1. 1 Gas Supply Preparations September 22, 2004 Columbia Gas of Maryland, Inc. Gas Supply Preparations September 22, 2004 Scott Phelps Director of Gas Procurement

2. 2 Content Firm Capacity Storage Gas Firm Gas Supply Contracts Pipeline Restrictions Last Winter U.S. Working Gas in Storage Weather & Temperatures U.S. Rotary Rig Count Natural Gas Prices

3. 3 Firm Capacity CMD’s contracts for firm upstream transportation and storage capacity, combined with our propane peaking facility, will be sufficient to supply the requirements of our firm customers on a winter design cold day this winter.

4. 4 Storage Gas CMD’s firm storage was filled to 90.0% as of September 15 th. CMD plans to have storage filled to approximately 99% of capacity by October 31 st. CMD’s planning process is designed to maintain storage supply at levels needed to serve daily and seasonal design conditions through March.

5. 5 Firm Gas Supply Contracts CMD has negotiated firm gas purchase contracts sufficient to fill our upstream transportation capacity during the coming winter. CMD’s propane peaking plant in Hagerstown is filled and prepared to meet peak day requirements.

6. 6 Supply Plan Plan for the cold day with a 10% probability of occurring during the winter season. For CMD, that equates to a day with an average temperature of minus one degree (-1° F). Plan for a cold winter season (Nov-Mar) with a 10% probability of occurrence. For CMD, this equates to a season that is 11.9% colder than normal Planned Sources of Supply for the 2004-2005 Winter DesignDaySeason Firm Transportation26.9%45.4% Firm Storage58.4%54.1% Peaking Facility14.7%00.5%

7. 7 Pipeline Restrictions Last Winter Last winter, which was 0.5% colder than normal in CMD’s service territory, Columbia Gas Transmission called complete interruptions of non-firm transportation services on 84 days in the Hagerstown area and and 41 days in the Cumberland area. However, it wasn’t necessary for CMD to issue any on system Operational Flow or Matching Orders of its own. When all of CMD’s available upstream capacity assets are required to serve CMD’s firm market, CMD is prepared to interrupt our balancing service to our gas transportation customers, requiring them to deliver enough supply to meet their own demand.

8. 8 U.S. Working Gas in Storage As of September 9, 2004, the US Estimated Working Gas in Storage was ahead of the same time last year by 10.2%, and ahead of the five year average by 7.1%.

9. 9 Weather & Temperatures Through July, cooler temperatures in the Northeast and Midwest more than offset by warmer than normal conditions in the Southeast and on the West coast, such that overall, temperatures were 6% warmer than normal. But August continued a cooling trend that started in July. Alex, Bonnie, Charlie, Frances, Ivan, Jeanne, etc. A mild El Nino has been measured in the Pacific. “At this time SSI is very heavily leaning towards 2002-03, which if this is true we are pretty certain about below normal temperatures for almost all regions east of the Mississippi.” Surface Systems, Inc.

10. 10 U.S. Rotary Rig Count The U.S.Oil and Gas Rotary Rig Count is up 13.6% from this time last year, from 1091 rigs to 1240. A positive trend, but one which must be considered in proper context with other variables, efficiency of drilling, and production per new well drilled. Overall, supply and demand remains in a relatively tight balance.

11. 11 Natural Gas Prices Gas prices have remained in the $4.50/dth - $6.50/dth range this summer, with recent NYMEX expectations averaging $6.50/dth for this winter.

12. 12 In Summary CMD’s gas supply preparations are on target to serve our firm market this winter through contracting for sufficient firm capacity and supply and through preparation of our Hagerstown peaking facility. CMD plans to serve its firm markets through management of its firm supply portfolio, combined with its ability to allocate interruptible services. The economy, oil prices, events related to the war, hurricanes, and ultimately winter temperatures will each continue to impact price movements heading into winter.