water intake structures. The rule became effective on September 7, 2004. Under this rule, stations will either have to demonstrate that the performance of their existing fish protection systems meet the new standards or develop new systems whose compliance is based on any of five options. To determine the impacts of the Bailly Station’s intake on the aquatic organisms in Lake Michigan, a detailed background biological sampling program was initiated in April 2005 and will continue for at least one year. The results of this sampling program will be utilized to choose the appropriate compliance option, or combination of options, for the facility. Specific impacts and available compliance options of the final Phase II rule for the remaining two operating Northern Indiana generating stations are still in the process of being determined at this time.

Remediation. On March 31, 2005, the EPA and Northern Indiana entered into an Administrative Order on Consent under the authority of Section 3008(h) of the Resource Conservation and Recovery Act for the Bailly Station. The order requires Northern Indiana to identify the nature and extent of releases of hazardous waste and hazardous constituents from the facility. Northern Indiana must also remediate any release of hazardous constituents that present an unacceptable risk to human health or the environment. A reserve has been established to fund the required investigations and conduct interim measures at the facility. The final costs of clean up have not yet been determined. As site investigations and clean up proceed and as additional information becomes available, reserves are adjusted.

8. Accumulated Other Comprehensive Loss

The following table displays the components of Accumulated Other Comprehensive Loss, which is included in “Common shareholder’s equity,” on the Consolidated Balance Sheets.

	June 30,			December 31,
(in millions, net of tax)	2005			2004
Other comprehensive income, before tax:
Unrealized gains (losses) on cash flow hedges	$	0.6		$	(6.2	)
Minimum pension liability adjustment		(200.9	)		(200.9	)
Other comprehensive loss, before tax		(200.3	)		(207.1	)
Income tax benefit related to items of other comprehensive loss		81.2			83.9
Total Accumulated Other Comprehensive Loss, net of tax	$	(119.1	)	$	(123.2	)

9. Income Taxes

For the six months ended June 30, 2005 and 2004, Northern Indiana’s provision for income taxes was calculated in accordance with APB. No 28. Accordingly, the interim effective tax rate reflects the estimated annual effective tax rate for 2005. The effective tax rate differs from the federal tax rate of 35% primarily due to the effects of tax credits, state income taxes, utility rate-making, and certain non-deductible expenses.

10. Business Segment Information

Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

19

ITEM 1. FINANCIAL STATEMENTS (continued)

Northern Indiana Public Service Company

Notes to Consolidated Financial Statements (continued) (unaudited)

Northern Indiana’s operations are divided into three primary business segments. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Indiana. The Electric Operations segment provides electric service in 21 counties in the northern part of Indiana and engages in wholesale and wheeling transactions. The Other Operations segment includes the results of NRC, a wholly-owned subsidiary of Northern Indiana, whose sole activity is to purchase accounts receivable from Northern Indiana and sells an undivided percentage ownership interest in these accounts to a commercial paper conduit, within the limits of the agreement between NRC and the conduit. NRC commenced operations on December 30, 2003.

The following table provides information about Northern Indiana business segments. Northern Indiana uses operating income as its primary measurement for each of the reporting segments. Operating income is derived from revenues and expenses directly associated with each segment.

	Three Months						Six Months
	Ended June 30,						Ended June 30,
(in millions)	2005			2004			2005		2004
REVENUES
Gas Distribution Operations
Unaffiliated	$	146.5		$	149.1		$	579.2	$	563.5
Affiliated		2.4			1.4			3.4		2.5
Total		148.9			150.5			582.6		566.0
Electric Operations
Unaffiliated		281.6			263.9			563.1		519.6
Affiliated		0.4			3.5			1.3		8.7
Total		282.0			267.4			564.4		528.3
Consolidated Revenues	$	430.9		$	417.9		$	1,147.0	$	1,094.3
Operating Income (Loss)
Gas Distribution Operations	$	(4.6	)	$	(11.9	)	$	43.8	$	38.0
Electric Operations		61.0			82.0			126.4		140.8
Other Operations		—			(0.3	)		—		(0.5	)
Consolidated Operating Income	$	56.4		$	69.8		$	170.2	$	178.3

20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Northern Indiana Public Service Company

Note regarding forward-looking statements
The Management’s Discussion and Analysis, including statements regarding market risk sensitive instruments, contains “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. Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning Northern Indiana plans, objectives, expected performance, expenditures and recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. From time to time, Northern Indiana may publish or otherwise make available forward-looking statements of this nature. All such subsequent forward-looking statements, whether written or oral and whether made by or on behalf of Northern Indiana, are also expressly qualified by these cautionary statements. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.

Realization of Northern Indiana’s objectives and expected performance is subject to a wide range of risks and can be adversely affected by, among other things, weather, fluctuations in supply and demand for energy commodities, growth opportunities for Northern Indiana’s businesses, increased competition in deregulated energy markets, the success of regulatory and commercial initiatives, dealings with third parties over whom Northern Indiana has no control, the effectiveness of NiSource’s outsourcing initiative, actual operating experience of Northern Indiana assets, the regulatory process, regulatory and legislative changes, changes in general economic, capital and commodity market conditions, and counter-party credit risk, many of which risks are beyond the control of Northern Indiana. In addition, the relative contributions to profitability by each segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.

The following Management’s Discussion and Analysis should be read in conjunction with Northern Indiana’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

CONSOLIDATED REVIEW

Results of Operations
The Quarter Ended June 30, 2005

Net Income
Northern Indiana reported net income of $27.8 million for the three months ended June 30, 2005, a decrease of $7.5 million as compared to the $35.3 million recorded in the 2004 period.

Net Revenues
Total consolidated net revenues (operating revenues less cost of sales) for the three months ended June 30, 2005, were $236.8 million, a $10.0 million increase from the same period last year. In the second quarter of 2005, electric net revenues of $189.6 million increased by $7.1 million from the comparable 2004 period. This improvement was primarily a result of increased sales due to the warmer weather compared to the second quarter of last year. Gas net revenues for the second quarter ended June 30, 2005 were $47.2 million, an increase of $2.9 million from the same period in 2004. The increase in net revenues was principally due to increased non-weather related usage of $2.7 million and a $0.5 million gas cost adjustment. This increase was partially offset by reduced margins in the PPS program of $1.3 million, due to higher than anticipated gas costs.

Expenses
Operating expenses for the second quarter of 2005 were $180.4 million, an increase of $23.4 million from the 2004 period. Operation and maintenance expenses were up $10.9 million, mainly due to incremental MISO costs of $1.5 million, increased electric production expense of $3.0 million and restructuring charges of $3.2 million in the current period. In addition, depreciation and amortization expense increased $1.9 million mainly due to plant additions. Other taxes increased by $11.4 million primarily due to a favorable accrual adjustment for property taxes recorded in the second quarter of 2004, partially offset by a reduction in the sales tax accrual.

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Income Taxes
Income tax expense for the second quarter of 2005 was $18.5 million, a decrease of $4.6 million compared to the 2004 period, due primarily to lower pre-tax income.

Results of Operations
Six Months Ended June 30, 2005

Net Income
Northern Indiana reported net income of $88.1 million for the six months ended June 30, 2005, a decrease of $4.7 million as compared to the $92.8 million recorded in the 2004 period.

Net Revenues
Total consolidated net revenues (operating revenues less cost of sales) for the six months ended June 30, 2005, were $534.9 million, a $15.6 million increase from the same period last year. In the first six months of 2005, electric net revenues were $376.3 million, an increase of $14.3 million from the comparable 2004 period as a result of an increase in power sales of approximately $6 million due to favorable weather conditions, an increase of $7.5 million in environmental cost tracker revenues, and increases in revenues from growth in residential and commercial customers. These increases in Electric Operations revenues for the first half of 2005 were partially offset by $4.1 million in increased costs associated with MISO. Gas net revenues for the first six months of 2005 were $158.6 million, an increase of $1.3 million from the same period in 2004. The increase in net revenues was primarily a result of increased non-weather related usage of $5.4 million and a $2.0 million gas cost adjustment. This increase was partially offset by reduced margins in the PPS program of $4.9 million, due to higher than anticipated gas costs as well as lower earnings of $1.0 million from the GCIM.

Expenses
Operating expenses for the six months ended June 30, 2005 were $364.7 million, an increase of $23.7 million over the 2004 period. Operation and maintenance expenses were up $10.9 million, mainly due to incremental MISO costs of $2.2 million, increased electric production expense of $5.4 million and restructuring charges of $3.2 million in the current period partially offset by a $4.2 million expense recognized in the comparable 2004 period related to a redemption premium from the early extinguishment of certain medium-term notes. In addition, depreciation and amortization expense increased $3.9 million mainly due to plant additions. Other taxes increased by $9.7 million primarily due to a favorable accrual adjustment for property taxes recorded in the second quarter of 2004, partially offset by a reduction in the sales tax accrual.

Other Income (Deductions)
Interest on long-term debt for the six months ended June 30, 2005 was $13.9 million, a decrease of $0.8 million compared to the 2004 period, primarily due to a reduction in long-term debt. Other, net was a loss of $2.9 million for the six months ended June 30, 2005 compared to a loss of $0.7 million for the comparable 2004 period, due to increased costs related to the sale of accounts receivables.

Income Taxes
Income tax expense for the six months ended June 30, 2005 was $59.9 million, a decrease of $2.5 million compared to the 2004 period, due to lower pre-tax income and a $1.8 million increase in tax expense related to the regulatory treatment of depreciation differences, offset by a $1.4 million income tax benefit from an electric production deduction (discussed below).

The American Jobs Creation Act of 2004, signed into law on October 22, 2004, created new Internal Revenue Code Section 199 which, beginning in 2005, permits taxpayers to claim a deduction from taxable income attributable to certain domestic production activities. Northern Indiana’s electric production activities qualify for this deduction. The deduction is equal to 3% of QPAI for the taxable year, with certain limitations. This deduction increases to 6% of QPAI beginning in 2007 and 9% of QPAI beginning in 2010 and thereafter. The 2005 tax benefit associated with the Section 199 domestic production deduction is estimated to be $2.6 million. The United States Treasury Department has issued guidance for calculating this deduction in Notice 2005-14, but there are many issues still to be addressed in forthcoming proposed regulations. As such, the estimated $2.6 million tax benefit is subject to revision based on subsequently released Treasury guidance.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Liquidity and Capital Resources

Generally, cash flow from operations has provided sufficient liquidity to meet operating requirements. A significant portion of Northern Indiana’s operations, most notably in the gas distribution and electric businesses, is subject to seasonal fluctuations in cash flow. During the heating season, which is primarily from November through March, cash receipts from gas sales and transportation services typically exceed cash requirements. During the summer months, cash on hand, together with the seasonal increase in cash flows from the electric business during the summer cooling season and external and internal short-term and long-term financing, is used to purchase gas to place in storage for heating season deliveries, perform necessary maintenance of facilities, make capital improvements in plant, and expand service into new areas.

Operating Activities. Net cash from operating activities for the six months ended June 30, 2005 was $299.9 million, a decrease of $42.9 million from the 2004 period mainly due to a decrease in cash flow from working capital. Cash flow from working capital decreased by $32.3 million mainly due to an increased use of cash for accounts payable balances associated with higher winter gas purchases as compared to the 2004 period.

Investing Activities. Capital expenditures in the first six months of 2005 of $80.2 million were $33.8 million lower than the 2004 period. This reduction in the capital expenditures is mainly due to a continued reduction in expenditures for NOx compliance.

Financing Activities. On May 4, 2005, Northern Indiana received approval from the IURC for authorization to issue to NiSource Finance $350 million of unsecured inter-company notes. The notes would be issued for terms of ten, fifteen and twenty-years. On June 28, 2005, Northern Indiana issued a $137.5 million, 5.42% fifteen-year note and a $137.5 million, 5.62% twenty-year note. The proceeds of the notes were used to reduce short-term debt and long-term debt due in 2005.

During July 2005, Northern Indiana redeemed $34.0 million of its medium-term notes with an average interest rate of 6.62%

During June 2005, Northern Indiana redeemed $39.3 million of its medium-term notes with an average interest rate of 6.79%.

During February 2004, Northern Indiana redeemed $111.1 million of its medium-term notes with an average interest rate of 7.49%. The associated redemption premium of $4.2 million was charged to operating expense.

Northern Indiana satisfies its liquidity requirements primarily through internally generated funds and through intercompany borrowings from the NiSource Money Pool. Northern Indiana may borrow a maximum of $1.0 billion through the Money Pool as approved by the SEC under the Public Utility Holding Company Act of 1935. NiSource Finance provides funding to the Money Pool from external borrowing sources. During March 2005, NiSource Finance obtained a new $1.25 billion five-year revolving credit facility with a syndicate of banks led by Barclays Capital. The credit facility is guaranteed by NiSource. As of June 30, 2005, Northern Indiana had $22.7 million of short-term Money Pool borrowings outstanding at an interest rate of 3.26%.

Sale of Trade Accounts Receivables
On December 30, 2003, Northern Indiana entered into an agreement to sell, without recourse, all of its trade receivables, as they originate, to NRC, a wholly-owned subsidiary of Northern Indiana. NRC, in turn, is party to an agreement in which it sells an undivided percentage ownership interest in the accounts receivable to a commercial paper conduit. The conduit can purchase up to $200 million of accounts receivable under the agreement. The agreement will expire on December 26, 2005, but can be renewed if mutually agreed to by both parties. As of June 30, 2005, NRC had sold $140.4 million of accounts receivable. Under the arrangement, Northern Indiana may not sell any new receivables if Northern Indiana’s debt rating falls below BBB- or Baa3 at Standard and Poor’s and Moody’s, respectively.

Under the agreement, Northern Indiana acts as administrative agent, by performing record keeping and cash collection functions for the accounts receivable sold by NRC. Northern Indiana receives a fee, which provides adequate compensation, for such services.

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Market Risk Disclosures

Through its various business activities, Northern Indiana is exposed to risk including commodity price, interest rate and credit risks. Northern Indiana’s risk management policy permits the use of certain financial instruments to manage its commodity price risk, including futures, forwards, options and swaps.

Non-Trading Risks
Commodity price risk at Northern Indiana is limited, since regulations allow recovery of prudently incurred purchased power, fuel and gas costs through the rate-making process. If Indiana were to explore additional regulatory reform, Northern Indiana may begin providing services without the benefit of the traditional rate-making process and may be more exposed to commodity price risk. Northern Indiana enters into certain sales contracts with customers based upon a fixed sales price and varying volumes, which are ultimately dependent upon the customer’s supply requirements. Northern Indiana utilizes derivative financial instruments to reduce the commodity price risk based on modeling techniques to anticipate these future supply requirements.

