Credit coring A Help to Low Income Customers Presented by Larry Nowicki Manager, Regulatory Compliance Thursday, June 16, 2005

ABOUT NISOURCE Fortune 500 holding company headquartered in Merrillville, Indiana. 15 subsidiary companies engage in natural gas transmission, storage & distribution as well as electric generation, transmission & distribution. Deliver energy to more than 3.7 million customers in high energy corridor stretching from the Gulf Coast through the Midwest to New England. Over 16,000 miles of interstate transmission pipeline; 55,000 miles of distribution pipeline. Over 9,000 employees. Income from continuing operations of $430 million in 2004. Mike

ABOUT NISOURCE Northern Indiana Public Service Northern Indiana Fuel & Light Kokomo Gas Customers Electric - 443,000 Gas – 776,000 Bay State Gas/Northern Utilities Customers Mass. – 279,000 N.H. – 26,000 Maine – 24,000 Columbia Gas Customers Ohio – 1,400,000 Pennsylvania – 401,000 Virginia – 209,000 Kentucky – 141,000 Maryland – 32,000 Mike

Low-Income Customers 70,038 Average number of low-income customers. 357,006 Average All Residential Customers

Credit Scoring Timeline 2000 2002 2003 2004 Pilot Program CAP Open Enrollment Chapter 14

JOE SCHMO 123-45-6789

JOE SCHMO

JOE SCHMO 123-45-6789 222 W MAIN RED LION

123-45-6789 JOE SCHMO 222 W MAIN RED LION 123-45-6789

Application Process First Contact with Customer Screening Early referrals to Universal Services

Results Accounts scoring 750 or less in years 2003 and 2004. 2003 2004 44% 32% % of customers scoring < 750 identified as level 1 or 2. 3% 2% % of customers scoring < 750 identified as level 3 or 4. 53% 66% % of customers scoring < 750 not identified (never obtained financial info). Accounts scoring >= 750 connected in years 2003 and 2004. 2003 2004 12% 8% % of customers scoring >= 750 identified as level 1 or 2. 2% 1% % of customers scoring >= 750 identified as level 3 or 4. 86% 91% % of customers scoring >= 750 not identified (never obtained financial info).

Results Verification 11% of customers who were credit scored were low income

Results Number of applicants scored 131,029 Columbia Gas of Pennsylvania Inc. Credit Scoring Pilot Program Report Summary of Period June 2001 Through October 2003 Number of applicants scored 131,029 Number of applicants with passing scores 82,107 Number of applicants with failing scores 48,922 Number of deposits obtained 44,735 Number of deposits waived 5,381 Waivers due to credit score error 49 Waivers due to improvement in credit score 26

5,381 X $162 = savings for low income Results Waived deposits Number of deposits X average deposit amount 5,381 X $162 = savings for low income customers

5,381 X $762 = avoided costs to utility for charge-off Results Number of deposits waived X average CAP Charge-off 5,381 X $762 = avoided costs to utility for charge-off

Results Other utility bottom line benefits Cash working capital Reduced collection costs due to early identification

Results Fewer complaints 17 complaints over four years

Results Affordable benefits CAP payment credit ($51) X number of waived CAP security deposits = total payment credit for CAP customers who were credit scored

Benefits of Credit Scoring Waived security deposits Affordable payment plans Energy assistance Building good credit Promotes goodwill with company

Credit Scoring vs. Low Income Help Utility Benefit WIN/WIN