Columbia Energy Group Receives Unsolicited ProposalFrom NiSource, Inc.

HERNDON, Va.--(BUSINESS WIRE)--June 7, 1999--

Columbia Energy Group today confirmed that it has received an unsolicited proposal from NiSource, Inc. which contemplates a merger transaction whereby NiSource would acquire all of Columbia's outstanding common stock for $68 per share in cash.

Dear Gary:

I am in receipt of your letter dated June 7, 1999. As we have communicated to you previously, Columbia Energy Group is not for sale and is not interested in any merger transaction in which another company acquires control of Columbia. Our return to shareholders over the last three years supports our belief that the best long-term interest of Columbia and its shareholders is for Columbia to remain an independent company free to implement over time its strategic business plan.

Nevertheless, in light of the formal nature of the offer set forth in your letter, your offer will be considered by our Board of Directors. After the consideration of your offer by our Board, we will advise you of the Board's conclusions.

Sincerely,

Oliver G. Richard III

Columbia Energy Group, based in Herndon, Va., is one of the nation's leading energy services companies, with 1998 revenues of nearly $6.6 billion and assets of about $7 billion. Its operating companies engage in all phases of the natural gas business, including exploration and production, transmission, storage and distribution, as well as commodities marketing, energy management, propane sales and electric power generation, sales and trading. Columbia companies serve customers in 34 states and the District of Columbia; over 60 percent of America's gas and electric revenue is derived in and around its principal operating region. Information about Columbia Energy Group (NYSE:CG) is available on the Internet at www.columbiaenergygroup.com.