Northern Indiana is exposed to interest rate risk as a result of changes in interest rates on intercompany borrowings with NiSource Finance and variable rate pollution control bonds, which have interest rates that are indexed to short-term market interest rates. Based upon average borrowings and debt obligations subject to fluctuations in short-term market interest rates during the second quarter of 2005, an increase in short-term interest rates of 100 basis points (1%) would have increased interest expense by $0.5 million and $2.0 million for the quarter and six months ended June 30, 2005, respectively.

Due to the nature of the industry, credit risk is a factor in many of Northern Indiana’s business activities. Credit risk arises because of the possibility that a customer, supplier or counterparty will not be able or willing to fulfill its obligations on a transaction on or before the settlement date. Exposure to credit risk is measured in terms of both current and potential exposure. Current credit exposure is generally measured by the notional or principal value of financial instruments and direct credit substitutes, such as commitments, stand-by letters of credit and guarantees. Because many of Northern Indiana’s exposures vary with changes in market prices, Northern Indiana also estimates the potential credit exposure over the remaining term of transactions through statistical analysis of market prices. In determining exposure, Northern Indiana considers collateral that it holds to reduce individual counterparty credit risk.

Off Balance Sheet Arrangements

At June 30, 2005, there have been no material changes in Northern Indiana’s purchase commitments and operating leases obligations from those reported in Northern Indiana’s Form 10-K for the year ended December 31, 2004.

NiSource Outsourcing Project
NiSource Corporate Services and IBM signed a definitive agreement for IBM to provide a broad range of business transformation and outsourcing services to NiSource. The 10-year agreement is expected to deliver upwards of $530 million in gross savings in operating and capital costs across NiSource’s 15 primary operating subsidiaries over the course of the contract, as well as provide technology advances and enhanced service capabilities. This does not include savings from other transformation projects such as a work management system or additional opportunities in supply chain. IBM began providing service to NiSource on July 1, 2005. Refer to Note 3, “Restructuring Activities,” in the Notes to Consolidated Financial Statements for additional information regarding restructuring activity related to Northern Indiana.

RESULTS AND DISCUSSION OF SEGMENT OPERATIONS

Presentation of Segment Information
Northern Indiana’s operations are divided into three primary business segments; Gas Distribution Operations, Electric Operations, and Other Operations. The Other Operations segment includes the results of NRC, a wholly-owned subsidiary of Northern Indiana, whose sole activity is to purchase accounts receivable from Northern Indiana and sells an undivided percentage ownership interest in these accounts to a commercial paper conduit, within the limits of the agreement between NRC and the conduit. NRC commenced operations on December 30, 2003.

24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Gas Distribution Operations

	Three Months						Six Months
	Ended June 30,						Ended June 30,
( in millions)	2005			2004			2005			2004
Net Revenues
Sales revenues	$	138.0		$	140.7		$	550.5		$	536.5
Less: Cost of gas sold		101.7			106.2			424.0			408.7
Net Sales Revenues		36.3			34.5			126.5			127.8
Transportation Revenues		10.9			9.8			32.1			29.5
Net Revenues		47.2			44.3			158.6			157.3
Operating Expenses
Operation and maintenance		30.3			29.3			61.0			60.6
Depreciation and amortization		21.8			21.7			43.8			43.1
Gain on sale of assets		(0.4	)		—			(0.4	)
Other taxes		0.1			5.2			10.4			15.6
Total Operating Expenses		51.8			56.2			114.8			119.3
Operating Income (Loss)	$	(4.6	)	$	(11.9	)	$	43.8		$	38.0
Revenues ($ in millions)
Residential		109.6			88.8			399.6			367.1
Commercial		35.6			30.5			131.6			122.6
Industrial		25.4			26.3			67.2			76.1
Transportation		10.9			9.8			32.1			29.5
Deferred Gas Costs		(37.2	)		(10.5	)		(60.8	)		(43.4	)
Other		4.6			5.6			12.9			14.1
Total		148.9			150.5			582.6			566.0
Sales and Transportation Volumes (MMDth)
Residential Sales		7.5			7.3			35.7			36.0
Commercial Sales		2.5			3.4			12.5			13.9
Industrial Sales		2.5			2.9			7.4			7.7
Transportation		34.7			35.7			83.0			84.1
Other		—			0.1			0.1			0.1
Total		47.2			49.4			138.7			141.8
Heating Degree Days		652			596			3,811			3,785
Normal Heating Degree Days		678			678			3,802			3,834
% Colder (Warmer) than Normal		(4	%)		(12	%)		0	%		(1	%)
Customers
Residential								596,306			594,859
Commercial								44,686			45,852
Industrial								2,718			3,031
Transportation								58,181			52,910
Other								11			12
Total								701,902			696,664

Northern Indiana’s natural gas distribution operations serve approximately 702,000 customers in the northern part of Indiana. Northern Indiana offers both traditional bundled services as well as transportation only for customers that purchase gas from alternative suppliers. The operating results reflect the temperature-sensitive nature of customer demand with over 69% of annual residential and commercial throughput affected by seasonality. As a result, segment operating income is higher in the first and fourth quarters reflecting the heating demand during the winter season.

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Gas Distribution Operations (continued)

Restructuring
In connection with the IBM agreement mentioned previously, Northern Indiana Gas Distribution Operations recorded a restructuring charge of $1.4 million, which was allocated from NiSource Corporate Services. Refer to Note 3, “Restructuring Activities,” in the Notes to Consolidated Financial Statements for additional information regarding restructuring initiatives for the Gas Distribution Operations segment.

Regulatory Matters
Northern Indiana’s gas costs are recovered under a flexible GCA mechanism approved by the IURC in 1999. Under the approved procedure, a demand component of the fuel adjustment factor is determined annually effective November 1 of each year, after hearings and IURC approval. The commodity component of the adjustment factor is determined by monthly filings, which do not require IURC approval but are reviewed by the IURC during the annual hearing that takes place regarding the demand component filing. Northern Indiana’s GCA factor also includes a GCIM which allows the sharing of any cost savings or cost increases with customers based on a comparison of actual gas supply portfolio cost to a market-based benchmark price.

Northern Indiana’s GCA6 annual demand cost recovery filing, covering the period November 1, 2004 through October 31, 2005 was made on August 26, 2004. The IURC authorized the collection of the demand charge, subject to refund, effective November 1, 2004 on October 20, 2004. The IURC held an evidentiary hearing in this Cause on March 2, 2005. Northern Indiana expects the IURC’s order in the third quarter of 2005.

Northern Indiana, the OUCC, Testimonial Staff of the IURC, and the Marketer Group (a group which collectively represents marketers participating in Northern Indiana Choice) filed a Stipulation and Settlement Agreement with the IURC on October 12, 2004, that, among other things, extends the expiration date of the current ARP to March 31, 2006. The IURC approved the settlement agreement on January 26, 2005. The agreement, as approved by the IURC, grandfathered the terms of existing contracts that marketers have with Choice customers and established a scope for negotiations. On May 2, 2005, Northern Indiana filed an unopposed motion that provided Parties more time to negotiate terms of the ARP and extend the expiration date of the current ARP to April 30, 2006. This action was approved by the IURC on May 25, 2005. A joint Stipulation and Settlement Agreement resolving all terms of the new ARP among Parties was filed with the IURC on July 13, 2005. The Settlement establishes a four year term that expires May 1, 2010, provides for the continuation of current products and services offered under the current ARP including the GCIM, spells out the terms of Northern Indiana’s merchant role, establishes a risk and reward mechanism to mitigate cost allocations created through Northern Indiana’s Choice program, and a rate moratorium with exceptions for the term of the Agreement. A procedural schedule including a prehearing conference and evidentiary hearing to review testimony explaining the terms of the settlement will be established in the third quarter of 2005. A final IURC decision is expected in the fourth quarter of 2005.

Environmental Matters
Currently, various environmental matters impact the Gas Distribution Operations segment. As of June 30, 2005, a reserve has been recorded to cover probable environmental response actions. Refer to Note 7-C, “Environmental Matters,” in the Notes to Consolidated Financial Statements for additional information regarding environmental matters for Gas Distribution Operations.

Weather
In general, Northern Indiana calculates the weather related revenue variance based on changing customer demand driven by weather variance from normal heating degree-days. Normal is evaluated using heating degree days across Northern Indiana’s distribution region. The temperature base for measuring heating degree days (i.e. the estimated average daily temperature at which heating load begins) is 65 degrees.

For the second quarter of 2005, weather was 4% warmer than normal and 9% colder than the second quarter of 2004.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Gas Distribution Operations (continued)

For the first six months of 2005, weather was relatively normal and 1% colder than the first six months of 2004.

Throughput
Northern Indiana sold and transported 47.2 MMDth for the second quarter 2005, as compared to 49.4 MMDth from the same period last year. The decrease in MMDth’s was mainly due to decreased commercial and industrial usage and decreased transport throughput.

Total volumes sold and transported were 138.7 MDth for the first six months of 2005, a decrease of 3.1 MDth from the same period in 2004, primarily due to decreased sales to commercial customers and decreased transport throughput.

Net Revenues
Net revenues for the second quarter ended June 30, 2005 were $47.2 million, an increase of $2.9 million from the same period in 2004. The increase in net revenues was principally due to increased non-weather related usage of $2.7 million and a $0.5 million gas cost adjustment. This increase was partially offset by reduced margins in the PPS program of $1.3 million, due to higher than anticipated gas costs.

Net revenues for the first six months of 2005 were $158.6 million, an increase of $1.3 million from the same period in 2004. The increase in net revenues was primarily a result of increased non-weather related usage of $5.4 million and a $2.0 million gas cost adjustment. This increase was partially offset by reduced margins in the PPS program of $4.9 million, due to higher than anticipated gas costs as well as lower earnings of $1.0 million from the GCIM.

Operating Income
For the second quarter of 2005, operating loss was $4.6 million compared to a loss of $11.9 million from the same period in 2004. The reduced loss was mainly attributable to lower other taxes of $5.1 million and higher net revenue mentioned above. Sales tax adjustments for 2004 and 2005 periods that lowered other taxes by $10.8 million in 2005 were partially offset by the impact of a property tax accrual reduction of $5.2 million in the comparable 2004 period. The reduction in the operating loss was partially offset by a restructuring charge of $1.4 million associated with the IBM agreement.

For the first six months of 2005, operating income was $43.8 million, an increase of $5.8 million from the same period in 2004. The increase was mainly attributable to lower other taxes of $5.2 million and higher net revenue mentioned above. Sales tax adjustments for 2004 and 2005 periods that lowered other taxes by $10.8 million in 2005 were partially offset by the impact of a property tax accrual reduction of $5.2 million in the comparable 2004 period. This increase in operating income was partially offset by a restructuring charge of $1.4 million associated with the IBM agreement. In addition, 2005 expenses decreased due to the $0.9 million expense in the comparable 2004 period for Gas Operations’ portion of a redemption premium paid for the early extinguishment of certain medium-term notes.

27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Electric Operations

	Three Months						Six Months
	Ended June 30,						Ended June 30,
( in millions)	2005			2004			2005			2004
Net Revenues
Sales Revenues	$	282.0		$	267.4		$	564.4		$	528.3
Less: Cost of sales		92.4			84.9			188.1			166.3
Net Revenues		189.6			182.5			376.3			362.0
Operating Expenses
Operation and maintenance		69.0			58.8			130.1			119.1
Depreciation and amortization		46.2			44.4			91.7			88.5
Gain on sale of assets		(0.4	)		—			(0.4	)		—
Other taxes		13.8			(2.7	)		28.5			13.6
Total Operating Expenses		128.6			100.5			249.9			221.2
Operating Income	$	61.0		$	82.0		$	126.4		$	140.8
Revenues ($ in millions)
Residential		77.3			66.7			150.7			137.9
Commercial		85.7			73.2			158.9			143.6
Industrial		104.6			102.5			217.0			203.8
Wholesale		6.3			11.4			13.8			22.8
Other		8.1			13.6			24.0			20.2
Total		282.0			267.4			564.4			528.3
Sales (Gigawatt Hours)
Residential		768.0			694.2			1,535.0			1,448.7
Commercial		988.1			899.3			1,882.3			1,759.5
Industrial		2,185.2			2,327.3			4,513.5			4,665.4
Wholesale		195.9			289.5			357.1			559.4
Other		15.9			33.8			48.5			66.2
Total		4,153.1			4,244.1			8,336.4			8,499.2
Cooling Degree Days		280			205			280			205
Normal Cooling Degree Days		227			227			227			227
% Warmer (Colder) than Normal		23	%		(10	%)		23	%		(10	%)
Customers
Residential								392,788			388,824
Commercial								50,697			49,635
Industrial								2,519			2,516
Wholesale								15			25
Other								769			776
Total								446,788			441,776

Northern Indiana generates and distributes electricity to approximately 447,000 customers in 21 counties in the northern part of Indiana. The operating results reflect the temperature-sensitive nature of customer demand with annual sales affected by temperatures in the northern part of Indiana. As a result, segment operating income is generally higher in the second and third quarters, reflecting cooling demand during the summer season.

28

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Electric Operations (continued)

Market Conditions
The regulatory frameworks applicable to Electric Operations continue to be affected by fundamental changes, that will impact Electric Operations’ structure and profitability. Notwithstanding those changes, competition within the industry will create opportunities to compete for new customers and revenues. Management has taken steps to improve operating efficiencies in this changing environment.

Northern Indiana coal deliveries from the PRB area have been limited to 80% - 85% of contracted amounts as a result of recent rail track problems experienced by the Union Pacific Railroad. Northern Indiana anticipates being able to meet the expected electricity demand through the end of the year by relying more on non-PRB fueled units and changing the fuel blend, which will reduce its need for PRB coal. Northern Indiana has been blending the fuel for a number of years.

Restructuring
In connection with the IBM agreement previously discussed, Electric Operations recorded a restructuring charge of $1.8 million, which was allocated from NiSource Corporate Services. Refer to Note 3, “Restructuring Activities,” in the Notes to Consolidated Financial Statements for additional information regarding restructuring initiatives for the Electric Operations segment.

Regulatory Matters
During 2002, Northern Indiana settled certain regulatory matters related to an electric rate review. On September 23, 2002, the IURC issued an order adopting most aspects of the settlement. The order approving the settlement provides that electric customers of Northern Indiana will receive bill credits of approximately $55.1 million each year, for a cumulative total of $225 million, for the minimum 49-month period, beginning on July 1, 2002. The order also provides that 60% of any future earnings beyond a specified earnings level will be retained by Northern Indiana. Credits amounting to $29.2 million and $26.8 million were recognized for electric customers for the first half of 2005 and 2004, respectively.

