TEXT-S&P release on NiSource unit

(The following statement was released by the rating agency)

April 24 - Standard & Poor's Ratings Services said today that NiSource Inc.'s (BBB-/Stable/--) announcement that its subsidiary PEI Holdings Inc. will sell its outstanding stock in subsidiary Whiting Clean Energy Inc. for $210 million does not affect the rating on the company or its subsidiaries.

The 525 MW Whiting plant, a cogeneration facility located at BP's Whiting, Indiana refinery, is being purchased by BP Alternative Energy North America Inc., which had a right of first refusal on the plant.

The Whiting facility was selected by Northern Indiana Public Service Co.'s (NIPSCO) as part of a request-for-proposal process conducted in 2007 to improve reliability and address anticipated capacity shortfalls in NIPSCO's service territory. BP's purchase of the plant will now require the company to explore other, longer-term options to replace this capacity.

We expect immediate reliability concerns to be addressed as NiSource moves forward with buying the 535 MW Sugar Creek combined-cycle plant under a separate transaction. NiSource expects to use proceeds from selling Whiting to repay short-term borrowings, however, we don't expect the level of debt reduction to be significant enough to change the company's ratings or outlook.

Ratings concerns could manifest if NiSource cannot identify a suitable long-term solution to the region's capacity requirements, or if the terms of interim purchased power agreements result in substantially higher levels of debt to be imputed to the company's consolidated balance sheet, although neither of these concerns are currently anticipated.