Bay State Gas Shareholders Approve Merger With NIPSCO Industries, Inc.

WESTBOROUGH, Mass.--(BUSINESS WIRE)--May 27, 1998--

Merger On Track For A Fall Close

Bay State Gas Company (NYSE:BGC) shareholders overwhelmingly approved its merger with NIPSCO Industries, Inc. of Merrillville, Indiana at a special shareholder meeting today. Approximately 78% of the outstanding number of common shares voted in favor of the merger. The shareholder vote represents a major step in the merger approval process, which is expected to conclude this fall.

"NIPSCO Industries has been an industry leader in generating gains in total shareholder returns," said Roger A. Young, Bay State's chairman and co-chief executive officer, "and today's vote clearly indicates that our shareholders recognize the benefits of this transaction. By combining the two companies, we believe that shareholders, employees and customers will all benefit from substantial value creation. Shareholders will receive a significant premium for their shares with the added upside potential of participating in the ownership of a larger, broader-based entity; employees will be part of a stronger, growing organization; and customers will have the choice of a greater array of products and services at more competitive prices than Bay State could provide on a stand-alone basis."

"Upon regulatory approval, the combined company will become the 10th largest natural gas distribution company in the United States with over one million gas customers," said Gary L. Neale, chairman, president and chief executive officer of NIPSCO Industries, Inc. "We're particularly excited about the growth prospects the undersaturated New England natural gas market holds for our company. Bay State is a company that shares our vision of growth made possible through the opportunities deregulation presents, and also mirrors our vision as a leader in providing customer choice. It is an exciting match."

Completion of the transaction is also subject to approval by regulators in Mass., N.H. and Maine, the Federal Energy Regulatory Commission and the Securities and Exchange Commission. All of these regulatory agencies are currently reviewing Bay State's merger plans, and the approval process is "on track" for a fall closing.

Bay State Gas Company operates in three related energy business segments: Utility; Energy Products & Services; and Energy Ventures. Geographically, Bay State is the largest gas utility in New England, serving more than 308,000 natural gas customers in the states of Massachusetts, New Hampshire, and Maine. The company's nonregulated Energy Products & Services business serves about 94,000 residential, commercial, and industrial customers throughout the U.S., and markets products and services through its subsidiaries, EnergyUSA(TM), Savage-Alert, Inc., and EnergyEXPRESS(TM). Bay State's Energy Ventures segment develops business opportunities and projects which are closely related to the company's core businesses.

NIPSCO Industries, Inc. is an energy/ utility-based holding company with headquarters in Merrillville, Ind. NI's regulated subsidiaries provide natural gas and electricity in northern Indiana, water in central Indiana, and interstate natural gas pipeline services through Crossroads Pipeline Company. NI's nonregulated subsidiaries are active primarily in energy marketing; gas storage, exploration and production; and power generation development.

For additional information about Bay State, EnergyUSA(TM), Savage-Alert, EnergyEXPRESS(TM) and NIPSCO Industries, Inc., please visit the following web sites: "http://www.bgc.com;" "http://www.energyusa.com;" and "http://www.nipsco.com."

This release contains forward-looking statements. The company cautions that, while it believes such statements to be reasonable and makes them in good faith, they almost always vary from actual results, and the differences between assumed facts or basis and actual results can be material, depending upon the circumstances. Investors should be aware of important factors that could have a material impact on future results and approval of the merger. Factors include, but are not limited to, the regulatory environment, customers' preferences, unforeseen competition, and other uncertainties, all of which are difficult to predict, and many of which are beyond the control of the company.

CONTACT: Bay State Gas Company, Westborough, Mass.

Media Relations: Carol Churchill, [phone]

Investor Relations: Liz Foley, [phone]

OR

NIPSCO Industries, Inc., Merrillville, Ind.

Media Relations: Kris Falzone, [phone]

Investor Relations: Dennis Senchak, [phone]