On June 20, 2002, Northern Indiana, Ameren Corporation and First Energy Corporation established terms for joining the MISO through participation in an ITC. Northern Indiana transferred functional control of its electric transmission assets to the ITC and MISO on October 1, 2003, also known as “Day 1.” In April 2005, Northern Indiana, as well as the other two participants of the ITC, announced their withdrawal from the ITC and the ITC will cease operations effective November 1, 2005. As part of Northern Indiana’s use of MISO’s transmission service, Northern Indiana incurs new categories of transmission charges based upon MISO’s FERC-approved tariff. One of the new categories of charges, Schedule 10, relates to the payment of administrative charges to MISO for its continuing management and operations of the transmission system. Northern Indiana filed a petition on September 30, 2003, with the IURC seeking approval to establish accounting treatment for the deferral of the Schedule 10 charges from MISO. On July 21, 2004, the IURC issued an order which denied Northern Indiana’s request for deferred accounting treatment for the MISO Schedule 10 administrative fees. Northern Indiana appealed this decision to the Indiana Appellate Court, but on April 27, 2005, the Court affirmed the IURC’s original decision. Northern Indiana recorded a charge during the second quarter 2004 in the amount of $2.1 million related to the MISO administrative charges deferred through June 30, 2004, and recognized $1.6 million in MISO fees for the second half of 2004. MISO Day 1 administrative fees were $1.4 million for the first six months of 2005. The Day 1 MISO Schedule 10 administrative fees are currently estimated to be $2.5 to $3.0 million annually.

The MISO has launched the MMI, also known as “Day 2,” implementing structures and processes of an electricity market for the MISO region. The MMI provides non-discriminatory transmission service, reliable grid operation, and the purchase and sale of electric energy in a competitive, efficient and non-discriminatory manner. MISO’s MMI tariffs have been approved by the FERC. Financially binding activities began with the opening of the market for bids and offers on March 25, 2005, and the real-time market on April 1, 2005. Northern Indiana is actively participating in the MMI. Based on the first quarter of market operations, management expects a financial impact of approximately $3.3 million annually in operating expenses for MMI administrative costs. These are in addition to the MISO Day 1 Schedule 10 administrative costs for which Northern Indiana was denied deferral treatment in 2004. MMI energy costs are being accounted for in the same manner that energy costs were recorded prior to the implementation of the MMI, and are recovered through the FAC in accordance with the final IURC order issued on

29

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Electric Operations (continued)

June 1, 2005. The detailed MMI tariff manages aspects of system reliability through the use of a market-based congestion management system. The FERC approved tariff includes a centralized dispatch platform, which dispatches the most economic resources to meet load requirements efficiently and reliably in the MISO region. The tariff uses Locational Marginal Pricing (i.e. the energy price for the next lowest priced megawatt available at each location within the MISO footprint). The MISO performs a day-ahead unit commitment and dispatch forecast for all resources in its market. The MISO also performs the real-time resource dispatch for resources under its control on a five-minute basis. The tariff also allows for the allocation, auction or sale of FTRs, which are instruments that protect against congestion costs occurring in the day-ahead market. Northern Indiana has not yet been a participant in the auction market for FTRs, but is allocated FTRs on a seasonal basis and at zero cost, for its use to protect against congestion costs. Northern Indiana retains its obligation for load following and other ancillary services.

Northern Indiana has been recovering the costs of electric power purchased for sale to its customers through the FAC. The FAC provides for costs to be collected if they are below a negotiated cap. If costs exceed this cap, Northern Indiana must demonstrate that the costs were prudently incurred to achieve approval for recovery. On June 15, 2005, Northern Indiana filed testimony and exhibits establishing a new basis for the cap. Northern Indiana received approval from the IURC of its request on July 20, 2005. A group of industrial customers challenged the manner in which Northern Indiana applied such costs under a specific interruptible sales tariff. A settlement was reached with the customers and the challenge was withdrawn and dismissed in January 2004. In addition, as a result of the settlement, Northern Indiana has sought and received approval by the IURC to reduce the charges applicable to the interruptible sales tariff. This reduction will remain in effect until the Mitchell Station returns to service.

In January 2002, Northern Indiana indefinitely shut down its Mitchell Station. In February 2004, the City of Gary announced an interest in acquiring the land on which the Mitchell Station is located for economic development, including a proposal to increase the length of the runways at the Gary International Airport. On May 7, 2004, the City of Gary filed a petition with the IURC seeking to have the IURC establish a value for the Mitchell Station and establish the terms and conditions under which the City of Gary would acquire the Mitchell Station. Northern Indiana has reached an agreement with the City of Gary that provides for a joint redevelopment process for the Mitchell Station where the City of Gary could ultimately receive ownership of the property provided that the City of Gary and Northern Indiana can find funding for the demolition and environmental cleanup cost associated with demolishing the facility. The agreement expressly provides that neither Northern Indiana nor its customers will be obligated to provide funds for these costs. The associated demolition and environmental cleanup costs are estimated to be between $38 million to $53 million.

On May 25, 2004, Northern Indiana filed a petition for approval of a Purchased Power and Transmission Tracker Mechanism to recover the cost of purchased power to meet Northern Indiana’s retail electric load requirements and charges imposed on Northern Indiana by MISO and ITC. A hearing in this matter was held December 1 and 2, 2004. An IURC order is expected in the third quarter of 2005.

On March 31, 2005, Northern Indiana and the OUCC filed an MOU with the IURC that could have resulted in settlements of the City of Gary petition and Purchased Power and Transmission Tracker petition. The settlement agreement that was contemplated by the MOU would have provided, among other things, for the recovery of Northern Indiana’s costs for intermediate dispatchable power purchased from TPC and would have required Northern Indiana to file a base rate case in 2007. The MOU provided that a settlement was contingent upon: 1) acceptable results of a third party evaluation study to be performed by an independent consultant relating to the use of Whiting Clean Energy and the Mitchell Station to meet the control performance standards required by the North American Electric Reliability Council and 2) affirmative consent to the other terms of the MOU by Northern Indiana’s large industrial electric customers. The scope of the proposed settlement did not include MISO costs. The ability to recover or defer MISO costs was to be determined in another proceeding before the IURC, filed by several of the investor-owned electric utilities in Indiana (see the following paragraph). The evaluation study was completed on June 30, 2005 by the engineering firm, Burns and McDonnell. On July 14, 2005, the OUCC filed a notice disavowing the MOU. In addition to confirming the need for a solution to help Northern Indiana meet certain control performance standards, the evaluation study identified several potential, alternative solutions. Northern Indiana continues to work with the OUCC and some of the utility’s industrial customers to explore the various

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Electric Operations (continued)

options suggested by the independent study. Northern Indiana anticipates that the parties will collaborate to reach a mutually acceptable solution that will address electric reliability issues.

On July 9, 2004, a verified joint petition was filed by PSI Energy, Inc., Indianapolis Power & Light Company, Northern Indiana and Vectren Energy Delivery of Indiana, Inc., seeking approval of certain changes in operations that are likely to result from the MISO’s implementation of energy markets, and for determination of the manner and timing of recovery of costs resulting from the MISO’s implementation of standard market design mechanisms, such as the MISO’s proposed real-time and day-ahead energy markets. The hearing in this matter was completed on February 11, 2005, and an IURC order was issued on June 1, 2005. The order, applicable to Northern Indiana, authorized recovery or deferral of fuel related MISO Day 2 costs but denied recovery or deferral of non-fuel MISO Day 2 costs during Northern Indiana’s rate moratorium.

On April 11, 2005, Whiting Clean Energy, TPC and Northern Indiana, each a subsidiary of NiSource, filed their petition with the IURC for approval of an arrangement pursuant to which Whiting Clean Energy would sell to TPC electric power generated at Whiting Clean Energy’s generating facility in Whiting, Indiana (“Whiting Clean Energy Facility”) which power would then be sold by TPC to Northern Indiana. On July 1, 2005, the IURC issued an interim order approving the ultimate sales of the necessary capacity and energy produced by the Whiting Clean Energy Facility to Northern Indiana through TPC under the Power Sales Tariff on an interim basis until December 31, 2005, or until a subsequent order is issued by the IURC, and authorized Northern Indiana recovery of fuel costs associated with interim purchases made under the Power Sales Tariff as part of its normal FAC proceedings. The IURC is expected to issue a final order in late 2005 or early 2006 following an evidentiary hearing, which is scheduled for the fourth quarter of 2005. On July 21, 2005, Intervenor LaPorte County filed a Petition for Reconsideration of the interim order with the IURC.

On November 26, 2002, Northern Indiana received approval for an ECT. Under the ECT, Northern Indiana is permitted to recover (1) allowance for funds used during construction and a return on the capital investment expended by Northern Indiana to implement IDEM’s NOx State Implementation Plan through an ECRM and (2) related operation and maintenance and depreciation expenses once the environmental facilities become operational through an EERM. Under the IURC’s November 26, 2002 order, Northern Indiana is permitted to submit filings on a semi-annual basis for the ECRM and on an annual basis for the EERM. Northern Indiana currently anticipates a total capital investment amounting to approximately $305 million. This amount was filed in Northern Indiana’s latest compliance plan, which was approved by the IURC on January 19, 2005. The ECRM revenues amounted to $12.8 million for the six months ended June 30, 2005, and $36.8 million from inception to date, while EERM revenues were $2.4 million for the first half of 2005. On February 4, 2005, Northern Indiana filed ECR-5 simultaneously with EER-2 for capital expenditures of $235.6 million and depreciation and operating expenses of $10.5 million through December 31, 2004. ECR-6 is expected to be filed in August 2005.

On April 13, 2005, Northern Indiana received an order from the IURC in a complaint filed by Jupiter. The complaint asserted that Northern Indiana’s service quality was not reasonably adequate. While concluding that Northern Indiana’s service was reasonably adequate, the IURC ruled that Northern Indiana must construct a backup line and pay Jupiter $2.5 million to install special fast switching equipment at the Jupiter plant. Further, Northern Indiana is precluded from recovering the $2.5 million in rates. Northern Indiana and Jupiter had both filed motions requesting the IURC to reconsider its order and were denied. Northern Indiana and Jupiter both have appealed the IURC’s order in this matter to the Indiana Court of Appeals. These appeals are currently pending. On June 15, 2005, Northern Indiana filed a Motion to Stay with the Indiana Court of Appeals requesting a stay of the portions of the order that require Northern Indiana to pay $2.5 million to Jupiter and install a backup line to serve Jupiter. On July 13, 2005, Northern Indiana’s Motion to Stay the IURC’s April 13, 2005 ruling was denied. Northern Indiana remitted the payment of $2.5 million to Jupiter in July 2005, and is working to comply with the remainder of the IURC’s order concerning the installation of a backup line.

Environmental Matters
Currently, various environmental matters impact the Electric Operations segment. As of June 30, 2005, a reserve has been recorded to cover probable environmental response actions. Refer to Note 7-C, “Environmental Matters,” in the Notes to Consolidated Financial Statements for additional information regarding environmental matters for Electric Operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Electric Operations (continued)

Sales
Electric sales quantities for the second quarter of 2005 were 4,153.1 gwh, a decrease of 91.0 gwh compared to the 2004 period, as a result of decreased wholesale transaction sales and decreased industrial sales due to steel customers running at lower levels. Residential and commercial sales quantities improved due to increases in the number of customers and warmer weather in the current period.

Electric sales for the first six months of 2005 was 8,336.4 gwh, a decrease of 162.8 gwh compared to the 2004 period, as a result of decreased wholesale transaction sales and decreased industrial sales due to steel customers running at lower levels. Residential and commercial sales quantities increased due to increases in the number of customers and warmer weather.

Net Revenues
In the second quarter of 2005, electric net revenues of $189.6 million increased by $7.1 million from the comparable 2004 period. This improvement was primarily a result of warmer weather compared to the second quarter of last year.

In the first six months of 2005, electric net revenues were $376.3 million, an increase of $14.3 million from the comparable 2004 period as a result of an increase in sales of approximately $6 million due to favorable weather conditions, an increase of $7.5 million in environmental cost tracker revenues, and increases in revenues from growth in residential and commercial customers. These increases in Electric Operations net revenues for the first half of 2005 were partially offset by $4.1 million in increased costs associated with MISO.

Operating Income
Operating income for the second quarter of 2005 was $61.0 million, a decrease of $21.0 million from the same period in 2004. The decrease was primarily due to the comparable 2004 period benefiting from a property tax accrual reduction of $18.1 million. Incremental MISO costs and fees of $5.6 million, restructuring charges of $1.8 million and increased electric production expense of $3.0 million in the current quarter were partially offset by increased net revenues discussed above.

Operating income for the first six months of 2005 was $126.4 million, a decrease of $14.4 million from the same period in 2004. This reduction in operating income was primarily due to the impact of a property tax accrual reduction of $18.1 million in the comparable 2004 period. Incremental MISO costs and fees of $6.3 million, increased electric production expense of $5.4 million and restructuring charges of $1.8 million in the current period were partially offset by an increase in net revenues discussed above. The 2004 period was negatively impacted by a $3.3 million expense for Electric Operations’ portion of a redemption premium paid for the early extinguishment of certain medium-term notes at Northern Indiana.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Northern Indiana Public Service Company

Other Operations

	Three Months					Six Months
	Ended June 30,					Ended June 30,
( in millions)	2005		2004			2005		2004
Net Revenues	$	—	$	—		$	—	$	—
Total Operating Expenses		—		0.3			—		0.5
Operating Loss	$	—	$	(0.3	)	$	—	$	(0.5	)

The Other Operations segment includes the results of NRC, a wholly-owned subsidiary of Northern Indiana, whose sole activity is to purchase accounts receivable from Northern Indiana and sells an undivided percentage ownership interest in these accounts to a commercial paper conduit, within the limits of the agreement between NRC and the conduit. Under the agreement, Northern Indiana acts as administrative agent, by performing record keeping and cash collection functions for the accounts receivable sold. Northern Indiana receives a fee, which provides adequate compensation, for such services. NRC commenced operations on December 30, 2003.

NRC contributes positive net income to the Other Operations segment, through income generated through the intercompany sale of receivables which is recorded in Other Income (Deductions) in the Statements of Consolidated Income. Also included in the Other Income (Deductions) section are expenses NRC pays directly to the commercial paper conduit. Operating Expenses include legal, management, and director fees and were approximately $20 thousand for the three months ended June 30, 2005. Operating Expenses include legal, management, and director fees and were approximately $58 thousand for the six months ended June 30, 2005. The table above reflects dollars in millions, and therefore these amounts round to zero in the 2005 periods.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Northern Indiana Public Service Company

For a discussion regarding quantitative and qualitative disclosures about market risk, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk Disclosures.”

