Bay State Gas announces plans to expand its nonregulated businesses under the "EnergyUSA" name.

WESTBOROUGH, Mass.--(BUSINESS WIRE)--July 23, 1996--Bay State Gas Company (NYSE: BGC) today announced plans to dramatically expand its nonregulated retail energy products and services business both within and outside its service territories, under the brand name "EnergyUSA."

Existing business activities for marketing retail energy products and services, which will be operated under the name "EnergyUSA," include: natural gas and propane commodity sales to residential, commercial, and industrial customers; energy system development and energy management services for commercial and industrial customers; residential water heater rentals; and residential low-interest energy loan financing. Bay State has been involved in many of these businesses for well over a decade, and today these businesses represent annual revenues of approximately $14 million.

"Our ambition is to grow this business ten-fold within the next three to five years by significantly expanding our product and service offerings both within and beyond our service territories," said Joel L. Singer, president and chief operating officer for Bay State. "Initial plans include opening several new offices throughout New England within the next year and expanding nationally -- probably through joint ventures -- during the next few years."

"We see the retail energy products and services business growing dramatically over the next several decades," said Singer. "Fueling this growth is: the increasing pace of gas and electric utility restructuring at the retail level; new technologies in energy conversion and energy management; and the trend among commercial and industrial customers to outsource their energy management activities."

According to Singer, success in this business will require skills and capabilities very different from those found in the energy industry today. Specifically, success will require sophisticated customer information systems, strong target marketing skills and product service and development capabilities, and the ability to effectively manage multiple channels of distribution.

Bay State Gas Company operates in three energy-related business segments -- Local Transportation, Energy Products & Services, and Energy Ventures. Bay State's Local Transportation business serves almost 300,000 natural gas customers, and geographically, is the largest gas utility in New England, serving the states of Massachusetts, New Hampshire, and Maine. The company's nonregulated Energy Products & Services segment offers energy commodities and related equipment and services to customers throughout New England. Bay State's Energy Ventures segment develops businesses and projects which are closely related to the company's core businesses. Additional information about Bay State is available on the World Wide Web at "http://www.bgc.com/bgc/."

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. Factors affecting the expansion of the unregulated businesses include, but are not limited to, the competitive environment, customers' preferences, 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, Westborough, Mass.

Carol Churchill, [phone]