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
Northern Indiana’s principal executive officer and its principal financial officer, after evaluating the effectiveness of Northern Indiana’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), have concluded based on the evaluation required by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15 that, as of the end of the period covered by this report, Northern Indiana’s disclosure controls and procedures were adequate and effective to ensure that material information relating to Northern Indiana and its consolidated subsidiaries would be made known to them by others within those entities.

Changes in Internal Controls
The MISO Day 2 market became effective on April 1, 2005, which impacted Northern Indiana’s regulated electric generation and purchase power operations. In connection with the implementation of MISO Day 2, Northern Indiana has implemented new processes and modified existing processes to facilitate participation in, and resultant settlements within the MISO market. Besides this change, there have been no other changes in Northern Indiana’s internal control over financial reporting during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, Northern Indiana’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Northern Indiana Public Service Company

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 31, 2005, the sole stockholder of Northern Indiana elected Timothy A. Dehring and Mark T. Maassel as directors of the Corporation until the next annual meeting of the stockholders or until each successor is duly elected, appointed and qualified.

ITEM 5. OTHER INFORMATION

On August 3, 2005, the sole common shareholder of Northern Indiana voted to amend Northern Indiana’s Articles of Incorporation to change the range for the number of directors to a range of 1 to 5 from the previous range of 3 to 5. This amendment will become effective upon the filing of the amended articles with the Secretary of State for the State of Indiana. Similarly, on August 3, 2005, the Board of Directors of Northern Indiana voted to amend the by-laws of Northern Indiana to change the range for the number of directors to a range of 1 to 5 from the previous range of 3 to 5. This amendment was effective immediately. Conformed copies of the revised articles of incorporation and by-laws are attached to this report as Exhibits 3.1 and 3.2, respectively.

ITEM 6. EXHIBITS

(3.1)	Articles of Incorporation of Northern Indiana as amended through August 3, 2005. *
(3.2)	By-laws of Northern Indiana as amended through August 3, 2005. *
(31.1)	Certification of Mark T. Maassel, Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
(31.2)	Certification of William M. O’Malley, Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
(32.1)	Certification of Mark T. Maassel, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). *
(32.2)	Certification of William M. O’Malley, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). *

* Exhibit filed herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Northern Indiana Public Service Company
	(Registrant)
Date: August 5, 2005	By:	/s/ Jeffrey W. Grossman
		Jeffrey W. Grossman
		Vice President (Duly Authorized Officer)

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EX-3.1

EXHIBIT 3.1

Articles of Incorporation

of

Northern Indiana Public Service Company

As Amended Through August 3, 2005

AMENDED ARTICLES OF INCORPORATION
OF
NORTHERN INDIANA PUBLIC SERVICE COMPANY

     The undersigned officers of Northern Indiana Public Service Company (hereinafter referred to as the “Corporation”) existing pursuant to the provisions of The Indiana Genera] Corporation Act, as amended (hereinafter referred to as the “Act”), desiring to give notice of corporate action effectuating certain amendments of its Articles of Incorporation by the adoption of new Amended Articles of Incorporation to supersede and take the place of its heretofore existing Amended Articles of Incorporation, certify the following facts:

SUBDIVISION A

Text of the Amended Articles

     The exact text of the entire Articles of Incorporation of the Corporation, as amended (hereinafter referred to as the “Amended Articles’), now is as follows:

ARTICLE I

Name

     The name of the Corporation is Northern Indiana Public Service Company.

ARTICLE II

Purposes

     The purposes for which the Corporation is formed are:

     (a) To carry on the general business of the manufacture, transmission, distribution, purchase and sale of electric current to towns and cities, and to the public in general, for heating, lighting and power purposes, and for the carrying on of all business incident thereto; to construct, purchase, or in any manner acquire, maintain and operate, and to mortgage, lease, sell or in any manner dispose of, plants and works for the manufacture, transmission, distribution, purchase and sale of electric current; to construct, purchase, or in any manner acquire, maintain and operate, and to mortgage, lease, sell or in any manner dispose of, lines and systems of poles, wires, conduits, meters and other appliances necessary for or useful in the purchase, sale, distribution and transmission of electric current; and to manufacture, buy, sell, mortgage, lease and deal in stoves, engines, lamps and other appliances and conveniences calculated directly or indirectly to promote the consumption of electric current or energy.

     (b) To manufacture, explore for, produce, store, distribute, buy and sell manufactured and natural gas for light, heat, power and other purposes, and to deal with and sell the by-products and residual products obtained in the manufacture of gas, and to deal with any other hydrocarbons in connection with any such purposes; to construct, purchase, or in any manner

1

acquire, maintain and operate, and to mortgage, lease, sell, and in any manner dispose of plants and works for the manufacture, underground storage, distribution, transportation and sale of manufactured and natural gas; to construct, lay, purchase, or in any manner acquire, and to maintain, operate, sell, encumber, or in any manner dispose of lines and systems of mains, pipes, conduits, meters, appliances and any other property, real and personal, necessary for or useful in the sale, underground storage, distribution and transportation of manufactured or natural gas for light, heat, power and other purposes; and to manufacture, buy, sell, mortgage, lease and deal in stoves, engines, lamps and other appliances and conveniences calculated directly or indirectly to promote the consumption of gas and its by-products.

     (c) To procure, store, supply, distribute, purchase and sell water in its natural or in a purified state; to construct, purchase, or in any manner acquire, maintain and operate, and to mortgage, lease, sell or in any manner dispose of, plants, systems and works for the storage, purification, distribution and supply of water; and to construct, lay, purchase or in any manner acquire, and to maintain, operate, sell, encumber, or in any manner dispose of, lines and systems of mains, pipes, conduits and appliances necessary for or useful in the sale, distribution and supply of water.

     (d) To manufacture, produce, generate, supply, distribute, purchase and sell steam and hot water for heat, power and other purposes; to construct, purchase, or in any manner acquire, maintain and operate, and to mortgage, lease, sell, or in any manner dispose of, plants, systems and works for the manufacture, production, distribution and sale of steam and hot water; and to construct, lay, purchase or in any manner acquire, and to maintain, operate, sell, encumber, or in any manner dispose of, lines and systems of mains, pipes, conduits and appliances necessary for or useful in the sale, distribution and supply of steam and hot water for heat, power and other purposes.

     (e) To purchase and own (so far as it lawfully may) all or a part of the shares of the capital stock and bonds and other securities of any other electrical, gas, water or heating company, and to invest its funds therein.

ARTICLE III

Term of Existence

     The period during which the Corporation shall continue is perpetual.

ARTICLE IV

Principal Office and Resident Agent

     The post-office address of the principal office of the Corporation is 5265 Hohman Avenue, Hammond, Lake County, Indiana 46320; and the name and post-office address of its Resident Agent in charge of such office is Edmund A. Schroer, Chairman and President, 5265 Hohman Avenue, Hammond, Lake County, Indiana 46320.

2

ARTICLE V

Amount of Capital Stock

     The total number of shares into which the authorized capital stock of the Corporation is divided is 85,400,000 shares, consisting of 2,400,000 shares with a par value of $100 per share, 2,000,000 shares with a par value of $50 per share, and 81,000,000 shares without par value.

ARTICLE VI

Terms of Capital Stock

     The total authorized capital stock of the Corporation consists of the following classes and amounts:

     (a) 2,400,000 shares of cumulative preferred stock with a par value of $100 per share (the “$100 par cumulative preferred stock’’);

     (b) 3,000,000 shares of cumulative preferred stock of no par value (the “no par cumulative preferred stock);

     (c 2,000,000 shares of cumulative preference stock with a par value of $50 per share (the “$50 par cumulative preference stock);

     (d) 3,000,000 shares of cumulative preference stock of no par value (the “no par cumulative preferred stock); and

     (e) 75,000,000 shares of common stock of no par value.

The term ''cumulative preferred stock’ when used herein shall mean he $100 par cumulative preferred stock and the no par cumulative preferred stock. The term “cumulative preference stock’’ when used herein shall mean the $50 par cumulative preference stock and the no par cumulative preference stock.

     The relative rights, preferences, limitations and restrictions of each class of capital stock of the Corporation are as follows:

     Priority of Cumulative Preferred Stock. (1) As to assets and dividends, the $100 par cumulative preferred stock and the no par cumulative preferred stock shall be of equal rank, and the cumulative preferred stock shall rank prior to, and be preferred over, the cumulative preference stock and the common stock,

     Cumulative Preferred Stock. (2) The shares of $100 par cumulative preferred stock and the shares of no par cumulative preferred stock may be divided into and issued, from time to time, in one or more series. All shares of cumulative preferred stock of the same series shall be identical, but shares of cumulative preferred stock of different series, subject to the provisions of this Article VI and to any applicable provisions of law, may vary as to (a) the rate of dividend,

3

(b) the prices at which such shares may be redeemed, (c) the number of shares issuable, (d) conversion and sinking fund provisions, if any, (e) the designations, (f) in the case of no par cumulative preferred stock, the amount per share which the no par cumulative preferred stock shall lie entitled to receive upon the involuntary liquidation, dissolution or winding up of the affairs of the Company, and (g) such other relative rights, preferences, limitations or restrictions as shall be determined in any resolution or resolutions adopted by the Board of Directors providing for the issuance thereof, and the Board of Directors is hereby expressly vested with authority to fax and determine with respect to any series, within the limitations herein set forth and provided by law, the number of shares to constitute any series and the designations thereof, and the relative rights, preferences, limitations or restrictions of the shares of any series so established.

     Dividends on Cumulative Preferred Stock. (3) The holders of shares of cumulative preferred stock of each series at the time outstanding shall be entitled to receive, but only when and as declared by the Board of Directors, cash dividends at the annual dividend rate fixed for the shares of such series by the Board of Directors as herein provided, and no more, payable quarterly upon such dates as the Board of Directors may from time to time determine. Dividends on shares of cumulative preferred stock of each series shall be cumulative. No dividends shall be declared on shares of cumulative preferred stock of any series for any quarterly dividend period unless at the same time and for the same quarterly dividend period there shall likewise be declared on all shares of all other series of the cumulative preferred stock at the time outstanding like proportionate dividends, ratably, in proportion to the annual dividend rates for such series, respectively, to the extent that such shares are entitled to receive dividends for such quarterly dividend period. No dividend shall be paid, or declared and set apart for payment, on the shares of any class of stock subordinate or junior to the cumulative preferred stock, nor any distribution made on any class of stock subordinate or junior to the cumulative preferred stock, nor shall any shares of any such subordinate or junior stock be purchased, redeemed or otherwise acquired for value by the Company, unless there shall have been declared and paid or shall have been declared and set apart for payment a sum sufficient for the payment of full dividends on all shares of cumulative preferred stock of all series at the time outstanding for all past quarterly dividend periods and for the then current quarterly dividend period. Whenever all cumulative dividends on said cumulative preferred stock for all previous quarterly dividend periods shall have been paid, and the full current quarterly dividends shall have been paid or shall have been declared and a sum sufficient for the payment thereof set apart, the Board of Directors may forthwith declare dividends on any other stock subordinate or junior to the cumulative preferred stock. Any accumulation of dividends on the cumulative preferred stock shall not bear interest.

     Dividend Accruals. (4) Dividends on the shares of cumulative preferred stock shall commence to accrue on the dividend payment date next preceding the issuance of the stock, or such later date as the Board of Directors may determine in the resolution authorizing the issuance thereof.

     Preference on Liquidation. (5) In the event of any voluntary liquidation, dissolution or winding up of the affairs of the Company, the holders of all shares of each series of cumulative preferred stock at the time outstanding shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings, available for distribution to its shareholders, before any amount shall be paid to the holders of any other stock subordinate or junior to the cumulative preferred stock, the redemption price thereof plus the unpaid cumulative dividends accrued thereon. In the event of any involuntary liquidation, dissolution or winding up of the

4

affairs of the Company, the holders of all shares of each series of cumulative preferred stock at the time outstanding shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its shareholders, before any amount shall be paid to the holders of any other stock subordinate or junior to the cumulative preferred stock, (a) $100 plus the unpaid cumulative dividends accrued thereon, in the case of the holders of shares of the $100 par cumulative preferred stock, for each such share or (b) the involuntary liquidation preference fixed for such series of shares by the Board of Directors plus the unpaid cumulative dividends accrued thereon, in the case of the holders of shares of the no par cumulative preferred stock, for each such share. After such payment in full to the holders of the cumulative preferred stock, as aforesaid, the remaining assets may be distributed and paid to the holders of any other stock subordinate or junior to the cumulative preferred stock according to their respective interests. If upon any such liquidation, dissolution or winding up, the assets distributable among the holders of the cumulative preferred stock shall be insufficient to permit the payment of the full preferential amounts aforesaid, then such assets shall be distributed among the holders of all shares of each series of the cumulative preferred stock then outstanding, ratably in proportion to the full preferential amounts to which they are respectively entitled.

     Right to Redeem-Redemption Price. (6) The Company, by action of its Board of Directors, shall have the right to redeem the cumulative preferred stock or any series thereof, in whole at any time, or in part from time to time, upon and by the payment of the redemption price or prices fixed therefor plus all unpaid cumulative dividends accrued thereon to the date fixed for redemption, or upon arid by setting aside for the benefit of the holders thereof the money sufficient to make such payments. If less than all the outstanding shares of any series of cumulative preferred stock shall 1) called for redemption, the shares to be redeemed shall he selected by lot in such manner as the Board of Directors may prescribe or, in the alternative, at Pie discretion of the Board of Director’s, shall he redeemed pro rata to the nearest whole share.

     Notice of Redemption. (7) Notice of the intention of the Company to redeem any shares of cumulative preferred stock specifying (i) the designation of the series of cumulative preferred stock to be redeemed, (ii) if less than all the outstanding shares of cumulative preferred stock of such series are called for redemption, appropriate specification of the shares to be redeemed, (iii) the place and date of redemption arid (iv) the redemption price of the shares to be redeemed as herein provided, shall, unless such publication be waived in writing by the holders of all such shares to be redeemed, be published once in each week for at least three successive weeks (in each case on any business day of the week) in at least one newspaper of general circulation in the city of Chicago, Illinois and in at least one newspaper of general circulation in city of New York, New York, printed in the English language and customarily published on each business day, the first publication to be not more than sixty (60) days and the last publication to be not less than seven (7) days prior to the redemption date fixed in said notice; and such notice shall also be mailed to each holder of such shares so to be redeemed at the address of such holder as it appears on the books of the Company, not less than thirty (30) days nor more than sixty (60) days prior to the date for the redemption thereof, but failure to so mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceedings for such redemption..

     When Shares Deemed Cancelled. (8) If notice of redemption shall have been duly given, and if the Company shall have, upon or prior to the redemption date specified in said notice, paid or set apart for payment the funds necessary to effect the redemption of shares of cumulative preferred stock called for redemption so that such funds shall be and continue to be available therefor, then, from and after the redemption date, notwithstanding that any certificate for shares

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called for redemption shall not have been surrendered for cancellation, such shares represented thereby shall no longer be deemed outstanding and shall be deemed cancelled and retired and shall not be reissued, and each holder thereof shall not thereafter be entitled to receive any further dividend or be entitled to exercise any rights as a holder of such stock excepting only the right to receive the redemption price thereof plus all unpaid cumulative dividends accrued thereon, but without interest. The moneys so set apart for the redemption of such stock called for redemption shall be paid to the holders of such stock upon the surrender to the Company for cancellation of the certificates representing such stock, properly endorsed in blank for transfer or accompanied by proper instruments of assignment in blank (if required by the Company) and bearing all necessary stock transfer tax stamps thereto affixed and cancelled.

     Deposit of Redemption Funds. (9) The Company may, after giving notice of redemption as herein provided, or after giving to the bank or trust company hereinafter referred to irrevocable authority to give due notice, deposit at any time on or prior to the redemption date specified in such notice, the amount of the aggregate redemption price plus all unpaid cumulative dividends accrued to the redemption date on the shares of cumulative preferred stock to be redeemed, with a bank on trust company having a capital and surplus of at least five million dollars and its principal office in the city of Chicago, Illinois, designated in such notice, in trust for the holders of such stock so to be redeemed, payable to the holders thereof on the date fixed for redemption (or prior thereto if the Board of Directors shall so determine), and then, from and after the date of such deposit, such stock so called for redemption shall not have been surrendered for cancellation, shall no longer be deemed outstanding and shall be deemed cancelled and retired and shall not be reissued, and each holder thereof shall not thereafter be entitled to receive any further dividend or be entitled to exercise any rights as a holder of such stock, excepting only the right to receive the redemption price thereof plus all unpaid cumulative dividends accrued thereon to the date of redemption price thereof plus all unpaid cumulative dividends accrued thereon to the date of redemption, but without interest thereon.

     Redemption Funds Not Claimed. (10) In case the holder of airy certificate for any cumulative preferred stock which shall have been redeemed shall not, within six (6) years after such redemption date, claim the amount deposited for the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Company such unclaimed amount and shall thereupon be relieved of all responsibility in respect thereof; provided such bank or trust company, before being required to make any such payment, may (at the expense of the Company) cause to be published once a week on any business day of the week for two (2) consecutive weeks in a newspaper of general circulation in the city of Chicago, Illinois, customarily published on each business day, a notice that such moneys have not been so called for and that after a date named therein such moneys will be returned to the Company.

     Purchase for Retirement-Redemption Funds. (11) The Company may also, from time to time, to the extent now or hereafter permitted by law, purchase or otherwise acquire the whole or any part, including a part of any series, of the cumulative preferred stock at not exceeding the redemption price thereof. Redemption of shares of cumulative preferred stock, or the purchase or other acquisition thereof, may be made at any time, except as in the next paragraph provided, out of any available funds of the Company, including surplus, the proceeds of common stock, or stock of any class, bonds, notes, or other securities, issued or to be issued, or any one or more thereof. All cumulative preferred stock redeemed, purchased or otherwise acquired, shall be cancelled and retired and shall not be reissued.

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     Redemption When Dividends in Arrears. (12) If at any time the Company has failed to pay all cumulative dividends accrued on any outstanding shares of cumulative preferred stock of any series, thereafter and until all cumulative dividends accrued on all shares of outstanding cumulative preferred stock of all series have been paid, or declared and set apart for payment, for all past quarter yearly dividend periods and for the then current quarterly dividend period (but without interest) the Company shall not redeem any shares of cumulative preferred stock unless all outstanding shares of cumulative preferred stock are thereupon redeemed, and shall not make any distribution thereon, and shall not purchase or otherwise acquire for value any shares of cumulative preferred stock except in accordance with a purchase offer made to all holders of the cumulative preferred stock providing for the purchase at a price which will equal for each share of such cumulative preferred stock the same percentage of the redemption price thereof (including all unpaid cumulative dividends accrued thereon) in effect at the time of purchase.

     Dividend Restriction on Common Stock. (13) So long as any shares of the cumulative preferred stock are outstanding no dividends shall be paid or declared upon the common stock (other than dividends payable in common stock) in excess of 75% of the net income available therefor for the preceding calendar year unless the aggregate of the capital of the Company applicable to stocks subordinate or junior as to assets and dividends to the cumulative preferred stock plus the surplus, after giving effect to such dividends, would equal or exceed 25% of the sum of all obligations of the Company evidenced by bonds, notes, debentures or other securities plus the total capital and surplus of the Company.

     Cumulative Preference Stock. (14) The shares of $50 par cumulative preference stock and the shares of no par cumulative preference stock may be divided into and issued, from time to time, in one or more series. All shares of cumulative preference stock of the same series shall be identical, but shares of cumulative preference stock of different series, subject to the provisions of this Article VI and to any applicable provisions of law, may vary as to (a) the rate of dividend, (b) the prices at which such shares may be redeemed (c) the number of shares issuable, (d) conversion and sinking fund provisions, if any, (e) the designations, (f) in the case of no par cumulative preference stock, the amount per share which the no par cumulative preference stock shall be entitled to receive upon the involuntary liquidation, dissolution or winding up of the affairs of the Company, and (g) such other relative rights, preferences, limitations or restrictions as shall be determined in any resolution or resolutions adopted by the Board of Directors providing for the issuance thereof, and the Board of Directors is hereby expressly vested with authority to fix and determine with respect to any series, within the limitations herein set forth and provided by law, the number of shares to constitute any series and the designations thereof, and the relative rights, preferences, limitations or restrictions of the shares of any series so established.

     Dividends on Cumulative Preference Stock. (15) The holders of shares of cumulative preference stock of each series at the time outstanding shall be entitled to receive, but only when and as declared by the Board of Directors, cash dividends at the annual dividend rate fixed for the shares of such series by the Board of Directors as herein provided, and no more, payable quarterly upon such dates, as the Board of Directors may from time to time determine, out of the surplus earnings or net profits or surplus paid in cash. No dividends shall be declared or paid on shares of cumulative preference stock of any series for any quarterly dividend period, unless at the same time, and for the same quarterly dividend period, there shall likewise be declared and paid, in due course, on all shares of all series of the cumulative preference stock at the time

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outstanding, like proportionate dividends, ratably, in proportion to the annual amount of dividends payable for each such series, respectively, to the extent that such shares are entitled to receive dividends for such quarterly dividend period. Such dividends shall be cumulative and shall be paid or declared and set apart for payment, before any dividends shall be paid, or declared and apart for payment, or any distribution made, on the common stock or any other stock subordinate to cumulative preference stock, so that if, in any year, dividends at the rate applicable to such cumulative preference stock shall not have been paid, or declared and set apart for payment, on the cumulative preference stock, the deficiency shall be paid, or declared and set apart for payment, on the cumulative preference stock, the deficiency shall be paid, or declared and set apart for payment, before any dividends shall be paid, or declared and set apart for payment, on the common stock or any other stock subordinate to the cumulative preference stock. Any accumulation of dividends on the cumulative preference stock shall not bear interest. Whenever all cumulative dividends on the cumulative preference stock for all previous quarterly dividend periods shall have been paid, and the full current quarterly dividends shall have been paid or shall have been declared and a sum sufficient for the payment of thereof set apart, the Board of Directors may forthwith declare dividends on the common stock or any other stock subordinate to the cumulative preference stock.

     Dividend Accruals. (16) Dividends on the shares of cumulative preference stock of each series shall commence to accrue on the dividend payment date next preceding the issuance thereof or such later date as the Board of Directors may determine in the resolutions authorizing the issuance thereof.

     Preference on Liquidation. (17) In the event of any voluntary liquidation, dissolution or winding up of the Company, the holders of shares of cumulative preference stock of each series at the time outstanding shall be entitled to be paid in cash out of the assets of the Company, before any amount shall be paid out such assets to the holders of the common stock or any other stock subordinate to the cumulative preference stock, an amount equal to the redemption price for such shares plus the unpaid cumulative dividends accrued thereon. In the event of any involuntary liquidation, dissolution or winding up of the Company, the holders of shares of cumulative preference stock of each series at the time outstanding shall be entitled to be paid in cash out of the assets of the Company, before any amount shall be paid out of such assets to the holders of the common stock or any other stock subordinate to the cumulative preference stock (a) $50 par cumulative preference stock, for each such share or (b) the involuntary liquidation preference fixed for such series of shares by the Board of Directors plus the unpaid cumulative dividends accrued thereon, in the case of the holders of shares of the no par cumulative preference stock, for each such share. After such payment in full to the holders of the cumulative preference stock, as aforesaid, the remaining assets may be distributed and paid to the holders of the common stock or any other stock subordinate to the cumulative preference stock, according to their respective interests. If upon any such liquidation, dissolution or winding up, the assets distributable among the holders of cumulative preference stock shall be insufficient to permit the payment of the full preferential amounts aforesaid, then such assets shall be distributed among the holders of all shares of the cumulative preference stock of each series thereof then outstanding, ratably in proportion to the full preferential amounts to which they are respectively entitled.

     Right to Redeem. (18) The Company, by action of its Board of Directors, shall have the right to redeem the cumulative preference stock or any series thereof, in whole at any time, or in part from time to time, upon and by the payment of the redemption price or prices fixed therefor

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plus all unpaid cumulative dividends accrued thereon to the date fixed for redemption, or upon and by setting aside for the benefit of the holders thereof the money sufficient to make such payments. If less than all the outstanding shares of cumulative preference stock of any series shall be called for redemption, the shares to be redeemed shall be selected by lot in such manner as the Board of Directors may prescribe or, in the alternative, at the discretion of the Board of Directors, shall be redeemed pro rata to the nearest whole share.

     Notice of Redemption. (19) Notice of the intention of the Company to redeem any shares of the cumulative preference stock, specifying (a) the designation of the series of cumulative preference stock to be redeemed, (b) if less than all the outstanding shares of cumulative preference stock of such series are called for redemption, appropriate specification of the shares to be redeemed, (c) the date of termination of the conversion rights, if any, (d) the place and date of redemption and (e) the redemption price of the shares to be redeemed as herein provided, shall, unless such publication be waived in writing by the holders of all such shares to be redeemed, be published once in each week for at least three successive weeks (in each case on any business day of the week) in at least one newspaper of general circulation in the city of Chicago, Illinois, and in at least one newspaper of general circulation in the city of New York, New York, printed in the English language and customarily published on each business day, the first publication to be not more than forty (40) days and the last publication to be not less than seven (7) days prior to the redemption date fixed in said notice; and such notice shall also be mailed to each holder of such shares so to be redeemed at the address of such holder as it appears on the books of the Company, riot less than thirty (30) days nor more than sixty (60) days prior to the date for’ the redemption thereof but failure to so mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceedings for such redemption.

     When Shares Deemed Cancelled. (20) If notice of redemption shall have been duly given, and if the Company shall have, upon or prior to the redemption date specified in said notice, paid or set apart for payment the funds necessary to effect the redemption of such shares of cumulative preference stock called for redemption so that such funds shall be and continue to be available therefor, then, from and after the redemption date, notwithstanding that any certificate for shares called for redemption shall not have been surrendered for cancellation, such shares represented thereby shall no longer be deemed outstanding and shall be deemed cancelled and each holder thereof shall not thereafter’ be entitled to receive any further dividend or’ be entitled to exercise any rights as a holder’ of such stock, excepting only the right to receive the redemption price thereof plus unpaid cumulative dividends accrued thereon, but without interest. The moneys so set apart for the redemption of such stock called for redemption shall be paid to the holders of such stock upon the surrender to the Company for cancellation of the certificates representing such stock, properly endorsed in blank for transfer on’ accompanied by proper instruments of assignment in blank (if required by the Company) and bearing all necessary stock transfer tax stamps thereto affixed arid cancelled.

     Deposit of Redemption Funds. (21) The Company may, after giving notice of redemption as herein provided, or after giving to the bank or trust company hereinafter referred to irrevocable authority to give due notice, deposit at any time on or prior to the redemption date specified in such notice, the amount of the aggregate redemption price plus all unpaid cumulative dividends accrued to the redemption date on the shares of cumulative preference stock to be redeemed, with a bank or trust company having capital and surplus of at least five million dollars and its principal office in the city of Chicago, Illinois, designated in such notice, in trust for the holders of such stock so to be redeemed, payable to the holders thereof on the date fixed for

9

redemption (or prior thereto if the Board of Directors shall so determine), and then, from and after the date of such deposit, such stock, notwithstanding that any certificate for such stock so called for redemption shall not have been surrendered for cancellation, shall no longer be deemed outstanding and shall be deemed cancelled and each holder thereof shall not thereafter be entitled to receive any further dividend or be entitled to exercise any rights as a holder of such stock, excepting only the right to receive the redemption price thereof plus unpaid cumulative dividends accrued thereon to the date of redemption, but without interest thereon.

     Redemption Funds Not Claimed. (22) In case the holder of any certificate for any cumulative preference stock which shall have been redeemed shall not, within six (6) years after such redemption date, claim the amount deposited for the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Company such unclaimed amount and shall thereupon be relieved of all responsibility in respect thereof; provided such bank or trust company, before being required to make any such payment, may (at the expense or the Company) cause to be published once a week on any business day of the week for two (2) consecutive weeks in a newspaper of general circulation in the city of Chicago, Illinois, customarily published on each business day, a notice that such moneys have not been so called for and that after a date named therein such moneys will be returned to the Company.

     Purchase for Redemption. (23) The Company may also, from time to time, to the extent now or hereafter permitted by law, purchase or otherwise acquire the whole or any part, including a part of any series, of cumulative preference stock, at not exceeding the redemption price thereof. Redemption of shares or cumulative preference stock, or the purchase or other acquisition thereof, may be made at any time, except as in the next paragraph provided, out of any available funds of the Company, including surplus, the proceeds of common stock, or stock of any class, bonds, notes, or other securities, issued or to be issued, or any one or more thereof. All shares of cumulative preference stock redeemed, purchased or otherwise acquired, shall be cancelled.

     Redemption When Dividends in Arrears. (24) If at any time the Company has failed to pay all cumulative dividends accrued on any outstanding shares of cumulative preference stock accrued on any outstanding shares of cumulative preference stock of any series, thereafter and until all cumulative dividends accrued on all shares of outstanding cumulative preference stock of all series have been paid, or declared and set apart for payment, for all past quarter yearly dividend periods (but without interest) the Company shall not purchase or otherwise acquire for value any stock subordinate to the cumulative preference stock, and the Company shall not redeem any cumulative preference stock unless all outstanding shares of cumulative preference stock are thereupon redeemed, and shall not make any distribution thereon, and shall not purchase or otherwise acquire for value any shares of cumulative preference stock of any series, except in accordance with a purchase offer made to all holders of the cumulative preference stock, providing for the purchase at a price which will equal for each share of such cumulative preference stock the same percentage of the redemption price thereof (including all unpaid cumulative dividends accrued thereon) in effect at the time of purchase.

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ARTICLE VII

Voting Rights of Capital Stock

     Rights of Common Stock. (1) Every share of common stock whenever and for whatever consideration issued, shall he equal to every other share of common stock and shall be entitled to the same rights as every other share of common stock in voting at all meetings of the stockholders and in all distributions of earnings or assets of the Corporation distributable to the holders of common stock.

     Cumulative Voting. (2) In all elections of directors every common shareholder shall have the right to multiply the number of shares he may be entitled to vote by the number of directors to be elected, and the product shall represent the number of votes he may cast at such election, and he may cast all such Votes represented by such product for one candidate or distribute them among any two or more candidates.

     Voting Rights of Cumulative Preferred Stock. (3) The holders of the cumulative preferred stock shall have no voting powers, nor shall they be entitled to notice of any meeting of the shareholders, except as required by law or by these Articles. Whenever any matter is submitted to a vote of the holders of the cumulative preferred stock pursuant to these Articles, the holders of shares of the $100 par cumulative preferred stock and the holders of the no pal’ cumulative preferred stock shall vote together as a class; the holders of the $100 par cumulative preferred stock shall be entitled to cast one vote per share, and the holders of the no par cumulative preferred stock shall be entitled to cast that vote per share (but not in excess of one vote per share) equal to a fraction the numerator of which shall be the involuntary liquidation preference per share fixed for each such share by the Board of Directors and the denominator of which shall be $100.

     Voting Rights of Cumulative Preferred Stock in the Event of Default. (4) In the event of a default in payment of an amount equal to four full quarterly dividends on all shares of all series of the cumulative preferred stock then outstanding, the holders of all shares of cumulative preferred stock shall be given notice of all meetings of shareholders and, voting as provided in Paragraph 3 of this Article VII, shall have the right to elect a majority of the Board of Directors and shall have in all other matters full voting rights; provided, however, that when all accrued installments and arrears of dividends on all series of the cumulative preferred stock then outstanding shall have been paid, then and thereupon all the rights and powers of the holders of the cumulative preferred stock to receive notice and to vote as in this paragraph provided shall cease, subject, however, to being again revived at any subsequent default of the Company as aforesaid.

     Voting Rights of Cumulative Preference Stock. (5) Except as herein expressly provided, and except in the manner and to the extent provided by the laws of the State of Indiana, the holders of the cumulative preference stock of the Company shall have no voting powers, nor shall they be entitled to notice of any meetings of the shareholders of the Company. Whenever any matter is submitted to a vote of the holders of the cumulative preference stock pursuant to these Articles, the holders of shares of the $50 par cumulative preference stock and the holders of the no par cumulative preference stock shall vote together as a class; the holders of the $50 par cumulative preference stock shall be entitled to cast one vote per share, and the holders of the no par cumulative preference stock shall be entitled to cast that vote per share (but not in excess of

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two votes per share) equal to a fraction the numerator of which shall be the involuntary liquidation preference per share fixed for each such share by the Board of Directors and the denominator of which shall be $50.

     Voting Rights of Cumulative Preference Stock in the Event of Default. (6) Whenever an amount equal to four full quarterly dividends on all shares of all series of the cumulative preference stock shall be in arrears, or whenever there shall have occurred some default in the observance of any of the provisions hereof or some default under any indenture of mortgage or deed of trust of the Company on which action shall have been taken by the bondholders or the trustee as in said mortgage or deed of trust provided, or whenever the Company shall have been declared bankrupt (each of said events being hereinafter called a “default”), then all the holders of the cumulative preference stock shall be given notice of all shareholders’ meetings and, voting as provided in Paragraph 5 of this Article VII, shall have the right to elect two directors of the Company and shall have in ail other matters full voting rights; provided, however, that when all said accrued installments and arrears of dividends shall have been paid by the Company, or whenever any default in the observance of any of the provisions hereof shall have been cured, or whenever any such action taken by such bondholders or such trustee shall have been dismissed by agreement or otherwise, or whenever the Company shall have been discharged from bankruptcy, then and thereupon, provided there shall be no other default then existing, all the rights and powers of the holders of said cumulative preference stock to receive notice and to vote as in this paragraph provided shall cease, subject, however, to being again revived at any subsequent default of the Company as aforesaid.

     When Two-thirds Vole of Cumulative Preferred Required to Amend Charter. (7) So long as any shares of the cumulative preferred stock of any series are outstanding, the Company shall not, without the affirmative vote (given at a meeting duly called for the purpose) of at least two-thirds of the total number of votes eligible to be cast by the holders of the cumulative preferred stock of all series then outstanding, voting as provided in Paragraph 3 of this Article VII, amend the Articles of Incorporation to (a) create or authorize any class of stock which would rank prior to the cumulative preferred stock as to assets or dividends, or any class of securities convertible into any class of stock which would rank prior to the cumulative preferred stock as to assets or dividends, or (b) change the express terms and conditions of the cumulative preferred stock in any manner prejudicial to the holders of any series thereof.

     When Majority Vote of Cumulative Preferred Required to Amend Charter. (8) So long as any shares of the cumulative preferred stock of any series are outstanding, the Company shall not, without the affirmative vote (given at a meeting duly called for the purpose) of at least a majority of the total number of votes eligible to be cast by the holders of cumulative preferred stock of all series then outstanding, voting as provided in Paragraph 3 or this Article VII, amend the Articles of Incorporation to (a) create or authorize any class of stock which would rank on parity with the cumulative preferred stock as to assets or dividends, or any class of securities convertible into any class of stock which would rank on a parity with the cumulative preferred stock as to assets or dividends, or (b) authorize additional shares of cumulative preferred stock.

     When Majority Vote of Cumulative Preferred Required to Issue Additional Shares, or Merge, etc. (9) So long as any shares of the cumulative preferred stock of any series are outstanding, the Company shall not, without the affirmative vote (given at a meeting duly called for the purpose) of at least a majority of the total number of votes eligible to be cast by the holders of cumulative preferred stock of all series then outstanding, voting as provided in

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Paragraph 3 of this Article VII, (a) issue any additional shares of the cumulative preferred stock, except shares of cumulative preferred stock issued in connection with the redemption of, or exchange for, at least an equal number of outstanding shares of cumulative preferred stock (1) unless for any twelve (12) consecutive calendar months within the fifteen (15) calendar months immediately preceding the month within which such additional shares are to be issued (i) the net earnings of the Company applicable to the payment of dividends on the cumulative preferred stock and any class of stock ranking on a parity with the cumulative preferred stock as to assets and dividends (determined in accordance with sound accounting practice) shall have been at least two (2) times the annual dividend requirements upon all shares of cumulative preferred stock and any class of stock ranking on a parity with the cumulative preferred stock as to assets or dividends to be outstanding immediately after the proposed issue of such additional shares, and (ii) the net earnings of the Company applicable to the payment of interest charges on the interest bearing indebtedness of the Company (determined in accordance with sound accounting practice) shall have been at least one and one-half (1¹/2) times the aggregate for a twelve (12) months’ period of such dividend requirements and the annual interest charges on the entire amount of interest bearing indebtedness likewise to be outstanding, but excluding from the foregoing computation interest charges on all indebtedness which is to be retired through the issue of such additional shares; and if such additional shares are to be issued in connection with the acquisition of any property, whether by merger, consolidation, purchase or otherwise, the earnings of the property to be acquired may be included on a pro forma basis in the foregoing computation and (2) unless the aggregate of the capital of the Company applicable to stocks subordinate or junior as to assets and dividends to the cumulative preferred stock plus the surplus of the Company shall equal or exceed 25% of the sum of all obligations of the Company evidenced by bonds, notes, debentures or other securities plus the total capital and surplus of the Company, or (b) merge or consolidate with any other corporation or sell all or substantially all of the assets of the Company unless provision is made for retirement of all shares of all series of the cumulative preferred stock, except that this clause does not apply to the purchase of assets or franchises of another company not involving a merger or consolidation.

     When Two-thirds Vote of Cumulative Preference Required. (10) Without the affirmative vote (given at a meeting duly called for the purpose) of at least two-thirds of the total number of votes eligible to be cast by the holders of cumulative preference stock of all series then outstanding, voting as provided in Paragraph 5 of this Article VII, the Company shall not (a) create any class of stock which would rank prior to or on a parity with the cumulative preference stock as to assets or dividends, or any securities convertible into any stock which would rank prior to or on a parity with the cumulative preference stock as to assets or dividends, or (b) amend the Articles of Incorporation to change the express terms and conditions of the cumulative preference stock in any manner substantially prejudicial to the holders thereof.

     When Majority Vote of Cumulative Preference Required. (11) Without the affirmative vote (given at a meeting duly called for the purpose) of at least a majority of the total number of votes eligible to be cast by the holders of cumulative preference stock of all series then outstanding, voting as provided in Paragraph 5 of this Article VII, the Company shall not (a) authorize additional shares of cumulative preferred stock or cumulative preference stock, or (b) merge or consolidate with any other corporation or sell all or substantially all of the assets of the Company unless provision is made for retirement of all shares of all classes and series of the cumulative preference stock, except that this clause does not apply to the purchase of assets or franchises of another company not involving a merger or consolidation.

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ARTICLE VIII

Paid-in Capital

     The amount of paid-in capital, with which the Corporation is continuing business, is $950,727,635.

ARTICLE IX

Data Respecting Directors

     Section 1. Number of Directors. The Board of Directors shall consist of not less than one nor more than five members, as determined from time to time by the Board of Directors and shall be elected annually. All directors of the Corporation shall hold office until their successors are elected and qualified. In the event that the holders of cumulative preferred stock or cumulative preference stock are entitled at any shareholders’ meeting to elect members of the Board of Directors, then the term of office of all persons who may be directors shall terminate upon the election of their successors at such meeting of shareholders.

     Section 2. Qualifications. Directors need not be shareholders of the Corporation. A majority of the Directors at any time shall he citizens of the United States.

ARTICLE X

Further Data Respecting Directors

     Section 1. Names and Post-Office Addresses. The names and post-office addresses of the Board of Directors of the Corporation are as follows:

Name	Address	City, State, Zip
Carl H. Elliott	Tri-State University	Angola, IN 46703
William J. Johnson	1525 South Tenth Street	Goshen, IN 46526
Dean H. Mitchell	5265 Hohman Avenue	Hammond, IN 46320
Paul H. Neininger	119 North Main Street	Monticello, IN 47960
Denis F. Ribordy	P. O. Box 599	Griffith, IN 46319
William J. Riley	720 West Chicago Avenue	East Chicago, IN 46312
Ian M. Rolland	1300 South Clinton Street	Fort Wayne, IN 46801
Edmund A. Schroer	5265 Hohman Avenue	Hammond, IN 46320
Eugene M. Shorb	5265 Hohman Avenue	Hammond, IN 46320

     Section 2. Citizenship. All of such Directors are citizens of the United States

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ARTICLE XI

Further Data Respecting Officers

     Section 1. Officers. The names and addresses of the president and secretary of the Corporation are as follows:

Name	Address	City, State, Zip
Edmund A. Schroer, President	5265 Hohman Avenue	Hammond, IN 46320
Mildred J. Mikulas, Secretary	5265 Hohman Avenue	Hammond, IN 46320

ARTICLE XII

Provisions for Regulation of Business and Conduct of Affairs of Corporation

     Consideration for Par Value Shares. (1) Shares of stock having a par value may be sold at less than their par value, in which case such shares may be issued for such consideration as may be fixed from time to time by the Board of Directors of the Corporation.

     Consideration for No Par Shares. (2) Shares of stock without nominal or par value may be issued and disposed of from time to time for such consideration as may be determined by the Board of Directors.

     Preemptive Rights. (3) The shareholders shall have no preemptive rights to subscribe to or purchase any shares of capital stock of the Corporation of any class, or treasury shares, or any obligations convertible into capital stock of the Corporation.

     Meetings of Shareholders. (4) Meetings of the shareholders of the Corporation shall be held at such place, within or without the State of Indiana, as may be specified from time to time in the respective notices thereof, or by the by-laws or by resolution of the Board of Directors.

EFFECT OF THE AMENDED ARTICLES

     The Amended Articles shall supersede and take the place of the heretofore existing Amended Articles of Incorporation of the Corporation.

SUBDIVISION B

Manner of Adoption and Vote

Section 1. Action by Directors

     The Board of Directors of the Corporation, at a meeting thereof, duly called, constituted and held on January 28, 1982 at which a quorum of such Board of Directors was present, duly

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adopted resolutions proposing to the shareholders of the Corporation entitled to vote in respect of the Amended Articles that the provisions and terms of its entire Articles of Incorporation be amended so as to read as set forth in the Amended Articles, and that the Amended Articles should supersede and take the place of its heretofore existing Amended Articles of Incorporation; and called a meeting of such shareholders, to be held April 14, 1982, to adopt or reject the Amended Articles.

Section 2. Action by Shareholders

     The shareholders of the Corporation entitled to vote in respect of amendment of the Amended Articles of Incorporation adopted April 9, 1980, and filed with the Secretary of State of Indiana on April 10, 1980, at a meeting thereof, duly called, constituted and held on April 14, 1982, at which the holders of 36,449,331 shares of the common Stock of No Par Value were present in person or by proxy, adopted the Amended Articles.

     (a) The number of shares entitled to vote in respect of adoption of a resolution amending the Amended Articles of Incorporation of the Corporation increasing the authorized number of shares of Common Stock of no par value from 55,000,000 shares to 75,000,000 shares, the number of shares voted in favor of adoption of said resolution and the number of shares voted against such adoption are as follows:

Shares entitled to vote: 51,120,707 of common stock of no par value
Shares voted in favor: 33,905,694 of common stock of no par value
Shares voted against: 2,062,299 of common stock of no par value

     (b) The number of shares entitled to vote in respect of adoption of a resolution to add a new paragraph 4 to Article XII of the Amended Articles of Incorporation of the Corporation, the number of shares voted in favor of adoption of said resolution and the number of shares voted against such adoption are as follows:

Shares entitled to vote: 51,120,707 of common stock of no par value
Shares voted in favor: 34,871,769 of common stock of no par value
Shares voted against: 1,112 891 of common stock of no par value

     (c) The number of shares entitled to vote in respect of adoption of a resolution to adopt and file new Amended Articles of Incorporation with the Secretary of State of Indiana reflecting the above described amendments and to supersede the Amended Articles of Incorporation adopted April 9,1980, and filed with the Secretary of State of Indiana on April 10, 1980, the number of shares voted in favor of adoption of said resolution and the number of shares voted against such adoption are as follows:

Shares entitled to vote: 51120,707 of common stock of no par value
Shares voted in favor: 34,958,429 of common stock of no par value
Shares voted against: 803,408 of common stock of no par value

Section 3. Compliance with Legal Requirements

     The manner of the adoption of the Amended Articles, and the vote by which they were

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adopted, constitute full legal compliance with the provisions of the Act, the Amended Articles of Incorporation, and the By-Laws of the Corporation.

SUBDIVISION C

Statement of Changes Made With Respect
To the Number of Shares Heretofore Authorized

Aggregate Number of Shares Previously Authorized	65,400,000
Increase	20,000,000
Aggregate Number of Shares to be Authorized After Effect of this Amendment	85,400,000

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EX-3.2

EXHIBIT 3.2

BY-LAWS

OF

NORTHERN INDIANA PUBLIC SERVICE COMPANY

As Amended Through August 3, 2005

[Conformed Copy]

BY-LAWS

OF

NORTHERN INDIANA PUBLIC SERVICE COMPANY

ARTICLE I.
OFFICES.

     SECTION 1.1. Registered Office. The registered office of the Corporation in the State of Indiana shall be at 801 East 86th Avenue, in the Town of Merrillville, County of Lake.

     SECTION 1.2. Principal Business Office. The principal business office of the Corporation shall be at 801 East 86th Avenue, in the Town of Merrillville, County of Lake, in the State of Indiana.

ARTICLE II.
SHAREHOLDERS’ MEETINGS.

     SECTION 2.1. Place of Meetings. Meetings of the shareholders of the Corporation shall be held at such place, within or without the State of Indiana, as may be specified by the Board of Directors in the notice of such meeting, but if no such designation is made, then at the principal business office of the Corporation.

     SECTION 2.2. Annual Meetings. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before

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the meeting, shall be held at a time fixed by the Board of Directors, on the third Tuesday in the month of May of each year, if such day is not a legal holiday, and if a legal holiday, then on the next business day that is not a legal holiday. If for any reason the annual meeting of the shareholders shall not be held at the time and place herein provided, the same may be held at any time thereafter, but not later than the date which is five months after the close of the Corporation’s fiscal year, or the date which is fifteen months after the last annual meeting, whichever is earlier.

     If for any reason any annual meeting shall not be held at the time herein provided, the same may be held at any time thereafter, upon notice as hereinafter provided, or the business thereof may be transacted at any special meeting of shareholders called for that purpose.

     SECTION 2.3. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman, the President, or the Board of Directors, and shall be called by the Chairman at the request in writing of a majority of the Board of Directors, or at the request in writing of the shareholders holding at least one-fourth of all the shares outstanding and entitled to vote on the business proposed to be transacted thereat. All requests for special meetings of shareholders shall state the time, place and the purpose or purposes thereof.

     SECTION 2.4. Notice of Shareholders’ Meetings. Notice of each meeting of shareholders, stating the date, time and place, and, in the case of special meetings, the purpose or purposes for which such meeting is called, shall be given to each shareholder entitled to vote thereat not less than 10 nor more than 60 days before the date of the meeting unless otherwise prescribed by statute.

     SECTION 2.5. Record Dates. (a) In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment

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thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a future date as the record date, which shall not be more than 60 nor less than 10 days before the date of such meeting or any other action requiring a determination by shareholders.

     (b) If a record date has not been fixed as provided in preceding subsection (a), then:

          (i) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and

          (ii) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

     (c) Only those who shall be shareholders of record on the record date so fixed as aforesaid shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding the transfer of any shares on the books of the Corporation after the applicable record date; provided, however, the Corporation shall fix a new record date if a meeting is adjourned to a date more than 120 days after the date originally fixed for the meeting.

     SECTION 2.6. Quorum and Adjournment. The holders of a majority of all the capital shares issued and outstanding and entitled to vote at any meeting of the shareholders, represented by the holders thereof in person or by proxy, shall be requisite at all meetings of the shareholders

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to constitute a quorum for the election of Directors or for the transaction of other business, unless otherwise provided by law or by the Corporation’s Articles of Incorporation, as amended (the “Articles of Incorporation”). Whether or not there is such a quorum, the chairman of the meeting or the shareholders present or represented by proxy representing a majority of the shares present or represented may adjourn the meeting from time to time without notice other than an announcement at the meeting. At such adjourned meeting at which the requisite number of voting shares shall be present or represented, any business may be transacted which might have been transacted at the meeting originally called.

     SECTION 2.7. Voting by Shareholders; Proxies. Every shareholder shall have the right at every shareholders’ meeting to one vote for each share standing in his name on the books of the Corporation, except as otherwise provided by law or by the Articles of Incorporation, and except that no share shall be voted at any meeting upon which any installment is due and unpaid, or which belongs to the Corporation. Election of directors at all meetings of the shareholders at which directors are to be elected shall be by ballot, and a plurality of the votes cast thereat shall be necessary to elect any Director. If a quorum exists, action on a matter (other than the election of directors) submitted to shareholders entitled to vote thereon at any meeting shall be approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law or by the Articles of Incorporation. A shareholder may vote either in person or by proxy executed in writing by the shareholder or a duly authorized attorney in fact. No proxy shall be valid after eleven months from the date of its execution unless a longer time is expressly provided therein. All voting at meetings of shareholders shall be by ballot, except that the presiding officer of the meeting may call for a viva voce vote on any matter other than the election of directors, unless the holder or holders of ten percent (10%) or more of the shares entitled to vote demands or demand a vote by ballot.

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     SECTION 2.8. List of Shareholders. The Secretary shall make, or cause the agent having charge of the stock transfer books of the Corporation to make, at least five (5) days before each meeting of shareholders, a complete list of the shareholders entitled by the Articles of Incorporation to vote at said meeting, arranged in alphabetical order, with the address and number of shares so entitled to vote held by each, which list shall be on file at the principal business office of the Corporation and subject to inspection by any shareholder within the usual business hours during said five (5) days either at the principal business office of the Corporation or a place in the city where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not so specified, at the place where said meeting is to be held. Such list shall be produced and kept open at the time and place of the meeting and subject to the inspection of any shareholder during the holding of such meeting.

     SECTION 2.9. Conduct of Business. Presiding Officer. The Chairman, when present, and in the absence of the Chairman the President, shall be the presiding officer at all meetings of shareholders, and in the absence of the Chairman and the President, the Board of Directors shall choose a presiding officer. The presiding officer of the meeting shall have plenary power to determine procedure and rules of order and make definitive rulings at meetings of the shareholders.

     SECTION 2.10. Organization of Meetings. The Secretary, who may call on any officer or officers of the Corporation for assistance, shall make all necessary and appropriate arrangements for all meetings of shareholders, receive all proxies and ascertain and report to each meeting of shareholders the number of shares present, in person and by proxy. In the absence of the Secretary, the Assistant Secretary shall perform the foregoing duties. The certificate and report of the Secretary or Assistant Secretary, as to the regularity of such proxies and as to the number of shares present, in person and by proxy, shall be received as prima facie evidence of

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the number of shares present in person and by proxy for the purpose of establishing the presence of a quorum at such meeting and for organizing the same, and for all other purposes.

     SECTION 2.11. Inspectors. At every meeting of shareholders it shall be the duty of the presiding officer to appoint three (3) shareholders of the Corporation inspectors of election to receive and count the votes of shareholders. Each inspector shall take an oath to fairly and impartially perform the duties of an inspector of the election and to honestly and truly report the results thereof. Such inspectors shall be responsible for tallying and certifying the vote taken on any matter at each meeting which is required to be tallied and certified by them in the resolution of the Board of Directors appointing them or the appointment of the presiding officer at such meeting as the case may be. Except as otherwise provided by these By-Laws or by law, such inspectors shall also decide all questions touching upon the qualification of voters, the validity of proxies and ballots, and the acceptance and rejection of votes. The Board of Directors shall have the authority to make rules establishing presumptions as to the validity and sufficiency of proxies.

     SECTION 2.12. Minutes of Shareholder Meetings. The presiding officer, secretary, and inspectors of election serving at a shareholders’ meeting shall constitute a committee to correct and approve the minutes of such meeting. The approval thereof shall be evidenced by an endorsement thereon signed by a majority of the committee.

     SECTION 2.13. Action by Written Consent. Unless otherwise restricted by statute, the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the common shareholders of the Corporation may be taken without a meeting if a written consent thereto is signed by all common shareholders and such written consent is filed with the minutes of proceedings of the common shareholders.

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ARTICLE III.
BOARD OF DIRECTORS.

     SECTION 3.1. Powers. The Board of Directors shall have the general direction, management and control of all the property, business and affairs of the Corporation and shall exercise all the powers that may be exercised or performed by the Corporation, under the statutes, the Articles of Incorporation, and these By-Laws.

     SECTION 3.2. Number of Directors. The number of directors which shall constitute the whole Board shall be not less than one (1) nor more than five (5) as determined from time to time by resolution of the Board of Directors or by the stockholders. The directors shall be elected at the annual meeting of the stockholders, except as may be provided elsewhere in the By-Laws, and each director elected shall hold office until his or her successor is elected and qualified or until his or her earlier death, resignation or removal in a manner permitted by statute or these By-Laws. Directors need not be stockholders.

     SECTION 3.3. Vacancies. Any vacancy in the Board of Directors caused by death, resignation or other reason shall be filled for the remainder of the Director’s term by a majority vote of the remaining Directors although less than a quorum, or by the sole remaining director, and any director so chosen shall hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class of directors to which such director has been elected expires. All Directors of the Corporation shall hold office until their successors are duly elected and qualified.

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     SECTION 3.4. Annual Meetings. A meeting of the Directors whose terms have not expired and the newly elected Directors, to be known as the annual meeting of the Board of Directors, for the election of officers and for the transaction of such other business as may properly come before the meeting, shall be held on the same day as the annual meeting of the shareholders, at that time and place determined by the Board of Directors or at such date, time and place otherwise set by the Chairman.

     SECTION 3.5. Regular Meetings. Regular monthly meetings of the Board of Directors shall be held from time to time (either within or without the state) as the Board may by resolution determine, without call and without notice, and unless otherwise determined all such regular monthly meetings shall be held at the principal business office of the Corporation on the fourth Tuesday of each and every month at 10:30 a.m.

     SECTION 3.6. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman, by the President, or by the Chairman upon the written request of any four (4) Directors by giving, or causing the Secretary to give, to each Director, notice in accordance with Article IV of these By-Laws.

     SECTION 3.7. Quorum. At all meetings of the Board of Directors, a majority of the Directors shall constitute a quorum for the transaction of business and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat, but a less number may adjourn the meeting from time to time until a quorum is present.

     SECTION 3.8. Action by Written Consent. Unless otherwise restricted by statute, the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all directors or by all members of such committee, as the

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case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee.

     SECTION 3.9. Attendance by Conference Telephone. Members of the Board of Directors or any committee thereof may participate in a meeting of such Board of Directors or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

     SECTION 3.10. Committees. (a) The Board of Directors may from time to time, in its discretion, by resolution passed by a majority of the Board, designate, and appoint, from the directors, committees of one or more persons which shall have and may exercise such lawfully delegable powers and duties conferred or authorized by the resolutions of designation and appointment. The Board of Directors shall have power at any time to change the members of any such committee, to fill vacancies, and to discharge any such committee. (b) Unless the Board of Directors shall provide otherwise, the presence of one-half of the total membership of any committee of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of such committee and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat.

ARTICLE IV.
NOTICES.

     SECTION 4.1. Notices. Notices to directors and shareholders shall be in writing and delivered personally or mailed to their addresses appearing on the records of the Corporation or, if to directors, by telegram, cable, telephone, telecopy, facsimile or a nationally recognized overnight delivery service. Notice to directors of special meeting by mail shall be given at least two days before the meeting. Notice to directors of special meeting by telegram, cable, personal

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delivery, telephone, telecopy or facsimile shall be given a reasonable time before the meeting, but in no event less than one hour before the meeting. Notice by mail or recognized overnight delivery service shall be deemed to be given when sent to the director at his or her address appearing on the records of the Corporation. Notice by telegram or cable shall be deemed to be given when the telegram or cable addressed to the director at his or her address appearing on the records of the Corporation is delivered to the telegraph company. Notice by telephone, telecopy or facsimile shall be deemed to be given when transmitted by telephone, telecopy or facsimile to the telephone, telegraph or facsimile number appearing on the records of the Corporation for the director (regardless of whether the director shall have personally received such telephone call or wireless message).

     SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver thereof signed by the person entitled to such notice, whether before or after the time stated therein, and filed with the minutes or corporate records, shall be deemed equivalent thereto. Attendance of any person at any meeting of shareholders or directors shall constitute a waiver of notice of such meeting, except when such person attends only for the express purpose of objecting, at the beginning of the meeting (or in the case of a director’s meeting, promptly upon such director’s arrival), to the transaction of any business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

ARTICLE V.
OFFICERS.

     SECTION 5.1. Officers. The Board of Directors will elect a President, General Manager and Secretary, and it may, if it so chooses, elect one or more Vice Presidents, a Treasurer, a Controller and any assistants for such officers, including assistant secretaries, as it deems

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necessary, whose duties and authority will be specified in the resolution appointing that officer. Each officer will hold office for one (1) year or until that officer’s successor is duly elected and qualified or until the officer resigns or is removed by the Board of Directors. Any officer may resign at any time upon written notice to the Corporation. The Board of Directors may, by the affirmative vote of a simple majority, remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. One person may simultaneously hold multiple offices except those of President and Secretary. Any vacancy occurring in any office by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.

     SECTION 5.2. Term of Office, Vacancies, Removal. Such officers shall be elected by the Board of Directors at its annual meeting, and shall hold office until the next annual meeting or until their respective successors shall have been duly elected. The Board of Directors may from time to time, elect or appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as may be prescribed by the Board of Directors. Vacancies among the officers of the Corporation shall be filled by the Board of Directors. Any officer or agent elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors.

     SECTION 5.3. President. The President of the Corporation will preside at all meetings of the shareholders of the Board of Directors. The President is, subject to the control of the Board of Directors, responsible for managing regulatory and external affairs of the Corporation and any other powers and duties prescribed by the Board of Directors.

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     SECTION 5.4. General Manager. The General Manager is, subject to the control of the Board of Directors, responsible for the Corporation’s day-to-day field operations and any other powers and duties described by the Board of Directors.

     SECTION 5.5. Secretary. The Secretary shall attend and keep the minutes of all meetings of the Board of Directors and of the shareholders. The Secretary shall have charge and custody of the corporate records and corporate seal of the Corporation, and shall in general perform all the duties incident to the office of secretary of a corporation, subject at all times to the direction and control of the Board of Directors.

     SECTION 5.6. Vice Presidents. Each of the Vice Presidents shall have such powers and duties as may be prescribed by the Board of Directors, the Chairman or the President.

     SECTION 5.7. Treasurer. The Treasurer shall have charge of, and shall be responsible for, the collection, receipt, custody and disbursement of the funds of the Corporation, and shall also have the custody of all securities belonging to the Corporation. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper receipts or making proper vouchers for such disbursements, and shall at all times preserve the same during the term of office. When necessary or proper, the Treasurer shall endorse, on behalf of the Corporation, all checks, notes, or other obligations payable to the Corporation or coming into possession of the Treasurer for and on behalf of the Corporation, and shall deposit the funds arising therefrom, together with all other funds of the Corporation coming into possession of the Treasurer, in the name and to the credit of the Corporation in such bank or banks as the Board of Directors shall from time to time by resolution direct. The Treasurer shall perform all duties which are incident to the office of treasurer of a corporation, subject at all time to the direction

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and control of the Board of Directors. The Treasurer shall give the Corporation a bond if required by the Board of Directors in a sum, and with one or more sureties, satisfactory to the Board, for the faithful performance of the duties of the office of Treasurer, and for the restoration to the Corporation, in case of the death, resignation, retirement or removal from office of the Treasurer, of all books, papers, vouchers, money or other property of whatever kind in the possession or under the control of the Treasurer belonging to the Corporation.

     SECTION 5.8. Controller. The Controller shall have control over all accounts and records pertaining to moneys, properties, materials and supplies. The Controller shall have executive direction of the bookkeeping and accounting departments, and shall have general supervision over the records in all other departments pertaining to moneys, properties, materials and supplies. The Controller shall have such other powers and duties as are commonly incident to the office of controller of a corporation, subject at all times to the direction and control of the Board of Directors.”

     SECTION 5.9. Assistant Secretaries. Each of the Assistant Secretaries shall have such duties and powers as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Secretary, the powers and duties of the Secretary shall devolve upon such one of the Assistant Secretaries as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Secretary, then upon such Assistant Secretary; and such Assistant Secretary shall thereupon have and exercise such powers and duties during such absence or disability of the Secretary.

     SECTION 5.10. Treasurer. The Treasurer shall have charge of, and shall be responsible for, the collection, receipt, custody and disbursement of the funds of the Corporation, and shall also have the custody of all securities belonging to the Corporation. The Treasurer shall disburse

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the funds of the Corporation as may be ordered by the Board of Directors, taking proper receipts or making proper vouchers for such disbursements, and shall at all times preserve the same during the term of office. When necessary or proper, the Treasurer shall endorse, on behalf of the Corporation, all checks, notes, or other obligations payable to the Corporation or coming into possession of the Treasurer for and on behalf of the Corporation, and shall deposit the funds arising therefrom, together with all other funds of the Corporation coming into possession of the Treasurer, in the name and to the credit of the Corporation in such bank or banks as the Board of Directors shall from time to time by resolution direct. The Treasurer shall perform all duties which are incident to the office of treasurer of a corporation, subject at all time to the direction and control of the Board of Directors, the Chairman and the President. The Treasurer shall give the Corporation a bond if required by the Board of Directors in a sum, and with one or more sureties, satisfactory to the Board, for the faithful performance of the duties of the office of Treasurer, and for the restoration to the Corporation, in case of the death, resignation, retirement or removal from office of the Treasurer, of all books, papers, vouchers, money or other property of whatever kind in the possession or under the control of the Treasurer belonging to the Corporation.

     SECTION 5.11. Assistant Treasurers. Each of the Assistant Treasurers shall have such powers and duties as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Treasurer, the powers and duties shall devolve upon such one of the Assistant Treasurers as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Treasurer, then upon such Assistant Treasurer who shall thereupon have and exercise such powers and duties during such absence or disability of the Treasurer. Each Assistant Treasurer shall likewise give the Corporation a bond if required by the Board of Directors upon like terms and conditions as the bond required of the Treasurer.

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     SECTION 5.12. Controller. The Controller shall have control over all accounts and records pertaining to moneys, properties, materials and supplies. The Controller shall have executive direction of the bookkeeping and accounting departments, and shall have general supervision over the records in all other departments pertaining to moneys, properties, materials and supplies. The Controller shall have charge of the preparation of the financial budget, and such other powers and duties as are commonly incident to the office of controller of a corporation, subject at all times to the direction and control of the Board of Directors, the Chairman and the President.

     SECTION 5.13. Assistant Controllers. Each of the Assistant Controllers shall have such powers and duties as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Controller, the powers and duties of the Controller shall devolve upon such one of the Assistant Controllers as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Controller, then upon such Assistant Controller who shall thereupon have and exercise such powers and duties during such absence or disability of the Controller.

ARTICLE VI.
CONDUCT OF BUSINESS.

     SECTION 6.1. Contracts, Deeds and Other Instruments. All agreements evidencing obligations of the Corporation, including but not limited to contracts, trust deeds, promissory notes, sight drafts, time drafts and letters of credit (including applications therefor), may be signed by any one of the Chairman, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary, any other person authorized by a resolution of the Board of Directors, and any other person authorized by the Chairman, as evidenced by a written instrument of delegation. Any such authorization by the Board of

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Directors or the Chairman shall remain in effect until rescinded by action of the Board of Directors or (in the case of a delegation by the Chairman) by the Chairman and, where it identifies the authorized signatory by office rather than by name, shall not be rescinded solely by virtue of a change in the person holding that office or a temporary vacancy in that office. A certified copy of these By-Laws and/or any authorization given hereunder may be furnished as evidence of the authorities herein granted, and all persons shall be entitled to rely on such authorities in the case of a specific contract, conveyance or other transaction without the need of a resolution of the Board of Directors specifically authorizing the transaction involved.

     SECTION 6.2. Checks. Checks and other negotiable instruments for the disbursement of Corporation funds may be signed by any one of the Chairman, the President, any Vice President, the Treasurer, the Controller and the Secretary in such manner as shall from time to time be determined by resolution of the Board of Directors. Electronic or wire transfers to funds may be authorized by any officer of the Corporation who is authorized pursuant to this Section 6.2 to disburse Corporation funds by check or other negotiable instrument.

     SECTION 6.3. Deposits. Securities, notes and other evidences of indebtedness shall be kept in such places, and deposits of checks, drafts and funds shall be made in such banks, trust companies or depositories, as shall be recommended and approved by any two of the Chairman, the President, any Vice President and the Treasurer.

     SECTION 6.4. Voting of Stock. Unless otherwise ordered by the Board of Directors, the Chairman, the President or any Vice President shall have the power to execute and deliver on behalf of the Corporation proxies on stock owned by the Corporation appointing a person or persons to represent and vote such stock at any meeting of stockholders, with full power of substitution, and shall have power to alter or rescind such appointment. Unless otherwise ordered by the Board of Directors, the Chairman, the President or any Vice President shall have

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the power on behalf of the Corporation to attend and to act and vote at any meeting of stockholders of any corporation in which the Corporation holds stock and shall possess and may exercise any and all rights and powers incident to the ownership of such stock, which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board may confer like powers upon any other person or persons.

     SECTION 6.5. Transfer of Stock. Such form of transfer or assignment customary or necessary to effect a transfer of stocks or other securities standing in the name of the Corporation shall be signed by the Chairman, the President, any Vice President or the Treasurer, and the Secretary or an Assistant Secretary shall sign as witness if required on the form. A corporation or person transferring any such stocks or other securities pursuant to a form of transfer or assignment so executed shall be fully protected and shall be under no duty to inquire whether the Board of Directors has taken action in respect thereof.

ARTICLE VII.
SHARE CERTIFICATES AND THEIR TRANSFER.

     SECTION 7.1. Share Certificates. Certificates for shares of the Corporation shall be signed by the Chairman, the President or any Vice President, and by the Secretary or any Assistant Secretary, and shall not be valid unless so signed. Such certificates shall be appropriately numbered and contain the name of the registered holder, the number of shares and the date of issue. If such certificate is countersigned (a) by a transfer agent other than the Corporation or its employee, or (b) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile.

     In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent,

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or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he, she or it were such officer, transfer agent, or registrar at the date of issue.

     SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation and such transfer agent to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction. No certificate shall be issued in exchange for any certificate until the former certificate for the same number of shares of the same class and series shall have been surrendered and cancelled, except as provided in Section 7.4.

     SECTION 7.3. Regulations. The Board of Directors shall have authority to make rules and regulations concerning the issue, transfer and registration of certificates for shares of the Corporation.

     SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may issue a new certificate or certificates for shares in place of any issued certificate alleged to have been lost, stolen or destroyed upon such terms and conditions as the Board of Directors may prescribe.

     SECTION 7.5. Registered Shareholders. The Corporation shall be entitled to treat the holder of record (according to the books of the Corporation) of any share or shares as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other party whether or not the Corporation shall have express or other notice thereof, except as expressly provided by law.

     SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may from time to time appoint a transfer agent and a registrar in one or more cities, may require all certificates

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evidencing shares of the Corporation to bear the signatures of a transfer agent and a registrar, may provide that such certificates shall be transferable in more than one city, and may provide for the functions of transfer agent and registrar to be combined in one agency.

ARTICLE VIII.
INDEMNIFICATION.

     SECTION 8.1. Litigation Brought by Third Parties. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, formal or informal (other than an action by or in the right of the Corporation) (an “Action”) by reasons of the fact that he or she is or was a director, officer, employee or agent of the Corporation (a “Corporate Person”), or is or was serving at the request of the Corporation as a director, officer, employee, agent, partner, trustee or member or in another authorized capacity (collectively, an “Authorized Capacity”) of or for another corporation, unincorporated association, business trust, partnership, joint venture, trust, individual or other legal entity, whether or not organized or formed for profit (collectively, “Another Entity”), against expenses (including attorneys’ fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such Action (“Expenses”) if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or,

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with respect to any criminal action or proceeding, that the person had reasonable cause to believe his or her conduct was unlawful.

     SECTION 8.2. Litigation by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a Corporate Person, or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against Expenses actually and reasonably incurred by him or her in connection with that defense or settlement of such action if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for willful negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that a court of equity or the court in which such action was pending shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court of equity or other court shall deem proper.

     SECTION 8.3. Successful Defense. To the extent that a person who is or was a Corporate Person or is or was serving in an Authorized Capacity of Another Entity at the request of the Corporation and has been successful on the merits or otherwise in defense of any action, referred to in Section 8.1 or 8.2 of this Article, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by him or her in connection therewith.

     SECTION 8.4 Determination of Conduct. Any indemnification under Section 8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the Corporation only upon a

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determination that indemnification of the person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in said Section 8.1 or 8.2. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors not at the time parties to such action, suit or proceeding, or (b) if a quorum cannot be obtained, by a majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate) consisting of two or more directors not at the time parties to such action, suit or proceeding, or © by special legal counsel, or (d) by the shareholders; provided, however, that shares owned by or voted under the control of persons who are at the time parties to such action, suit or proceeding may not be voted on the determination.

     SECTION 8.5. Advance Payment. The Corporation shall advance Expenses reasonably incurred by any Corporate Person in any action in advance of the final disposition thereof upon the undertaking of such party to repay the advance unless it is ultimately determined that such party is not entitled to indemnification hereunder, if (a) the indemnitee furnishes the Corporation a written affirmation of his or her good faith belief that he or she has satisfied the standard of conduct in Section 8.1 or 8.2 and (b) a determination is made by those making the decision pursuant to Section 8.4 that the facts then known would not preclude indemnification under these By-Laws.

     SECTION 8.6. By-Law Not Exclusive. The indemnification provided by this Article 8 shall not be deemed exclusive of any other rights to which any person may be entitled under any by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

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     SECTION 8.7. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article 8 or the Indiana Business Corporation Law.

     SECTION 8.8. Effect of Invalidity. The invalidity or unenforceability of any provision of this Article 8 shall not affect the validity or enforceability of the remaining provisions of this Article 8.

     SECTION 8.9. Definition of Corporation. For purposes of this Article 8, references to “the Corporation” shall include, in addition to the surviving or resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger.

     SECTION 8.10. Change in Law. Notwithstanding the foregoing provisions of Article 8, the Corporation shall indemnify any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity to the full extent permitted by the Indiana Business Corporation Law or by any other applicable law, as may from time to time be in effect.

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ARTICLE IX.
GENERAL.

     SECTION 9.1. Fiscal Year. The fiscal year of the Corporation shall begin on the 1st day of January and end on the 31st day of December in each year.

     SECTION 9.2. Corporate Seal. The corporate seal shall be circular in form and shall have inscribed thereon the words “Northern Indiana Public Service Company — Corporate Seal - Indiana.”

     SECTION 9.3. Amendments. These By-Laws may be altered, amended or repealed in whole or in part, and new By-Laws may be adopted, at any annual, regular or special meeting of the Board of Directors by the affirmative vote of a majority of a quorum of the Board of Directors.

     SECTION 9.4. Dividends. Subject to any provisions of any applicable statute or of the Articles of Incorporation, dividends may be declared upon the capital stock of the Corporation by the Board of Directors at any regular or special meeting thereof; and such dividends may be paid in cash, property or shares of the Corporation.

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EX-31.1

Exhibit 31.1

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark T. Maassel, certify that:

1.	I have reviewed this Quarterly Report of Northern Indiana Public Service Company on Form 10-Q for the quarter ended June 30, 2005;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2005	By:	/s/ Mark T. Maassel
		Mark T. Maassel
		President

EX-31.2

Exhibit 31.2

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, William M. O’Malley, certify that:

1.	I have reviewed this Quarterly Report of Northern Indiana Public Service Company on Form 10-Q for the quarter ended June 30, 2005;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2005	By:	/s/ William M. O'Malley
		William M. O'Malley
		Vice President, Finance

EX-32.1

Exhibit 32.1

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Northern Indiana Public Service Company (the “Company”) on Form 10-Q for the quarter ending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark T. Maassel, President of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 5, 2005	By:	/s/ Mark T. Maassel
		Mark T. Maassel
		President

EX-32.2

Exhibit 32.2

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Northern Indiana Public Service Company (the “Company”) on Form 10-Q for the quarter ending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William M. O’Malley, Vice President, Finance of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 5, 2005	By:	/s/ William M. O'Malley
		William M. O'Malley
		Vice President, Finance